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Alabama Re Memorandum Opinion

Alabama Re Memorandum Opinion

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Published by Roger Shuler
Court opinion in an insurance-fraud case involving Alabama Reassurance.
Court opinion in an insurance-fraud case involving Alabama Reassurance.

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Published by: Roger Shuler on Jul 27, 2011
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11/17/2013

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IN THE UNITED STATES DISTRICT COURTFOR THE EASTERN DISTRICT OF PENNSYLVANIAUNITED STATES OF AMERICA:CRIMINAL ACTION:NO. 96-583v.::CIVIL ACTIONALLEN W. STEWART:NO. 00-6299MEMORANDUMBartle, J. June , 2001Before the court is the motion of Allen W. Stewart("Stewart") under 28 U.S.C. § 2255 to vacate, set aside, orcorrect sentence.Stewart was convicted by a jury in December, 1997 of135 counts of violating the Racketeer Influenced and CorruptOrganizations Act ("RICO"), 18 U.S.C. §§ 1961, etseq., as wellas federal mail fraud, wire fraud, and money laundering statutes.18 U.S.C. §§ 1341, 1343, 1957. The charges arose out ofStewart's involvement in a complex scheme to loot Summit NationalLife Insurance Company ("Summit") and Equitable Beneficial LifeInsurance Company ("EBL"). The jury also determined that certainof Stewart's assets were subject to forfeiture under the RICO andmoney laundering laws. On August 13, 1998 Stewart was sentencedto 15 years imprisonment, and an order of restitution in theamount of $60.1 million was entered against him. His convictionand sentence were subsequently affirmed by the Court of Appeals,United States v. Stewart, 185 F.3d 112 (3d Cir. 1999), and the
 
1. Title 18 U.S.C. § 1341 provides in relevant part:Whoever, having devised or intending todevise any scheme or artifice to defraud, orfor obtaining money or property by means offalse or fraudulent pretenses, ... places inany post office or authorized depository formail matter, any matter or thing whatever tobe sent or delivered by the Postal Service,..., or takes or receives therefrom, any suchmatter or thing, ..., shall be fined underthis title or imprisoned not more than fiveyears, or both.2. The wire fraud statute is identical to the mail fraud statuteexcept that the wrongdoer "transmits or causes to be transmittedby means of wire, ... any writings, signs, signals, pictures orsounds for the purpose of executing such scheme or artifice." 18U.S.C. § 1343.3. While Cleveland dealt only with the federal mail fraudstatute, it is also applicable to the federal wire fraud statute.SeeUnited States v. Tarnopol, 561 F.2d 466, 475 (3d Cir. 1977).-2-Supreme Court thereafter denied certiorari. Stewart v. UnitedStates, 528 U.S. 1063 (1999).I.Stewart's timely collateral attack first challenges hisconvictions for mail fraud under 18 U.S.C. § 1341
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and wire fraudunder 18 U.S.C. § 1343.
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To support his argument that theseconvictions must be vacated, Stewart relies on Cleveland v.United States, 531 U.S. 12, 121 S. Ct. 365 (2000), decided afterthe Supreme Court denied certiorari in this case, and thus afterhis conviction became final. Cleveland held that licenses issuedby states are not property within the meaning of the federal mailfraud statute.
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Since the mail fraud statute "requires theobject of the fraud to be 'property' in the victim's hands," the
 
4. We note that Stewart attempts to couch his Cleveland argumentas a nonwaivable jurisdictional defect of which there can be noprocedural default. We disagree with this characterization. InCleveland the Court interpreted the term "property" in adifferent, more restrictive manner than some lower courts had.In that sense it is analogous to cases such as Bailey v. UnitedStates, 516 U.S. 137 (1995), where the term "using" a firearm in18 U.S.C. § 924(c)(1) was redefined, and McNally v. UnitedStates, 483 U.S. 350 (1987), where the reach of the mail fraudstatute was restricted to exclude an intangible rights theory.Courts addressing the application of Bailey and McNally in post-conviction proceedings have not excused procedural default unlessthe test for doing so has been met. See, e.g.,Bousley v. UnitedStates, 523 U.S. 614 (1998);United States v. Osser, 864 F.2d1056 (3d Cir. 1988); United States v. Shelton, 848 F.2d 1485(10th Cir. 1988).-3-Court concluded that the use of fraud to obtain a state licensedoes not fall within the ambit of § 1341. Id. at 374. Thus,even though "licensees may have property interests in theirlicenses," using a scheme or artifice to defraud in order toobtain a license from a state regulator does not constitute aviolation of § 1341. Id.Before turning to the merits of Stewart's Clevelandargument, we must decide whether his claim is procedurallydefaulted.
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While Stewart raised the issue of licenses notconstituting property under the mail and wire fraud statutesprior to trial and in his certiorari petition, he did not assertit during his direct appeal. The Supreme Court most recentlyaddressed procedural default in Bousley v. United States, 523U.S. 622 (1998). See alsoUnited States v. Frady, 456 U.S. 152,167 (1982).Bousley made clear that the procedural default ruleapplies to claims arising under decisions like Cleveland whichhold "that a substantive federal criminal statute does not reach

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