Samuel Reisman v. United States of America, Joseph J. Byrnes v. United States

Appellants were convicted under 18 U.S.C. § 1341 of using the mails for the purpose of executing a scheme to defraud in connection with the subdivision and public sale of portions of the “Gamble Ranch” in Nevada. The pattern disclosed by the evidence is similar to that involved in two other cases recently before this court: Phillips v. United States, 356 F.2d 297 (9th Cir. 1965); and Windsor v. United States, 384 F.2d 535 (9th Cir. 1967).

Appellants’ principal contention is that reversal is required because complaint letters from disgruntled customers were used against the appellants in a way prohibited by the Phillips decision.

Phillips held that complaint letters alleging misrepresentation are relevant to show that a defendant had a specific intent to defraud because such an intent may be inferred from the defendant’s continued participation in a promotional venture after he has learned that the representations being made are misleading customers. However, as the court pointed out:

Accordingly, the court held, complaint letters are not admissible “on any theory of constructive notice to appellants based upon actual notice to other members of the asserted conspiracy” (304)…