United States v. Turner, Cecil ( 2008 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 07-1062
U NITED S TATES OF A MERICA,
Plaintiff-Appellee,
v.
C ECIL T URNER,
Defendant-Appellant.
Appeal from the United States District Court
for the Central District of Illinois.
No. 06 CR 30012—Joe Billy McDade, Judge.
A RGUED D ECEMBER 3, 2007—D ECIDED D ECEMBER 30, 2008
Before B AUER, E VANS, and S YKES, Circuit Judges.
S YKES, Circuit Judge. A jury convicted Cecil Turner of
two counts of making false statements to the FBI and
four counts of wire fraud for his part in a fraudulent
scheme by which three janitors employed by the State
of Illinois worked only a small fraction of their required
40 hours per week but falsified their attendance logs and
collected their full salaries. On appeal, Turner contends
that his statements to the FBI were not material because
the FBI already knew about his involvement in the
2 No. 07-1062
scheme and therefore could not have been misled by what
he said. We disagree. A false statement need not actually
influence the agents to whom it is made in order to
satisfy the materiality requirement for this offense; it
need only have the possibility of influencing a rea-
sonable agent under normal circumstances. Turner’s
statements to the FBI—denying that he provided supervi-
sory cover for the janitors’ fraudulent scheme—satisfied
this standard.
Turner also maintains the evidence was insufficient to
convict him of wire fraud. His argument is twofold:
He challenges the sufficiency of the evidence on the gov-
ernment’s “honest services” fraud theory and the suffi-
ciency of the use of the wires. As to the former, the case
was charged and submitted to the jury as a traditional
money or property fraud and as an honest services fraud.
The evidence established that Turner aided and abetted a
straightforward money or property fraud—Turner assisted
the janitors’ fraudulent scheme to collect thousands of
dollars in wages for hours they did not work—so the
verdict may be sustained regardless of any factual insuffi-
ciency on the alternative honest services fraud theory. As
for the use of the wires, two of the janitors were paid
through direct deposit; under the circumstances of this
case, this use of the wires was sufficient to satisfy the wire-
fraud statute. The janitors’ receipt of falsely inflated
wages was the final step—indeed, it was the whole
point—of the fraudulent scheme.
No. 07-1062 3
I. Background
Turner was the Director of the Division of Physical
Services for the Illinois Secretary of State’s office from 1999
to 2005. He supervised over 300 employees who were re-
sponsible for cleaning and maintaining various state-
owned buildings in Springfield, Illinois. Three of those
employees were night janitors Dana Dinora, Steven Boyce,
and David Medvesek. Turner promoted Dinora to lead
night janitor shortly after being appointed Director in 1999,
and the three janitors comprised a cleaning crew responsi-
ble for the Herndon Building, the Court of Claims, and the
Lincoln Towers. Dinora also worked as an Assistant
Superintendent for the City of Springfield Public Works
Department where he handled street cleaning and garbage
pick-up throughout the city.
Dinora and his crew were required to report to work by
3 p.m. Monday through Friday and stay until 11 p.m. As
with any other employee, each was required to submit
a leave slip and obtain approval if he was going to be
absent during normal work hours. The janitors were
supervised by building managers, who in turn reported
to the division chief, who was overseen by the deputy
director, who reported directly to Turner.
Led by Dinora, the three night janitors devised a
scheme to take massive amounts of unauthorized leave
without being detected by their supervisors. At its peak
the scheme allowed Dinora to collect a full salary while
working less than 30 minutes each day and the others to
receive full pay while cutting their work hours in half.
Sometimes one janitor would remain at work while the
4 No. 07-1062
other two were absent; the “on duty” janitor would tip off
the absent ones if questioned by a supervisor about the
whereabouts of the other members of the crew. The
absent janitors would then come in to work, call the
supervisor who made the inquiry, or submit an appro-
priate leave slip. Another feature of the scheme involved
leaving a note in one building falsely representing that
the absent janitor was working in another building. The
three janitors also kept two sets of attendance logs. The
first accurately recorded occasions when one or more of
the janitors did not work a full shift and submitted a
proper leave request. If no one checked their work that
night, however, the “on-duty” janitor would replace the
first, accurate attendance log with a second log falsely
recording that all three had been working the entire night.
The janitors’ scheme could not have succeeded without
Turner’s help. Prompted by requests from Dinora, Turner
repeatedly intervened when the janitors’ immediate
supervisors began to watch the three more closely. In 1999
Building Manager Randy Lewis forced Dinora to prove
that he was actually sick before taking more sick days.
Dinora complained to Turner, who reprimanded Lewis
and told him to leave Dinora and his crew alone. Two
other building managers received similar warnings
after attempting to more closely supervise Dinora.
Building Manager James Carter was admonished by
Turner to “stay the hell away from” Dinora and his crew
after Dinora told Turner that Carter was watching the
Herndon Building. Turner also instructed Building Man-
ager Harry Fanning to leave Dinora’s men alone and to
stop checking their work.
No. 07-1062 5
Turner’s efforts to deflect attention from the night
janitors’ fraud were successful from 1999 until 2003, when
Division Chief Dodie Stannard became involved. After
receiving numerous complaints about the unsanitary
conditions in the buildings that Dinora’s crew was as-
signed to clean, Stannard began to investigate. On a
number of occasions, she visited the Herndon Building
at night and found no one there cleaning. Just to be sure
the men weren’t working in another of their assigned
buildings, she checked the Court of Claims, but it, too,
was deserted. She made a written report to Turner
about her investigation and recommended involving
the Inspector General. Turner responded harshly, claiming
that Stannard had “stabbed him in the back” by putting
her concerns in writing instead of passing along the
information verbally. He also told her that reporting
Dinora’s crew to the Inspector General’s office was unnec-
essary as the matter rested with him alone.
The fraud thus went undetected through mid-2005, when
Stannard defied Turner and contacted the Inspector
General’s office. In August 2005 Turner’s wife, Doris—a
member of the County Board—called Dinora to warn
him that Stannard had tipped off the Inspector General.
Dinora confirmed this with Turner, who told Dinora to
be careful and make sure his crew showed up for work.
A week later, inspectors advised Turner of their inves-
tigation and told him not to disclose it to anyone. Never-
theless, Turner kept Dinora informed about the Inspector
General’s inquiry and advised him to watch his crew
closely. In September the FBI opened an investigation
and Dinora began cooperating. Thereafter Dinora
recorded many of his conversations with Turner.
6 No. 07-1062
As a result of Dinora’s cooperation, Turner became the
focus of the investigation. In mid-October FBI agents
questioned Turner about the janitors’ scheme. He told
them that he never “looked the other way” for Dinora or
his crew and that he never reprimanded any of their
supervisors for checking on their activities at the
Herndon Building. He also claimed that he only learned
about the scheme in September 2005 and that he com-
plied with the Inspector General’s request to tell no one
about the investigation. The FBI interviewed him again
in November, and Turner stuck to his story. When asked
if he told his wife to call Dinora, Turner denied it. The
agents then played a tape of Doris Turner warning
Dinora about the Inspector General’s investigation and
explaining that she was calling on behalf of her husband.
Turner continued to maintain that he did not ask his
wife to make the call.
Turner was charged with four counts of wire fraud in
violation of 18 U.S.C. §§ 1343 and 1346 and two counts of
making false statements in violation of 18 U.S.C. § 1001.1
The government’s wire-fraud theory was that Turner
either aided and abetted the night janitors’ fraudulent
scheme or deprived the State of Illinois of his honest
services.
At the close of the government’s case, Turner moved for
judgment of acquittal on the wire-fraud charges under
Rule 29(a) of the Federal Rules of Criminal Procedure, arguing
1
Dinora, Boyce, and Medvesek were charged with four counts
of wire fraud and all three pleaded guilty.
No. 07-1062 7
insufficiency of the evidence. The district court denied
this motion. The court also denied Turner’s later motion
under Rule 29(c) for judgment of acquittal after the
jury returned a verdict of guilty on all charges. Turner
appeals, reiterating his challenges to the sufficiency of the
evidence in a number of respects.
II. Analysis
A. False Statements to the FBI
Turner contends the evidence was insufficient to con-
vict him of making false statements in violation of 18
U.S.C. § 1001. 2 On these counts the government was
required to prove that Turner’s statements were false;
material; knowingly and willfully made; and concerned
a matter within the jurisdiction of a federal department
or agency—here, the FBI. United States v. Ringer, 300 F.3d
788, 791 (7th Cir. 2002). Turner claims there was not
enough evidence to prove that the FBI investigation was
within its jurisdiction or that his false statements were
material.
On a sufficiency-of-the-evidence challenge, we view the
evidence in the light most favorable to the verdict and will
2
The statute provides: “Except as otherwise provided in this
section, whoever, in any matter within the jurisdiction of the
executive, legislative, or judicial branch of the Government of
the United States, knowingly and willfully . . . (2) makes any
materially false, fictitious, or fraudulent statement or rep-
resentation” shall be subject to a fine and imprisonment of up
to five years. 18 U.S.C. § 1001(a)(2).
8 No. 07-1062
overturn the conviction only if there is no evidence upon
which a rational juror could have found the defendant
guilty. United States v. James, 464 F.3d 699, 705 (7th Cir.
2006). Adding to this already steep burden is the fact that
Turner did not move for acquittal on the charges of
making false statements; his Rule 29 motions were di-
rected at the wire-fraud counts. FED. R. C RIM. P. 29(c).
Accordingly, he must establish a “manifest miscarriage of
justice.” United States v. Banks, 405 F.3d 559, 569 (7th Cir.
2005). “Manifest miscarriage of justice is perhaps the
most demanding standard of appellate review. We will
reverse ‘only if the record is devoid of evidence pointing
to guilt, or if the evidence on a key element of the
offense was so tenuous that a conviction would be shock-
ing.’ ” United States v. Taylor, 226 F.3d 593, 597-98 (7th
Cir. 2000) (quoting United States v. McKinney, 143 F.3d 325,
330 (7th Cir. 1998) (internal quotation marks omitted)).
Turner’s first argument—that the investigation was
within the jurisdiction of the State of Illinois, not the
FBI—may be dispatched quickly. In United States v.
Rodgers, the Supreme Court cautioned that the term
“jurisdiction” in § 1001 is not given a “narrow or technical
meaning.” 466 U.S. 475, 480 (1984). Rather, “the phrase
‘within the jurisdiction’ merely differentiates the official,
authorized functions of an agency or department from
matters peripheral to the business of that body.” Id. at 479.
The Court concluded in Rodgers that “[t]here is no
doubt” that the FBI “is authorized ‘to detect and prosecute
crimes against the United States,’ ” including, in that case,
kidnaping. Id. at 481 (quoting 28 U.S.C. § 533(1)).
No. 07-1062 9
Here, Turner’s statements to the FBI were made during
the course of a criminal investigation into possible federal
wire-fraud offenses, which falls squarely within the
official, authorized functions of the FBI. See United States
v. F.J. Vollmer & Co., Inc., 1 F.3d 1511, 1518 (7th Cir. 1993)
(finding that the question of jurisdiction is one of law “and
a department or agency has jurisdiction only when it
has the power to exercise authority in a particular situa-
tion”). That the investigation originated with the State
of Illinois is irrelevant.
Turner also argues that the statements he made to the
special agents were not material because the agents
already knew the answers to the questions before they
asked him. The FBI was in possession of tape-recorded
conversations between Dinora and both Cecil and Doris
Turner at the time agents interviewed Turner. During the
course of one of the recorded conversations, Doris, on
behalf of her husband, warned Dinora about the
Inspector General’s investigation and told him to be
careful about missing work. During a call a few days later,
Turner reminded Dinora about the Inspector General’s
involvement and told him to make sure his crew filled out
their leave slips. Turner argues that his statements
cannot have been material to the FBI’s investigation
because the agents had these and other conversations
on tape and therefore could not have been misled.
To be material for purposes of § 1001, a statement “must
have ‘a natural tendency to influence, or [be] capable of
influencing, the decision of the decisionmaking body to
which it was addressed.’ ” United States v. Gaudin, 515 U.S.
10 No. 07-1062
506, 509 (1995) (alteration in original) (quoting Kungys v.
United States, 485 U.S. 759, 770 (1988)); see also Kungys, 485
U.S. at 771 (The “central object” of the materiality
inquiry is “whether the misrepresentation or conceal-
ment was predictably capable of affecting, i.e., had a
natural tendency to affect, the official decision.”). We have
held, however, that “[u]nder section 1001 a false state-
ment may be material even though the agency did not
rely on it and was not influenced by it.” United States v.
Dick, 744 F.2d 546, 553 (7th Cir. 1984).
Similarly, we held in United States v. Ranum, that “it is
not necessary for an allegedly false statement to have
any ill effect at all, as long as it is capable of having such
an effect.” 96 F.3d 1020, 1028 n.12 (7th Cir. 1996). Other
circuits are in accord. See, e.g., United States v. White, 270
F.3d 356, 365 (6th Cir. 2001) (“If the false statements are
received by an agency, they may be material even if the
receiving agent or agency knows that they are false.”);
United States v. Sarihifard, 155 F.3d 301, 306 (4th Cir. 1998)
(“It is irrelevant whether the false statement actually
influenced or affected the decision-making process of the
agency or fact finding body.”); United States v. Service
Deli, Inc., 151 F.3d 938, 941 (9th Cir. 1998) (“[T]he test is
the intrinsic capabilities of the false statement itself,
rather than the possibility of the actual attainment of its
end as measured by collateral circumstances.”) (internal
quotation marks & citation omitted); United States v.
Edgar, 82 F.3d 499, 510 (1st Cir. 1996) (“[T]he standard is
not whether there was actual influence, but whether it
would have a tendency to influence.”); cf. United States v.
Baker, 200 F.3d 558, 561 (8th Cir. 2000) (“Materiality does
No. 07-1062 11
not require proof that the government actually relied on
the statement.”); United States v. Neder, 197 F.3d 1122,
1128 (11th Cir. 1999) (“[A] false statement can be mate-
rial even if the decision maker did not actually rely on
the statement.”).
In United States v. McBane, 433 F.3d 344 (3d Cir. 2005), the
Third Circuit rejected a materiality challenge quite
similar to the one Turner advances here. The defendant
was a local sheriff who confiscated a rifle from a suspect
and later sold it to an FBI informant. When questioned by
the FBI about the rifle, the defendant lied and told the
agent that it remained in the possession of the sheriff’s
department at all times. Id. at 347. The Third Circuit posed
the question presented as follows: “whether the test for
‘materiality’ necessarily requires that a false statement
be capable of influencing an actual, particular decision of
the agency at issue, or whether the test requires only that
a statement be of a type that would naturally tend to
influence a reasonable decisionmaking agency in the
abstract.” Id. at 350. Citing the materiality standard we
have quoted above, the court concluded that a state-
ment’s “natural tendency to influence” suggests not that
it must actually influence the agency but instead puts
the focus more broadly on the “qualities of the state-
ment in question that transcend the immediate circum-
stances in which it is offered and inhere in the statement
itself.” Id. at 351. The court held that the defendant
sheriff’s statements to the FBI were material—even though
the FBI already had the information from its infor-
mant—because the sheriff’s “misrepresentations, under
normal circumstances, could cause FBI agents to re-direct
12 No. 07-1062
their investigation to another suspect, question their
informant differently or more fully, or perhaps close the
investigation altogether.” Id. at 352.
Here, as in McBane, Turner’s statements to the FBI
probably had very little actual influence on the agents
because they were already in possession of incriminating
recorded conversations between Turner, his wife, and
Dinora. The agents were not likely swayed by Turner’s
false statements because he was on tape saying precisely
the opposite to Dinora. But the point of his telling
the agents that he did not learn of the trouble in the
Herndon Building in September 2005 was to cast
suspicion away from him, which in the ordinary course
would have an intrinsic capability—a “natural ten-
dency”—to influence an FBI investigation. The same is
true of Turner’s claim that he had not reprimanded any
of his employees for monitoring Dinora’s crew, as well as
his later denial that he asked his wife to call Dinora on
his behalf. Turner’s statements were aimed at misdi-
recting the agents, and this is enough to satisfy the materi-
ality requirement of § 1001.
B. Wire Fraud
The wire-fraud statute, 18 U.S.C. § 1343, makes it a crime
to use the interstate wires in “any scheme or artifice to
defraud, or for obtaining money or property by means of
false or fraudulent pretenses, representations, or prom-
No. 07-1062 13
ises.” 3 To convict a defendant of wire fraud, the govern-
ment must prove three elements: (1) the defendant par-
ticipated in a scheme to defraud; (2) the defendant in-
tended to defraud; and (3) a use of an interstate wire in
furtherance of the fraudulent scheme. United States v.
Radziszewski, 474 F.3d 480, 484-85 (7th Cir. 2007).
The government advanced two theories on the four
counts of wire fraud against Turner: (1) that he aided
and abetted the janitors’ fraudulent scheme to obtain
their full salaries while working only a fraction of their
required hours; and (2) that he deprived the State of Illinois
of its right to his honest services as Director of Physical
Services. The latter theory derives from 18 U.S.C. § 1346,
which provides that the term “scheme or artifice to de-
fraud” in the mail- and wire-fraud statutes “includes a
scheme or artifice to deprive another of the intangible
right of honest services.” Turner argues that the evidence
was insufficient to establish an honest services fraud and
that the use of the wires was not “in furtherance of” the
fraudulent scheme.
3
More fully, the wire-fraud statute, 18 U.S.C. § 1343 (2002),
read: “Whoever, having devised or intending to devise any
scheme or artifice to defraud, or for obtaining money or prop-
erty by means of false or fraudulent pretenses, representations,
or promises, transmits or causes to be transmitted by means
of wire, radio, or television communication in interstate or
foreign commerce, any writings, signs, signals, pictures, or
sounds for the purpose of executing such scheme or artifice,
shall be fined under this title or imprisoned not more than
20 years, or both.”
14 No. 07-1062
1. Honest Services Fraud
Turner argues that the evidence of an honest services
fraud was insufficient because he received no private
gain as a result of his participation in the janitors’ fraudu-
lent scheme. The “private gain” requirement is this
circuit’s gloss on the “honest services” variant of mail
and wire fraud and is meant to limit the potential for
overreach in prosecutions premised on § 1346. See United
States v. Sorich, 523 F.3d 702, 707-08 (7th Cir. 2008); United
States v. Bloom, 149 F.3d 649, 655 (7th Cir. 1998). “Section
1346 was added to the Criminal Code in 1988 to equate a
deprivation of honest services with deprivation of money
or property” under the mail- and wire-fraud statutes.
United States v. Orsburn, 525 F.3d 543, 546 (7th Cir. 2008).
But “given the amorphous and open-ended nature of
§ 1346 . . . , courts have felt the need to find limiting
principles, and ours has been that the ‘[m]isuse of office
(more broadly, misuse of position) for private gain is the
line that separates run-of-the-mill violations of state-
law fiduciary duty . . . from federal crime.’ ” Sorich, 523
F.3d at 707 (quoting Bloom, 149 F.3d at 655) (alteration
in original) (citation omitted).
There is no evidence that Turner received kickbacks or
otherwise personally profited from the janitors’ inflated
salaries. There was evidence that Dinora—in his “day job”
capacity as Assistant Superintendent in the Springfield
Public Works Department—routinely arranged for expe-
dited refuse removal at Turner’s home. But the govern-
ment did not suggest that this was the “private gain” for
purposes of its honest services fraud theory against Turner.
No. 07-1062 15
Rather, in closing argument the prosecutor maintained
that the private gain was the janitors’ unearned salaries,
not the preferential garbage collection. In its appellate
brief, the government conceded that on this point its case
had been flawed; it understood the private-gain require-
ment to mean that the defendant must have misused his
office for his own private gain. But in Sorich—issued after
this case was briefed and argued—we clarified that “[b]y
‘private gain’ we simply mean illegitimate gain, which
usually will go to the defendant, but need not.” 523 F.3d
at 709.
We noted in Sorich that “in most honest services cases,
the defendant violates a fiduciary duty in return for
cash—kickbacks, bribes, or other payments,” but ex-
plained that “[n]ot all [honest services] fraud cases follow
this precise pattern.” Id. at 707. The defendants in Sorich
had misused their public offices for the private gain of
third parties—campaign workers who were given civil-
service jobs. This was sufficient, we said, because “the
true purpose of the private gain requirement—and one
that does not depend on who gets the spoils—is to prevent
the conviction of individuals who have breached a fidu-
ciary duty to an employer or the public, but have not done
so for illegitimate gain.” Id. at 710. We observed that
although “someone up to no good will [usually] be out to
enrich himself, not others . . . , ‘[a] participant in a
scheme to defraud is guilty even if he is an altruist and
all the benefits of the fraud accrue to other participants.’ ”
Id. at 709 (quoting United States v. Spano, 421 F.3d 599, 603
(7th Cir. 2005) (alteration in original)). Because the defen-
dants in Sorich had “created an illegitimate, shadow hiring
16 No. 07-1062
scheme based on patronage and cronyism by filling out
sham interview forms, falsely certifying that politics
had not entered into their hiring, and covering up their
malfeasance,” the “hallmarks” of an honest services
fraud were present. Id. at 711.
Sorich thus makes the government’s concession in this
case unnecessary. But Turner’s challenge to the suf-
ficiency of the evidence of honest services fraud falls
short for another reason. The government argued that
because the evidence was sufficient to establish that
Turner aided and abetted a straightforward money or
property fraud, his wire-fraud convictions may be
affirmed despite any factual infirmity in its honest
services fraud case. We agree. It is well established that
when a case is submitted to a jury on two correct theories
of criminal liability, a general verdict is valid and will not
be set aside as long as the evidence supporting one of the
possible bases for conviction is sufficient. Griffin v. United
States, 502 U.S. 46, 59-60 (1991); United States v. Black, 530
F.3d 596, 602 (7th Cir. 2008). Although reversal is gen-
erally required when on a general verdict only one of two
bases for the conviction is legally sound, see Yates v. United
States, 354 U.S. 298, 311-12 (1957), the same is not true
when the issue is factual, not legal, insufficiency. When
“two correct theories of illegality are presented in the
instructions and there is sufficient evidence to convict
only on one[,] the jury is assumed to have followed the
instruction on the government’s burden of proof and
therefore to have rejected the insufficiently supported
theory.” Black, 530 F.3d at 602.
No. 07-1062 17
Here, Turner claims there was insufficient evidence of
his own private gain to support a conviction for honest
services fraud. We have explained that the private gain
need not be his own; the janitors’ private gain is sufficient
to support his conviction on an honest services fraud
theory. But the honest services alternative was unneces-
sary to Turner’s conviction in any event. The evidence
was quite enough to convict him for aiding and abetting
a conventional money or property fraud, and his convic-
tion may be affirmed on this basis. He does not argue
otherwise, except with respect to the “use of the wires”
element, to which we now turn.
2. The Use of a Wire
The mail- and wire-fraud statutes are not intended to
reach all frauds but only those in which a mailing or use
of an interstate wire is part of the scheme. Schmuck v.
United States, 489 U.S. 705, 710 (1989). The use of the mail
or wire need not be an indispensable part of the fraud to
satisfy the “in furtherance of” element of the offense; it
need only “be incident to an essential part of the
scheme . . . or a step in [the] plot.” Id. at 710-11 (alteration
in original) (internal quotation marks & citation omitted).
“In other words, the success of the scheme must in some
measure depend on the mailing [or wire transmission].” 4
United States v. Seward, 272 F.3d 831, 836 (7th Cir. 2001). The
4
Cases construing the mail-fraud statute are equally applicable
to cases involving violations of the wire-fraud statute. United
States v. Leahy, 464 F.3d 773, 786 (7th Cir. 2006).
18 No. 07-1062
defendant himself need not personally cause the mailing
or use of the wire; it is enough that the use of mail or
wire “will follow in the ordinary course of business, or
where such use can reasonably be foreseen, even though
not actually intended.” Pereira v. United States, 347 U.S. 1,
8-9 (1954) (“Where one does an act with knowledge that
the use of the mails will follow in the ordinary course of
business, or where such use can reasonably be foreseen,
even though not actually intended, then he ‘causes’ the
mails to be used.”); United States v. Hickok, 77 F.3d 992, 1004
(7th Cir. 1996). The mailing or use of the wires need not
itself contain false or fraudulent material; a “routine or
innocent” mailing or use of the wire can supply this
element of the offense, as long as the use of the mail or
wire is part of the execution of the scheme. Schmuck, 489
U.S. at 714-15; United States v. Brocksmith, 991 F.2d 1363,
1368 (7th Cir. 1993).
Here, the wire transmission was the direct deposit of
Dinora’s and Boyce’s inflated paychecks. Turner argues
that this use of the interstate wires was a regular part of
the janitors’ employment, unrelated to and therefore not
“in furtherance of” their fraudulent scheme. For support
he cites United States v. Kwiat, 817 F.2d 440 (7th Cir. 1987),
but we think the case is distinguishable. The fraudulent
scheme in Kwiat involved risky real-estate loans by bank
directors who persuaded investors to purchase condo-
miniums in which the directors had an interest. No
credit checks on the investors or appraisals of the property
were performed. When the loans eventually defaulted,
the bank lost more than $600,000. The directors were
No. 07-1062 19
charged with “honest services” mail fraud in violation of
§ 1341.5 The alleged mailings in furtherance of the fraud
occurred when the recorder of deeds mailed each
mortgage instrument back to the bank after it had been
recorded. We held that these mailings were not “in fur-
therance of” the fraudulent scheme because they “did not
make the fraud possible or facilitate it. . . . The mailings are
offshoots of the loans, but honest services would have
produced the same sort of mailings.” Id. at 443-44.
Kwiat is not analogous here, not least because it was
submitted to the jury solely as an honest services fraud
case. As we have explained, in this case the honest services
theory was merely duplicative; the evidence easily estab-
lished a traditional money or property fraud, so whether
the direct deposits were sufficiently incident to Turner’s
violation of his duty of honest services is beside the
point. See Orsburn, 525 F.3d at 546 (noting that “[s]ection
1346 is a definitional clause, not a separate crime”). The
janitors’ inflated wages—full-time pay for part-time
work—were at the heart of this money or property fraud,
and two of the three were paid by direct deposit. While
the after-the-fact mortgage mailings in Kwiat did not
5
The indictment followed our decisions in United States v.
George, 477 F.2d 508, 513 & n.6 (7th Cir. 1973), and United States
v. Dick, 744 F.2d 546, 550 (7th Cir. 1984), which adopted the
“intangible rights” theory of mail fraud. The Supreme Court
eliminated this theory in McNally v. United States, 483 U.S. 350,
360 (1987), and Congress restored it in 1988 with the passage
of § 1346.
20 No. 07-1062
facilitate or perpetuate the directors’ breach of their duty
of honest services, the direct paycheck deposits at issue
here were the main object of the fraudulent scheme, the
final step in the completion of the plot.
In Sorich, we noted that “courts have found that salaries
fraudulently obtained” are “money or property” for
purposes of a traditional mail- or wire-fraud offense.
523 F.3d at 713 (citing United States v. Doherty, 867 F.2d 47,
56, 60 (1st Cir. 1989)). Extrapolating from this point, we
held in Sorich that the civil-service jobs wrongfully
awarded to campaign workers were “property” within
the meaning of the mail-fraud statute. Id. If a salary
fraudulently obtained is “money or property” for pur-
poses of establishing a traditional mail or wire fraud, then
the receipt of that fraudulently obtained salary by means
of direct deposit completes the plot and is therefore “in
furtherance of” the fraudulent scheme.
Turner argues that if the direct deposit of a paycheck
can satisfy the use of the wires element of wire fraud,
then every employee who commits an act of malfeasance
on the job and is paid by direct deposit will be guilty of
wire fraud, and the reach of the statute will be unlimited.
If the conduct at issue involved an honest services
fraud alone—not a money or property fraud—we might
share this concern. That is, if a fiduciary breach (or other
act of employee dishonesty) plus a paycheck directly
deposited (or mailed, for that matter) were enough
for liability under § 1346’s alternative definition of “scheme
to defraud,” then the federal mail- and wire-fraud statutes
would potentially reach a vast array of fiduciary
No. 07-1062 21
and employee misconduct otherwise governed only by
state law.
In contrast, here, as we have noted, the evidence estab-
lished not a deprivation of honest services only but a theft
by fraud of money or property. The whole point of the
janitors’ scheme—the “money or property” object of
their scheme to defraud—was to obtain falsely inflated
salaries. Turner provided the supervisory cover for this
money-for-nothing scheme. That some of the fraudulently
obtained wages were paid by way of direct deposit sup-
plies the “use of the wires” element necessary to make
this a federal wire fraud.
Our decisions in Brocksmith and Hickok support this
conclusion. The defendant in Brocksmith was an insur-
ance agent who used his clients’ premium checks to pay
for his personal expenses. United States v. Brocksmith, 991
F.2d 1363 (7th Cir. 1993). He told his clients to mail their
checks—endorsed to him and not the insurance com-
pany—to his office. He delayed purchasing their actual
policies and instead expropriated the funds for his own
use or purchased a policy for a previous customer. He
also mailed required medical forms to two customers
and sent them postcards setting up meetings to buy more
time to cover their premiums. Id. at 1364-65. We held that
the mailing of the fraudulently obtained premium checks
was not only “incidental” to the defendant’s scheme, but
“it was his scheme.” Id. at 1367. The other mailings
allayed customers’ suspicions and covered up the defen-
dant’s fraudulent activity. “Use of the mails to lull victims
into a false sense of security, we have held, violates the
mail fraud statute, even if it occurs after the money has
22 No. 07-1062
been fraudulently obtained.” Id. at 1367-68 (citing United
States v. Chappell, 698 F.2d 308, 311 (7th Cir. 1983), cert.
denied, 461 U.S. 931 (1983)).
The defendant in Hickok submitted fraudulent sales
reports to a cellular phone company, and the company
mailed him commission checks based in part on those
reports. United States v. Hickok, 77 F.3d 992 (7th Cir. 1996).
We held that this use of the mails was “an essential part
of Hickok’s scheme to defraud” because “[i]n order to
receive commission money which he had not earned and
to which he was not entitled,” he had submitted false
sales reports to the cellular phone company, which in
turn sent him commission checks through the mail. Id. at
1004. “Obviously, the use of the mails to send commission
checks . . . followed in the ordinary course of business, or
was at least reasonably foreseeable by Hickok.” Id. (internal
quotation marks omitted).
In both Brocksmith and Hickok, the “money or property”
proceeds of the defendants’ fraudulent scheme were
received through the mail; in Brocksmith it was misap-
propriated insurance premiums and in Hickok it was
unearned commissions. Similarly here, the “money or
property” proceeds of the janitors’ scheme—their unearned
salaries—were received via wire transmission. That the
direct deposits were a routine part of their employment
does not make the use of the wires insufficient; even
“routine or innocent” mailings and wire transfers can
form the basis of a mail- or wire-fraud conviction if they
are part of the execution of the scheme. Schmuck, 489 U.S.
at 714-15; Brocksmith, 991 F.2d at 1368.
No. 07-1062 23
Accordingly, for the foregoing reasons, we A FFIRM
Turner’s convictions for making false statements in viola-
tion of § 1001 and for wire fraud in violation of § 1343.
12-30-08