Attorney Grievance Commission v. Klauber

Smith, J., delivered the opinion of the Court. This is the third time we have considered issues growing out of the mail fraud conviction of Gerald Ney Klauber, a member of the Maryland bar. This time we shall disbar. Bar Counsel, acting on behalf of the Attorney Grievance Commission, filed a petition with us seeking disciplinary ⁴⁴⁸ action against Klauber because he had been convicted of violating 18 U.S.C. § 1341 (1970) (mail fraud) and 18 U.S.C. § 1962 (1970) (racketeering).

It was alleged that Klauber had violated Disciplinary Rules 1-102; 2-103 (B), (C), (D), and (F); 3-103; 5-107 (A); 7-101 (A) (3); 7-102 (A) (2-8, inclusive); and 9-102. Pursuant to Maryland Rule BV9 we designated the Honorable David Ross, an associate judge of the Eighth Judicial Circuit of Maryland, to hear the charges. He found as a fact that Klauber "was found guilty by a jury in the United States District Court for the District of Maryland of 16 counts of mail fraud ... and one count of racketeering ... on April 21, 1978 and was sentenced to concurrent terms of 5 years imprisonment as to each count on June 21, 1978.” His conclusions of law were: 1. The federal crime of mail fraud ( 18 U.S.C. § 1341 ) is a crime involving moral turpitude. 2.

A lawyer who is guilty of the federal crime of mail fraud ( 18 U.S.C. § 1341 ) has violated the following disciplinary rules: DR 1-102(A)(3) DR 1-102(A)(4) DR 1-102(A)(5) These disciplinary rules specify that a lawyer shall ■ not engage in illegal conduct involving moral turpitude; conduct involving dishonesty, fraud, deceit, or misrepresentation; or conduct that is prejudicial to the administration of justice. In United States v. Klauber, 611 F.2d 512 (4th Cir. 1979), cert. denied, 446 U.S. 908 , 100 S. Ct. 1835 (1980), Judge Murnaghan summarized for the court the factual basis for the conviction: The scheme or artifice to defraud and the pattern of racketeering activity asserted against Klauber grew out of his conduct as a partner in the law firm of Fine and Klauber, P.A. The evidence at trial permitted a jury conclusion that Klauber was engaged in a practice in which, with respect to per ⁴⁴⁹ sonal injury cases in which he or his firm represented plaintiffs, Klauber sought inflated statements from doctors in which charges were set forth for visits by the plaintiffs which had not actually occurred. Subsequent to settlements with insurance companies based on such inflated statements from doctors, Klauber reduced the amounts actually remitted to the doctors and sometimes diverted amounts received in settlement with respect to one plaintiffs case to a doctor not involved in the case but retained with respect to some other plaintiff. [Id. at 513.] In his effort to avoid disciplinary action Klauber has filed a number of exceptions to the findings of fact and conclusions of law of the trial judge. They are all bound up, however, in his contention that the trial judge erred in ruling that the offenses of which Klauber was convicted "per se involve moral turpitude” and thus that it is improper to discipline Klauber without a development of the underlying issues.

He says, "It is obvious that this Court’s refusal to suspend Respondent for conviction of a crime involving moral turpitude means ipso facto that mail fraud need not, in every case, involve moral turpitude,” referring to Attorney Griev. Comm’n v. Klauber, 283 Md. 597 , 391 A.2d 849 (1978) (Klauber I). Such is not the case. We shall here attempt to dispel any false impressions which may have arisen as a result of that opinion, that in Attorney Grievance Comm’n v. Klauber, 284 Md. 306 , 396 A.2d 253 (1979) (Klauber II), and the one in Attorney Grievance Comm’n v. Reamer, 281 Md. 323 , 379 A.2d 171 (1977).

We shall first examine the federal statute and that which has been written relative to it. The statute provides: Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, or to sell, dispose of, loan, exchange, alter, give away, distribute, supply, or furnish or procure for unlawful use ⁴⁵⁰ any counterfeit or spurious coin, obligation, security, or other article, or anything represented to be or intimated or held out to be such counterfeit or spurious article, for the purpose of executing such scheme or artifice or attempting so to do, places in any post office or authorized depository for mail matter, any matter or thing whatever to be sent or delivered by the Postal Service, or takes or receives therefrom, any such matter or thing, or knowingly causes to be delivered by mail according to the direction thereon, or at the place at which it is directed to be delivered by the person to whom it is addressed, any such matter or thing, shall be fined not more than $1,000 or imprisoned not more than five years, or both. [ 18 U.S.C. § 1341 (1970).] No significant change has been made in the statute since 1909. The most recent opinion of the Supreme Court on this statute is Pereira v. United States, 347 U.S. 1 , 74 S. Ct. 358 , 98 L. Ed. 435 (1954), in which Chief Justice Warren said for the Court: The elements of the offense of mail fraud under 18 U.S.C. (Supp. V) § 1341 are (1) a scheme to defraud, and (2) the mailing of a letter, etc., for the purpose of executing the scheme.

It is not necessary that the scheme contemplate the use of the mails as an essential element. United States v. Young, 232 U.S. 155 . [Id. at 8.] In reviewing convictions under this statute the federal appellate courts consistently have said that to convict under this statute these elements must be established. They usually cite Pereira to this effect. See, e.g., United States v. Bohonus, 628 F.2d 1167, 1171 (9th Cir.), cert. denied, 447 U.S. 928 , 100 S. Ct. 3026 (1980); United States v. Wrehe, 628 F.2d 1079, 1082 (8th Cir. 1980); United States v. Jordan, 626 F.2d 928, 930 (D.C. Cir. 1980); United States v. Rodgers, 624 F.2d 1303, 1306 (5th Cir. 1980); United States v. Freeman, ⁴⁵¹ 619 F.2d 1112, 1117 (5th Cir. 1980); United States v. Brien, 617 F.2d 299, 307 (1st Cir.), cert. denied, 446 U.S. 919 , 100 S. Ct. 1854 (1980); DeMier v. United States, 616 F.2d 366, 369 (8th Cir. 1980); United States v. Kent, 608 F.2d 542, 545 (5th Cir. 1979), cert. denied, 446 U.S. 936 (1980); United States v. Corbin, 590 F.2d 398, 402 (1st Cir. 1979); United States v. McDonald, 576 F.2d 1350, 1359 (9th Cir.), cert. denied, 439 U.S. 830 (1978); United States v. Pearlstein, 576 F.2d 531, 537 (3d Cir. 1978); United States v. Foshee, 569 F.2d 401, 403 (5th Cir. 1978), cert. denied, 444 U.S. 1082 (1979); United States v. McNeive, 536 F.2d 1245, 1247 (8th Cir. 1976); United States v. Bush, 522 F.2d 641, 648 (7th Cir. 1975), cert. denied, 424 U.S. 977 (1976); United States v. Bryza, 522 F.2d 414, 421 (7th Cir. 1975), cert. denied, 426 U.S. 912 (1976); United States v. Payne, 474 F.2d 603, 604 (9th Cir. 1973); and United States v. Bessesen, 445 F.2d 463, 468-69 (7th Cir.), cert. denied, 404 U.S. 984 (1971).

In Jordan the court stated: During its deliberations the jury sent the following note to the court: "The indictment in count seven, charge one, mail fraud, cites approximately $110,000 as the proceeds involved in defendant’s alleged scheme to defraud. This is the first time such a sum has appeared and the evidence does not account for this total. Is this pertinent for the jury to know in arriving at a decision? If so, what is the explanation for the $110,000?” In response the court instructed the jury: The Government is not required to prove the details of a scheme: it is, however, required to prove beyond a reasonable doubt the following: that the defendant. .. willfully and knowingly devised a scheme or artifice to defraud .. . and, secondly, that the defendant used the United States Postal Service by mailing or by causing to be mailed some matter or thing for the purpose of executing the scheme to defraud. ⁴⁵² The instruction as given was correct in all respects. [Id. 626 F.2d at 930 .] In United States v. Grande, 620 F.2d 1026 (4th Cir.), cert. denied, U.S., 101 S. Ct. 98 (1980), Judge Winter said for the court: The thrust of § 1341 is upon misuse of the mails to defraud, not the regulation of state and municipal affairs.

United States v. States, 488 F.2d 761, 767 (8 Cir. 1973), cert. denied, 417 U.S. 909 , 94 S. Ct. 2605 , 41 L. Ed. 2d 212 , cert. denied, 417 U.S. 950 , 94 S. Ct. 3078 , 41 L. Ed. 2d 671 (1974). Defendants’ use of the mails, principally to give notice to proceed on contracts for demolition, to send checks in full or partial payment under fraudulently obtained demolition contracts and to mail a bill from one of the contractors for work performed under one such contract are, in our view, sufficiently related to the scheme to defraud to bring defendants within the reach of § 1341. Pereira v. United States, 347 U.S. 1, 8 , 74 S. Ct. 358, 362 , 98 L. Ed. 435 (1954); United States v. Mandel, supra, at 1360 n. 9; United States v. Brewer, 528 F.2d 492, 494 (4. Cir. 1975). [Id. at 1029-30.] In Freeman the court observed, "The indictment need not specifically charge, but the government must prove, 'a specific intent to commit fraud,’ United States v. Kent, 608 F.2d at 545 n. 3 ..., id. at 546 .” Id. at 619 F.2d at 1117 .

Law review articles upon the subject include Comment: Federal Prosecution of Elected State Officials for Mail Fraud: Creative Prosecution or an Affront to Federalism?, 28 Am. U. L. Rev. 63 (1978); Rakoff, The Federal Mail Fraud Statute (Parti), 18 Duq. L. Rev. 771 (1980); Comment: The Intangible-Rights Doctrine and Political-Corruption Prosecutions Under the Federal Mail Fraud Statute, 47 U. of Chi. L. Rev. 562 (1980); Comment, Survey of the Law of Mail Fraud, 1975 U. of Ill.

L. F. 237 (1975); and Comment: A Survey of the Mail Fraud Act, 8 Mem. St. U. L. Rev. 673 ⁴⁵³ (1978). The comment in the University of Illinois Law Forum and the article by Mr. Rakoff, former Chief of Business Frauds Prosecutions of the United States Attorney’s Office, for the Southern District of New York, contain comprehensive background information relative to the development of the mail fraud statute and the court decisions thereunder. Although the American University and University of Chicago articles are somewhat critical of use of the statute for some of the more recent prosecutions, no article disputes the fact that fraud is one of the elements of the crime which must be proved in order to obtain a conviction.

Mr. Rakoff states, "The truth ... is that at least since the 1909 amendment, the sole genuine purpose of the mail fraud statute has been to prosecute fraud and the mailing has served primarily as a basis for invoking federal jurisdiction.” Id. at 819 . Under Rule BV16 as it existed prior to July 1, 1978, Bar Counsel might petition us to suspend an attorney who was convicted of a crime involving moral turpitude. A petition for such a suspension was before us in Reamer, 281 Md. 323 . He, too, had been convicted of violation of 18 U.S.C. § 1341 (1970).

Chief Judge Murphy said for the Court relative to Reamer’s contentions: Reamer suggests that in recent years the mail fraud statute has been broadened in scope by decisions of the