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July 1, 1994

C. EUGENE DEFRIES, et al., Defendants.

The opinion of the court was delivered by: THOMAS PENFIELD JACKSON

 In this 10-count indictment the government charges 15 former union officials with multiple acts of conspiracy, corruption and racketeering in seizing control of the union and exercising the authority so acquired for their personal benefit. *fn1" Briefly summarized, the indictment alleges that from approximately September, 1984, through January, 1991, the defendants fraudulently procured their election and re-election to union offices, and, once in power, so managed the affairs of the union as to enrich themselves at union expense and otherwise to their advantage.

 Four counts charge ten of the defendants with mail fraud in violation of 18 U.S.C. §§ 1341 and 1346 on two dates in March, 1988, in connection with their alleged falsification of ballots cast by the union membership in a referendum conducted on a proposed merger with another union; the falsification of ballots cast for the election of national delegates and mailed in October, 1989; and the falsification of ballots mailed in October, 1990, for the election of union officers. *fn2" The defendants so charged have moved to dismiss those counts on the authority of McNally v. United States, 483 U.S. 350, 97 L. Ed. 2d 292, 107 S. Ct. 2875 (1987).


 Title 18 U.S.C., § 1341, declares it to be a federal crime to use the mails for the purpose of executing "any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises." It has been employed by the government on myriad occasions in the past to prosecute both public and private officials who exploited their offices for personal gain. In June of 1987, however, the Supreme Court decided the McNally case, reversing convictions of state officers who had made mailings in connection with a scheme to procure kickbacks from insurance underwriters to whom they had steered state business, but at no proven loss to the state. The Supreme Court held that the statute did not purport to criminalize generally dishonest conduct depriving the citizenry of their intangible right to good government, concluding that § 1341 was addressed, as a matter of legislative intent, to deceptions and false promises designed to cheat the victims of "property rights." 483 U.S. at 360. *fn3"


 Counts Three and Four at issue here allege that the defendants engaged in a scheme or artifice to "deprive members [of the union] of their property rights to vote and to participate in fair and honest elections," and to deprive the union itself of the "ballots" (presumably the legitimate votes of its members in good standing) regarding the 1988 merger referendum. (Indictment, P 88). Counts Six and Seven allege a scheme to deprive union members of their "right to democratic participation in [union] affairs . . . including the right to vote in secret and to participate in a fair and honest election [and] to the honest services of their union officers . . ." in connection with the 1989 and 1990 elections. ( Id., PP 98, 104).

 Defendants contend that, simply stated, none of those interests represent the "property rights" contemplated by McNally as enjoying protection under § 1341. Hence, Counts Three and Four, and Counts Six and Seven do not, according to defendants, charge offenses upon which they can be brought to trial. "Property rights," say the defendants, possess "minimum, irreducible characteristics" that separate property interests from all others; namely, they must have pecuniary value; they must be capable of ownership; and they must be transferable. (Memorandum of Law in Support of Defendants' Motion, pp. 4-10).

 The government responds that the integrity of any labor union's electoral process is guaranteed to its members by the union's own constitution and by-laws, and by the Labor Management Reporting Disclosure Act of 1959 ("LMRDA"), 29 U.S.C. §§ 411 et seq. (1988). It cites numerous cases -- all, unfortunately, civil cases -- decided under the LMRDA that speak of the rights of union members to participate in union affairs as being "economic," or "a source of wealth," or a means to a "livelihood." The government also analogizes to Hobbs Act cases, 18 U.S.C. § 1951 (1988), under which even allegations of criminal wrongdoing have been sustained against the contention that rights extorted from union members by threats or violence were not "property." See e.g., United States v. International Brotherhood of Teamsters, 708 F. Supp. 1388, 1397-99 (S.D.N.Y. 1989). *fn4"

 There are, however, obvious dangers presented for a lower court in assessing the implications of the McNally doctrine in a mail fraud prosecution by drawing upon learning from other lower court cases, decided under statutes other than 18 U.S.C. § 1341 (and for other purposes), and, in particular, cases antedating McNally. The Supreme Court decided McNally under § 1341, the very mail fraud statute at issue here, and it did so substantially upon what it discerned to be Congress' legislative intent. Moreover, there are at least three post-McNally circuit court decisions holding McNally to have effectively overruled older precedent allowing prosecutions under § 1341 for election frauds such as that charged here where the "victims," i.e., the bodies politic, had been deprived of no more than a fair election. *fn5" There are, apparently, no contrary decisions.

 Elsewhere in the Indictment (Count Five), five of the defendants are charged with embezzlement, aided and abetted by others, in that they allegedly devised a plan to make, and then purported to authorize, exorbitant lump sum "severance" payments to themselves in an aggregate amount of nearly $ 2 million. The ballots of the union members whose votes were allegedly usurped by the defendants in the 1988 merger referendum may hypothetically have enabled them to accomplish it. If so, the ballots were of immense value, and as assuredly "property" in the McNally sense, as, for example, electronic access cards that enable withdrawals to be made from depositors' bank accounts. They were, literally and figuratively, the keys to the union treasury.

 But the government does not allege the connection. Counts Three and Four allege only that the mail fraud with which the defendants are charged was intended to deprive the union and its members of a regular election in accordance with the union's constitution and by-laws. To be sure, the concept of an untainted election is less ambiguous than the notion of "good government" which the Supreme Court dismissed in McNally as unable to claim protection under § 1341. But it still partakes insufficiently of the qualities of property in the McNally sense in the opinion of three circuit courts of appeals. See Supra, note 6. This Court is not disposed to take issue with them, and Counts Three and Four of the Indictment will be dismissed.


 The operative dates for the offenses with which defendants are charged in Count Six are October 1, 1989, to November 30, 1989, and, in Count Seven, October 1, 1990, through December 31, 1990. Twice more, after 1988, the government alleges, the defendants corrupted the union's election processes (using the mails to do so) to produce results satisfactory to them ...

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