United States of America v. Edwin David Wood, Ii

*The Honorable James S. Gwin, United States District Judge for the
Northern District of Ohio, sitting by designation.
1
RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
ELECTRONIC CITATION: 2004 FED App. 0111P (6th Cir.)
File Name: 04a0111p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v.
EDWIN DAVID WOOD, II,
Defendant-Appellant.
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No. 01-2548
Appeal from the United States District Court
for the Western District of Michigan at Grand Rapids.
No. 99-00132—Gordon J. Quist, District Judge.
Argued: October 22, 2003
Decided and Filed: April 19, 2004
Before: DAUGHTREY and GILMAN, Circuit Judges;
GWIN, District Judge.*
2 United States v. Wood, et al. No. 01-2548
_________________
COUNSEL
ARGUED: Kip T. Bollin, THOMPSON HINE, Cleveland,
Ohio, for Appellant. Richard S. Murray, ASSISTANT
UNITED STATES ATTORNEY, Grand Rapids, Michigan,
for Appellee. ON BRIEF: Kip T. Bollin, William B. Leahy,
THOMPSON HINE, Cleveland, Ohio, for Appellant.
Richard S. Murray, ASSISTANT UNITED STATES
ATTORNEY, Grand Rapids, Michigan, for Appellee.
GILMAN, J., delivered the opinion of the court, in which
DAUGHTREY, J., joined. GWIN, D. J. (pp. 23-41),
delivered a separate opinion concurring in part and dissenting
in part.
_________________
OPINION
_________________
RONALD LEE GILMAN, Circuit Judge. In August 1999,
Edwin David Wood, II was indicted on 22 counts of wire
fraud, mail fraud, and money laundering. These charges arose
out of two loan transactions that Wood arranged in 1994.
Wood pleaded not guilty. After a jury found Wood guilty on
21 of the 22 counts, the district court sentenced him to 168
months of imprisonment and ordered him to pay
approximately $570,000 in restitution. Wood appeals,
arguing that (1) certain jury instructions were erroneous,
(2) venue in the Western District of Michigan was improper
with regard to five of the seven mail fraud charges, (3) the
district court’s restitution order was excessive, and (4) the
government failed to produce sufficient evidence concerning
one of the loan transactions to support his conviction. For the
reasons set forth below, we AFFIRM Wood’s conviction and
sentence on all counts other than the mail fraud charges in
Counts 17-21, REVERSE Wood’s conviction on these latter

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No. 01-2548 United States v. Wood, et al. 3
counts for lack of proper venue, and, accordingly, REMAND
for resentencing.
I. BACKGROUND
The charges against Wood arise out of two loan agreements
executed by him in 1994. Wood orchestrated these
transactions from the Metropolitan Correctional Center
(MCC) in Chicago, a federal prison, between June 15 and
October 6 of 1994. While at the MCC, Wood worked
through First Financial Acceptance Company, Inc., which had
offices in Battle Creek, Michigan. First Financial personnel
did not disclose to the potential borrowers that Wood was in
prison as a convicted felon.
To attract customers, First Financial advertised in
publications such as the New York Times, the Wall Street
Journal, and Investors Business Daily, offering to lend up to
90% of the value of any eligible stock that the prospective
borrower owned. These ads generated a large number of
telephone inquiries. Wood kept track of these inquiries by
calling First Financial from prison and then having First
Financial personnel connect him to the prospective borrower
through call forwarding. Interested callers were sent a
package of documents compiled by Wood. These documents
included a Security and Pledge Agreement, which provided
in pertinent part as follows:
Lender [First Financial] shall hold the pledged shares as
security for the repayment of the loan and shall not
encumber the shares except in accordance with the
provisions of this Agreement. . . . In the event that
Pledgor defaults in the performance of any of the terms
of this Agreement, . . . Lender may, upon five (5) days
advance written notice to Pledgor, sent by certified mail,
and without liability for any diminution in price which
may have occurred, sell all of the pledged shares in such
manner and for such price as Lender may determine, at
any bona fide public sale, and Lender shall be free to
4 United States v. Wood, et al. No. 01-2548
purchase all or any part of the pledged shares at such
sale.
First Financial utilized a technique called “selling short
against the box” to fund the loans. (For a detailed description
of short-against-the-box transactions, see Edward D.
Kleinbard, Risky and Riskless Positions in Securities, TAXES,
December 1993, at 788). Neither in the Agreement nor in any
other communication with prospective borrowers did First
Financial disclose the use of short-against-the-box
transactions to fund the requested loans.
The first loan transaction at issue was with Robert Graham.
Graham wanted to retire a debt with the $230,000 that he
intended to borrow from First Financial. He pledged 70,000
shares of Sonic Environmental Systems stock as collateral.
Graham received a loan commitment from First Financial for
the $230,000 in June of 1994, but he did not receive any of
the loan proceeds until November of that year. At that time,
Graham received approximately $31,000. First Financial
made no other disbursements on its $230,000 commitment.
Meanwhile, on September 13 and 14 of 1994, a broker
acting on Wood’s instructions sold short 35,000 shares of
Graham’s Sonic Environmental Systems stock for $173,191.
The sale of Graham’s stock was supposed to be a short-
against-the-box sale, but because the broker was unable to
borrow 35,000 shares of Sonic Environmental Systems stock
in the open market, a short-against-the-box transaction could
not be executed. Instead, the short position was closed by
selling the 35,000 shares on the open market in October of
1994.
Graham was not told that half of his collateral had been
sold when he attempted to get his stock back in late 1994.
First Financial returned the remaining 35,000 shares of
Graham’s collateral to him in January of 1995. Graham later
sold the stock and paid the approximately $31,000 balance

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No. 01-2548 United States v. Wood, et al. 5
due on his loan. He never received the rest of his collateral
back.
The second transaction at issue in this case arises from a
loan First Financial made to Gordon Miller and his mother,
Ruth Miller. Ruth Miller pledged 8,167 shares of her
Comerica Bank stock as collateral for the loan, and Gordon
Miller received approximately $200,000 in loan proceeds in
September of 1994. First Financial sold Ruth Miller’s 8,167
shares of stock short against the box two days after closing on
the Millers’ loan. It received approximately $227,000 from
the sale. The government presented evidence at trial that, at
Wood’s direction, First Financial closed its short position in
Comerica by delivering Ruth Miller’s stock in December of
1994 to the broker who provided the shares sold short.
Although the stock was thus disposed of by First Financial
within three months of closing the loan transaction, Gordon
Miller continued to make loan payments through June of
1996. Ruth Miller never recovered her collateral from First
Financial.
In August of 1999, a federal grand jury returned a 22-count
indictment that charged Wood with 7 counts of wire fraud in
violation of 18 U.S.C. § 1343, 7 counts of mail fraud in
violation of 18 U.S.C. § 1341, 3 counts of money laundering
in violation of 18 U.S.C. § 1956(a)(1)(A)(i), 2 counts of
money laundering in violation of 18 U.S.C.
§ 1956(a)(1)(B)(i), and 3 counts of engaging in monetary
transactions with proceeds of a specified unlawful activity in
violation of 18 U.S.C. § 1957. Arguing that the district court
lacked venue to try certain mail fraud charges, Wood sought
dismissal of most of the mail fraud counts before trial, at the
close of the government’s case, and at the close of all of the
evidence. The district court denied all of these motions.
Wood also moved for acquittal under Rule 29 of the Federal
Rules of Criminal Procedure at the end of the government’s
case and at the close of all the evidence. The district court
denied these motions as well. After an eight-day trial in April
of 2001, a jury convicted Wood on 21 of the 22 counts. He
6 United States v. Wood, et al. No. 01-2548
was later sentenced to 168 months of imprisonment and
ordered to pay $570,025.83 in restitution. The district court
entered judgment on October 26, 2001. This timely appeal
followed.
II. ANALYSIS
A. Jury instructions
Wood claims that the district court erred in instructing the
jury that short sales against the box encumber the stock
pledged as collateral. He maintains that, as a matter of law,
such sales do not encumber the stock, thus making the court’s
instructions to the jury erroneous. Wood concludes that the
jury “was charged in a manner that allowed them to convict
him on insufficient grounds – for legal conduct.”
Because Wood did not object to the jury instructions at
trial, we review the instructions under the “plain error”
standard, considering whether “the instructions, when taken
as a whole, were so clearly wrong as to produce a grave
miscarriage of justice.” United States v. Sanderson, 966 F.2d
184, 187 (6th Cir. 1992). Plain error is a stringent standard.
See United States v. Cox, 957 F.2d 264, 267 (6th Cir. 1992).
This court in Cox noted that the Supreme Court and numerous
federal courts caution that the plain error doctrine should be
applied only “in exceptional circumstances, and solely to
avoid a miscarriage of justice. Recourse may be had to the
doctrine only on appeal from a trial infected with error so
‘plain’ the trial judge and prosecutor were derelict in
countenancing it.” Id. (quotation marks omitted).
Wood claims that the following instruction was erroneous:
The government has alleged, in part, that Defendant
Wood engaged in a scheme or plan to obtain money or
property by means of false or fraudulent pretenses,
representations, or promises and, more particularly, that

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No. 01-2548 United States v. Wood, et al. 7
a short sale against the box encumbers the securities in
the box.
The government concedes that this portion of the district
court’s instruction suggests that a short sale against the box is
a fraudulent transaction in and of itself. What followed this
portion of the instruction, however, is significant in
determining whether the instruction as a whole was
erroneous. The court continued:
A short sale is made by selling a security that the seller
does not own. This is different from a short sale against
the box. A short sale is “against the box” to the extent
that the separate account contemporaneously owns or has
the right to obtain at no added cost securities identical to
those sold. The owner of the account is considered the
owner of the shares deposited “in the box.”
The shares can be returned in one of two ways:
1. By delivering the shares held “in the box” – or in the
account; or
2. By purchasing in the market identical shares. If the
market value is higher than the amount received in the
short sale, then the account owner must come up with
more money than he received from the short sale. . . . If
the market value of the short sale goes down, then the
account owner must come up with less money than he
received from the short sale. . . . [I]f the account owner
is required to deliver the shares “in the box” to a third
person, like Mrs. Miller, for example, after she has repaid
her loan, he has to do two things:
a. Deliver the equivalent shares to the third person -
that’s Mrs. Miller – and
b. Cover with cash or shares the shares that were in the
box so that the broker is not at risk on the money paid to
the account holder at the time of the original short sale.
This instruction, when read in its entirety, explained how
the short sale against the box had to be covered so that the
collateral could be returned once the loan was repaid.
8 United States v. Wood, et al. No. 01-2548
Moreover, the jury instructions as a whole detailed the
elements of the alleged crimes and did not imply that a short
sale against the box was inherently a fraudulent transaction.
We therefore conclude that the jury instructions were not “so
clearly wrong as to produce a grave miscarriage of justice.”
United States v. Sanderson, 966 F.2d 184, 187 (6th Cir.
1992).
B. Venue
Wood claims that because the government did not prove by
a preponderance of the evidence that the checks forming the
basis of the mail fraud charges in Counts 17 through 21 were
sent from, received in, or moved through the Western District
of Michigan, venue in that district was improper.
Accordingly, Wood urges this court to reverse his convictions
on these counts.
Counts 17 through 21 allege that Wood, on five separate
occasions, “did cause to be deposited, sent and delivered by
mail . . . from Battle Creek, Michigan, to Ruth Miller in
Birmingham, Michigan, [checks] purporting to be Mrs.
Miller’s dividend check from her Comerica stock being used
as collateral for the First Financial loan to her son.” Before
trial, Wood moved unsuccessfully for the dismissal of Counts
17 through 21. At the end of the government’s case and again
at the close of all evidence, Wood moved, pursuant to Rule 29
of the Federal Rules of Criminal Procedure, to dismiss Counts
17 through 21 because of improper venue. The district court
denied these motions. Count 16 was also part of the Rule 29
motions, but Wood does not include that count in his
argument on appeal.
Both the United States Constitution and Rule 18 of the
Federal Rules of Criminal Procedure provide that a person
can be tried for a crime only where that crime was committed.
United States v. Cabrales, 524 U.S. 1, 6-7 (1998). The
Constitution requires that all criminal trials “shall be held in
the State where the said Crimes shall have been committed.”

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No. 01-2548 United States v. Wood, et al. 9
U.S. CONST. art. III, § 2, cl. 3. A similar guarantee is found
in the Sixth Amendment: “In all criminal prosecutions, the
accused shall enjoy the right to a speedy and public trial, by
an impartial jury of the State and district wherein the crime
shall have been committed.” U.S. CONST. amend. VI. Rule
18 of the Federal Rules of Criminal Procedure likewise
provides that “[u]nless a statute or these rules permit
otherwise, the government must prosecute an offense in a
district where the offense was committed.”
“[T]he locus delecti [of the crime charged] must be
determined from the nature of the crime alleged and the
location of the act or acts constituting it.” Cabrales, 524 U.S.
at 6-7. In determining the “locus delecti” of a crime, the
Supreme Court directs us to “initially identify the conduct
constituting the offense (the nature of the crime) and then
discern the location of the commission of the criminal acts.”
United States v. Rodriguez-Moreno, 526 U.S. 275, 279
(1999). Venue is therefore appropriate only in the district
where the conduct comprising the essential elements of the
offense occurred. The government must prove that venue was
proper as to each count charged. United States v. Crozier,
259 F.3d 503, 519 (6th Cir. 2001). Because venue is an
essential aspect of the government’s case, “[i]f the
government does not establish venue and the defendant
objects at trial, then an appellate court must reverse the
conviction.” United States v. Scaife, 749 F.2d 338, 346 (6th
Cir. 1984).
For venue purposes, this court has held that mail fraud is
a continuing offense governed by 18 U.S.C. § 3237(a).
United States v. Holt, Nos. 89-6070, 89-6092, 1990 WL
37613, at *1-2 (6th Cir. April 3, 1990) (unpublished opinion).
Section 3237 reads in pertinent part as follows:
(a) Except as otherwise expressly provided by enactment
of Congress, any offense against the United States begun
in one district and completed in another, or committed in
more than one district, may be inquired of and
10 United States v. Wood, et al. No. 01-2548
prosecuted in any district in which such offense was
begun, continued, or completed.
Any offense involving the use of the mails, transportation
in interstate or foreign commerce, or the importation of
an object or person into the United States is a continuing
offense and, except as otherwise expressly provided by
enactment of Congress, may be inquired of and
prosecuted in any district from, through, or into which
such commerce, mail matter, or imported object or
person moves.
The substantive offense of mail fraud, on the other hand, is
defined by the following portion of the federal mail fraud
statute:
Whoever having devised or intending to devise any
scheme or artifice to defraud . . . 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 deposits or causes to
be deposited any matter or thing whatever to be sent or
delivered by any private or commercial interstate carrier,
or takes or receives therefrom, any such matter or thing,
or knowingly causes to be delivered by mail or such
carrier 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 under this title or imprisoned not more than 20
years, or both.
18 U.S.C. § 1341.
Appropriate venue under the mail fraud statute is far from
clear in the present case because the government did not
allege that the checks at issue in mail fraud Counts 19-21
were either mailed from or received in the Western District of
Michigan. Rather, the government argues that venue in the

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No. 01-2548 United States v. Wood, et al. 11
Western District of Michigan was appropriate because the
offices of First Financial, located in the Western District of
Michigan, were used at every step of the scheme to defraud.
As a starting point, we note that in discussing the mail
fraud statute, court decisions have focused on the use of the
mails. The Ninth Circuit, for example, has stated that the
mail fraud statute protects the instrumentality of
communication “making the use of the mails . . . as part of a
fraudulent scheme an independent offense quite separate from
any other potentially illegal conduct.” United States v.
Garlick, 240 F.3d 789 (9th Cir. 2001) (emphasis in original).
See also United States v. Monostra, 125 F.3d 183, 187 (3d
Cir. 2001) (comparing the mail and wire fraud statute to the
bank fraud statute and commenting that “the mail and wire
fraud statutes do not penalize the victimization of specific
persons; rather, they are directed at the instrumentalities of
fraud.”) (emphasis added) (citations and quotations marks
omitted).
This concentration upon the use of the mails makes sense,
given that the use of the mails is what establishes federal
jurisdiction in these cases. Although “the use of the mails
need not be an essential element of the [fraudulent] scheme,”
Schmuck v. United States, 489 U.S. 705, 710 (1989), such use
is essential to federal jurisdiction, United States v. Mikell, 163
F. Supp. 2d 720, 729 (E.D. Mich. 2001). Without the use of
the mails, after all, the fraudulent scheme would be only a
state-law offense.
We have found only three cases that have directly
addressed a situation comparable to the present case where
the “base” location for the fraudulent scheme was in a
different district than the place of the mailings. Two of these
cases rejected the government’s expansive view of mail fraud
venue. See Kreuter v. United States, 218 F.2d 532, 534 (5th
Cir. 1955) (“[T]he gravamen of the offense is the use of the
mails. Therefore, [defendant] could be tried where he caused
a letter to be either mailed or delivered in furtherance of the
12 United States v. Wood, et al. No. 01-2548
scheme. The place where the scheme is conceived or put in
motion is immaterial, it is the place of mailing or delivery by
mail.”); United States v. Mikell, 163 F. Supp. 2d at 728
(holding that venue was inappropriate “for a prosecution
under § 1314 in a district where the mail matter did not move
from, through, or into, but where an aspect of the scheme to
defraud was devised and executed”).
The third case is United States v. Olen, 183 F. Supp. 212
(S.D.N.Y. 1960), which, although not a mail fraud case,
discusses the general venue statute for continuing crimes, 18
U.S.C. § 3237(a). In Olen, the district court granted the
defendant’s request to transfer venue in a securities fraud case
to the Southern District of Alabama where the scheme to
defraud was located, even though the mailings in furtherance
of that scheme occurred in the Southern District of New York.
Id. at 218. The district court focused on the second paragraph
of § 3237(a) that prescribes venue for mail fraud
prosecutions, even though mail fraud was not charged, yet
ignored the first paragraph of § 3237(a) that appears to justify
the court’s decision. We frankly find Olen’s reasoning
unpersuasive as it relates to the present case.
Also relevant to our inquiry are two Supreme Court
decisions, neither of which involved the mail fraud statute,
but both of which resolved venue challenges in a criminal
case. One is United States v. Cabrales, 524 U.S. 1 (1998),
where the government prosecuted Cabrales in Missouri for
illegal financial transactions in Florida. The Supreme Court
held that venue in Missouri was inappropriate, despite the fact
that the source of the funds was from drug trafficking in that
state, reasoning in part that the money laundering statutes
proscribed “only the financial transactions (acts located
entirely in Florida), not the anterior criminal conduct that
yielded the funds allegedly laundered.” Id. at 7.
The other relevant decision is United States v. Rodriguez-
Moreno, 526 U.S. 275 (1999), where a drug distributor and
his henchmen kidnaped another drug dealer in Texas and held

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No. 01-2548 United States v. Wood, et al. 13
him captive as they traveled through several states, including
New Jersey. Rodriguez was tried in New Jersey “for using or
carrying a firearm during and in relation to any crime of
violence.” Id. at 276 (citation and quotation marks omitted).
The Supreme Court rejected Rodriguez’s claim that venue
was appropriate only in Maryland, where the gun was actually
possessed. It reasoned that kidnaping is a continuing offense,
causing venue to lie in any district where the offense “was
begun, continued, or completed” as provided in the first
paragraph of 18 U.S.C. § 3237(a). Id. at 282. Aside from the
fact that neither Cabrales nor Rodriguez involved the mail
fraud statute, they point in different directions as to the
appropriate resolution of the case before us.
In the present case, the fraudulent scheme was not
separable from the mailings, which is the very reason why
Cabrales is not directly on point. If it were, then the venue
issue would not be an open question for us to resolve. But
Rodriguez is not directly on point either, because the decision
relied solely upon the first paragraph of 18 U.S.C. § 3237(a),
which provides, in pertinent part, that “any offense against the
United States begun in one district and completed in another,
or committed in more than one district, may be inquired of
and prosecuted in any district in which such offense was
begun, continued, or completed.” We are concerned here,
however, with the second paragraph of § 3237(a), which
specifically deals with any offense involving the use of the
mails: “Any offense involving the use of the mails . . . may be
inquired of and prosecuted in any district from, through, or
into which such . . . mail matter . . . moves.”
The dissent focuses in part on a “plain reading of the text”
to support its conclusion that venue for mail fraud may be
based on the situs of the scheme to defraud. (Dissenting Op.
41) But the “text” that the dissent focuses on is § 1341,
which creates the substantive offense of mail fraud, not
§ 3237(a), which deals specifically with the proper venue for
“any offense involving the use of the mails.” See United
States v. Holt, Nos. 89-6070, 89-6092, 1990 WL 37613, at
14 United States v. Wood, et al. No. 01-2548
*1-2 (6th Cir. April 3, 1990) (unpublished opinion) (holding
that 18 U.S.C. § 3237 governs venue in mail fraud cases);
United States v. Reitmeyer, 356 F.3d 1313 (10th Cir. 2004)
(discussing venue in mail fraud cases and noting that
“Congress specifically stated ‘any offense involving the use
of the mails . . . is a continuing offense’ for venue
purposes.”); United States v. Loe, 248 F.3d 449, 465 (5th Cir.
2001) (“As a ‘continuing offense,’ mail fraud may be
prosecuted in ‘any district in which such offense was begun,
continued, or completed.”).
The dissent questions whether the offense of mail fraud is
an “offense involving use of the mails . . . .” 18 U.S.C.
§ 3237(a). (Dissenting Op. 30) To the contrary, we believe
that the question virtually answers itself. If the plain meaning
of language is to be given any efficacy at all, how can the
offense of mail fraud not be an “offense involving the use of
the mails . . . .”? We find this court’s application of § 3237(a)
to the offense of mail fraud in Holt, as well as the Fifth and
Tenth Circuits’ discussion of the issue, more persuasive and
in line with common sense that the contrary Second Circuit
decision in United States v. Brennan, 183 F.3d 139 (2d Cir.
1999), that is relied upon so heavily by the dissent.
Consistent with this court’s previous decision in Holt, as well
as Reitmeyer and Loe, we believe that § 3237(a) is the
controlling statute on venue for mail fraud cases.
A plain reading of the text thus leads us to the conclusion
that venue in a mail fraud case is limited to districts where the
mail is deposited, received, or moves through, even if the
fraud’s core was elsewhere. Whether or not Congress could
constitutionally provide otherwise is not before us, because
the present language of § 3237(a) is determinative.
The dissent also focuses in part on fairness to the
defendant. (Dissenting Op. 40) We find this argument
puzzling in light of the fact that the government is the party
pressing for venue where the core of the fraudulent scheme
took place, not Wood. If public policy supports

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No. 01-2548 United States v. Wood, et al. 15
accommodating the accused by promoting “fairness,” then it
should support Wood’s desire to limit venue to where the
mailings took place. The dissent’s expansive interpretation
that would impose a different venue on Wood thus appears
contrary to public policy as expressed in § 3237(a).
Finally, we note the dissent’s concern that “[b]y applying
§ 3237(a) to mail fraud, the majority could permit the
government to hale a defendant into court in distant
jurisdictions having virtually no relation to the underlying
crime.” (Dissenting Op. 34) We would first observe that this
is not what happened in the case before us, nor is the dissent’s
concern consistent with Department of Justice Policy. United
States Department of Justice, United States Attorneys’
Manual 9-43.300 (1997) (“Department of Justice policy
opposes mail fraud venue based solely on the mail matter
passing through a jurisdiction.”). Second, the dissent’s
“parade of horribles” is really a challenge to § 3237(a) itself,
because the statute allows all “continuing offense[s]” to be
prosecuted “in any district from, through, or into which such
commerce, mail matter, or imported object or person moves.”
(Emphasis added.) We would note in this regard that the
dissent’s concern was evidently not shared by the Supreme
Court in Rodriguez, because the Court expressly held that the
defendant could be prosecuted under § 3237(a) for the illegal
possession of a firearm in New Jersey, through which he
traveled on his kidnaping odyssey, even though the gun was
actually possessed only in Maryland. United States v.
Rodriguez-Moreno, 526 U.S. 275, (1999).
We now turn our attention to the mail fraud charged in
Counts 17 and 18. Unlike Counts 19-21 discussed above,
where the government based venue solely on the existence of
a fraudulent scheme with a significant nexus to the Western
District of Michigan, the government argues that it proved by
a preponderance of the evidence that the checks involved in
Counts 17 and 18 were actually mailed from Battle Creek,
which is located within the district. Counts 17 and 18 refer to
checks signed by Jacqueline Johnson, an attorney based in
16 United States v. Wood, et al. No. 01-2548
Columbus, Ohio, who occasionally worked for Wood. The
checks are dated May 31, 1995, and August 28, 1995.
Johnson testified that she traveled to Michigan “quite a bit”
during “March, April, May, through probably late 1995 . . . .”
She noted that the bank account from which the two checks
were drawn was a Battle Creek account and that any checks
written when she was frequently traveling to Michigan “were
probably all written while we were visiting the offices in
Battle Creek.” Based upon this testimony, the government
argues that it proved that venue is proper as to Counts 17 and
18 by a preponderance of the evidence.
Wood counters that the undisputed evidence at trial showed
that the checks were sent to Ruth Miller in Birmingham,
Michigan, which is located in the Eastern District of
Michigan. He also points out that the evidence at trial
showed that the checkbook for the Battle Creek account on
which the checks were drawn was kept in Ohio and that the
dividend checks were generally sent from Columbus.
Moreover, Wood was in federal custody in Chicago during
the relevant time period and was therefore not personally
sending or receiving mail in the Western District of Michigan.
Johnson’s testimony that any checks written while she was
traveling in Michigan were “probably all written while we
were visiting the offices in Battle Creek” does not answer the
question at hand. In the first place, she had no specific
recollection that the particular two checks in question were in
fact written while she was in Michigan. Nor was she asked if,
after writing any checks in Battle Creek, she then mailed them
from Battle Creek. Under these ambiguous circumstances,
we conclude that the government failed to prove by a
preponderance of the evidence that Johnson actually mailed
the two checks at issue from the Western District of
Michigan. This precludes a finding that venue was proper
with respect to Counts 17 and 18. We therefore reverse
Wood’s conviction on these counts, as well as on Counts 19-
21, and remand for resentencing.

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No. 01-2548 United States v. Wood, et al. 17
C. Restitution
Wood also claims that the district court erred in imposing
restitution as a penalty for the Graham and Miller loan
transactions. The district court ordered Wood to pay
$125,000 in restitution to Graham and approximately
$445,000 in restitution to the Millers. We review de novo
whether a restitution order is permitted under the law. United
States v. Dunigan, 163 F.3d 979, 981 (6th Cir. 1999). If it is,
then the amount of restitution ordered is reviewed under the
“abuse of discretion” standard. Id. Because Wood did not
object to the restitution awards at sentencing, however, we
will not set aside the district court’s determination unless it
constitutes plain error. United States v. Bondurant, 39 F.3d
665, 668 (6th Cir. 1994).
The district court had authority under 18 U.S.C. § 3663 to
order Wood to pay restitution. This statute provides in
pertinent part as follows:
(B)(i) The court, in determining whether to order
restitution under this section, shall consider — (I) the
amount of the loss sustained by each victim as a result of
the offense; and (II) the financial resources of the
defendant, the financial needs and earnings ability of the
defendant and the defendant’s dependents, and such other
factors as the court deems appropriate.
Wood argues that the district court failed to consider his
financial situation as the statute mandates. The government
counters that because Wood refused to complete his personal
financial statement, he did not meet his burden under
18 U.S.C. § 3664(e), which provides in pertinent part as
follows:
Any dispute as to the proper amount or type of restitution
shall be resolved by the court by the preponderance of
the evidence. . . . The burden of demonstrating the
financial resources of the defendant and the financial
18 United States v. Wood, et al. No. 01-2548
needs of the defendant’s dependents, shall be on the
defendant.
Although he failed to complete his personal financial
statement, Wood’s presentencce report reflects that “[f]rom
April 1996 to the present [the date of the presentence report],
. . . he received $20,000 a year.” Wood’s failure to cooperate
and to complete his personal financial statement undercuts his
argument that the district court should have taken his
financial situation into account at sentencing.
The district court appears, however, to have had some
awareness of Wood’s financial situation, even without
Wood’s personal financial statement. After ordering Wood
to pay approximately $570,000 in restitution and a $5,000
fine, the court waived the fine because it found that Wood
“[did] not have the ability to pay a fine, because he can’t even
pay restitution probably. But he doesn’t have the financial
wherewithal to pay both certainly. So I’ll reverse myself and
waive the fine in this case.” Thus the district court apparently
had some understanding of Wood’s financial situation.
This court has taken a clear position against restitution
orders in amounts “that a defendant cannot possibly pay,”
reasoning that such restitution orders threaten “respect for
judicial orders generally and provide[] the defendant with less
incentive to seek remunerative, rehabilitative, and non-
criminal employment.” United States v. Dunigan, 163 F.3d
979, 982 (6th Cir. 1999) (quotation marks omitted). In the
present case, however, the record provides no basis to
conclude that the district court definitively knew that Wood
could not pay the award. Wood bore the responsibility of
providing the court with details of his financial situation. See
United States v. Hall, 71 F.3d 569, 573-74 (6th Cir. 1995)
(“The Sixth Circuit has held repeatedly that the district court
is not required to make findings on the defendant’s financial
condition.”). We conclude that the district court’s restitution
order does not rise to the level of plain error because Wood’s
lack of cooperation belies his argument that the order

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No. 01-2548 United States v. Wood, et al. 19
“affected the fairness or integrity of the judicial proceeding.”
United States v. Koeberlein, 161 F.3d 946, 952 (6th Cir.
1998).
Wood makes two additional arguments as to why the
restitution awards were erroneous. He contends that the
district court miscalculated the loss sustained by the Millers
because it failed to consider the Millers’ receipt and use of
loan proceeds that were never repaid. Wood also argues that
the court failed to consider that the Millers and Wood had
settled their claims against each other in a prior civil action.
These arguments fail, however, because evidence in the
record shows that the court did take these considerations into
account when ordering the restitution awards. And even if
the court had not taken these factors into account, we cannot
say that this would rise to the level of plain error in light of
Wood’s failure to object to the awards at sentencing.
Accordingly, we affirm the district court’s restitution awards.
D. Sufficiency of the evidence
Wood’s final argument is that, with respect to the Miller
transaction, the government failed to present sufficient
evidence for a rational trier of fact to convict him on Counts
7-11 and 16-22 of the indictment. He contends that (1) the
Millers breached their loan agreement, thus giving First
Financial the right under the Agreement to sell the Millers’
stock; (2) there was no sale as alleged in the indictment, only
a “short sale against the box”; and (3) the government failed
to show that Wood was being deceitful when he claimed in a
telephone conversation in August of 1996 to have 2,950
shares of Ruth Miller’s Comerica stock. When reviewing the
sufficiency of the evidence to support a criminal conviction,
the “relevant question is whether, after viewing the evidence
in the light most favorable to the prosecution, any rational
trier of fact could have found the essential elements of the
crime beyond a reasonable doubt.” Jackson v. Virginia, 443
U.S. 307, 319 (1979) (emphasis in original); see also United
20 United States v. Wood, et al. No. 01-2548
States v. Kincaide, 145 F.3d 771, 781 (6th Cir. 1998)
(employing the Jackson standard of review).
Wood first contends that, because the evidence at trial
demonstrated that the Millers defaulted on their loan, First
Financial had the right to sell the Millers’ Comerica stock
under the terms of the Agreement. The government counters
that the parties treated the loan as an outstanding debt through
1996, yet First Financial had in fact sold Miller’s collateral
long before it ever claimed that the Millers were in default.
First Financial closed on the Millers’ loan for $200,000 on
September 19, 1994. The government presented evidence at
trial that First Financial sold Ruth Miller’s 8,167 shares of
Comerica stock short against the box two days later.
According to the government, Wood directed First Financial
to cover its short position in Comerica stock by delivering
Ruth Miller’s stock to a broker, on December 8, 1994. This
means that less than three months after the Millers entered
into the loan agreement, First Financial had disposed of their
collateral.
The earliest default notice First Financial sent to Gordon
Miller was in the spring of 1995 and the latest was in early
1996. Gordon Miller made12 payments to First Financial
between October of 1994 and June of 1996, 10 of which were
made after Ruth Miller’s stock had been sold in December of
1994. Viewed in the light most favorable to the government,
this proof was sufficient for a jury to find that the Millers
were not in default at the time that First Financial sold their
collateral.
Wood next argues that the district court erred in denying his
Rule 29 motion to dismiss Count 8 of the indictment.
Count 8 alleged wire fraud due to the sale of the Ruth Miller’s
8,167 shares of Comerica stock on September 21, 1994.
Wood claims that there was no evidence of a “sale” of the
Comerica stock. According to Wood, the sale alleged in the
indictment never occurred because Ruth Miller’s Comerica

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No. 01-2548 United States v. Wood, et al. 21
stock was used as collateral for a short sale of someone else’s
Comerica stock. “Therefore, the Comerica stock posted by
the Millers as collateral for the loan from First Financial was
held by First Financial in a brokerage account in a short
against the box transaction.” Wood’s argument may be
semantically correct, but it is ultimately unpersuasive.
In response to Wood’s Rule 29 motion, the government
argued at trial that “the term ‘sale’ is sufficiently broad to
cover a sale short against the box at that time where
Ms. Miller’s stock was the collateral standing behind the loan
and became, in a sense, encumbered to fulfill the obligation
to restore the stock where it had been borrowed.” (Emphasis
added.) The government presented evidence at trial that Ruth
Miller’s Comerica stock was in fact disposed of on
December 8, 1994, to cover the short position created by the
September 21, 1994, transaction. This evidence was
sufficient to support Count 8 of the indictment. We therefore
find no error in the district court’s denial of Wood’s Rule 29
motion on Count 8.
Wood’s final argument concerns the sufficiency of the
evidence supporting the wire fraud charged in Count 22 of the
indictment. Count 22 alleged that Wood committed wire
fraud during a telephone call when he represented that 2,950
shares of Comerica stock in the account of Keystone
Financial, a successor to First Financial, was a portion of
Ruth Miller’s stock, when in fact Wood knew that the stock
was not hers. Wood argues that the government presented no
evidence at trial that the stock did not belong to Ruth Miller.
Ruth Miller testified at trial, however, that she became
suspicious about her stock’s whereabouts when her dividend
checks “were coming very late and they were not directly
from Comerica, which had been the practice up until then.”
She explained that no one had told her where her stock was
being kept and that she attempted to track it down on her
own. Miller finally engaged the help of an attorney, Michael
Herzoff, to assist her. Herzoff testified at trial that after
22 United States v. Wood, et al. No. 01-2548
attempting to find Miller’s stock, his “beliefs were . . .
confirmed . . . that the stock was not in existence any more.”
In addition to Ruth Miller’s and Michael Herzoff’s testimony,
Gordon Miller testified that his mother’s stock was never
returned to her.
This evidence, when viewed in the light most favorable to
the government, supports the allegation that Wood’s
telephone conversation, which is the subject of Count 22,
furthered a scheme to defraud because “[i]t lulled [Miller]
into believing her collateral was safe . . . when in fact it was
completely gone.” Accordingly, we find no error in the
district court’s denial of Wood’s Rule 29 motion with regard
to Count 22.
III. CONCLUSION
For all of the reasons set forth above, we AFFIRM Wood’s
conviction and sentence on all counts other than the mail
fraud charges in Counts 17-21, REVERSE Wood’s
conviction on these latter counts, and, accordingly,
REMAND for resentencing.

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No. 01-2548 United States v. Wood, et al. 23
______________________________________________
CONCURRING IN PART, DISSENTING IN PART
______________________________________________
JAMES S. GWIN, District Judge, CONCURRING, in part
and DISSENTING, in part. While agreeing with the well-
stated opinion of my colleagues on other issues, I respectfully
dissent regarding their determination that venue did not lie in
the Western District of Michigan under the mail fraud statute,
18 U.S.C. § 1341. In that district, the defendant, through
collaborators, engaged in a large portion of the fraudulent
activities involved with this case. Further, while I concur
with the majority opinion’s denial of a motion for acquittal,
I offer a somewhat different explanation why Defendant
Wood’s transactions were sales or encumbrances and not
“short sales against the box.” I begin by offering
supplemental reasoning regarding Wood’s claim that he
engaged in short sales against the box and that such
transactions were neither a sale nor an encumbrance of any
equities. I then turn to the majority’s finding that, in mail
fraud prosecutions, venue lies in the district where the
participants have mailed or delivered or through which
materials passed but not within the district that was the focus
of the fraudulent scheme.
I. Short Sales Against the Box
On appeal, Defendant Wood argues that, as a matter of law,
a short sale against the box is neither a sale nor an
encumbrance. First, the defendant argues that the jury
instructions that describe a short sale against a box as a “sale”
or an “encumbrance” were invalid. Second, the Defendant
argues that the evidence was insufficient to convict him
because his activities could not be a sale or an encumbrance.
The majority finds the trial court’s instructions were
balanced, neither suggesting nor rejecting that a short sale
against the box could be an encumbrance or a sale. I agree
24 United States v. Wood, et al. No. 01-2548
13 LA W SEC. REG. § 14 .22 (4 th Ed.).
with this finding, although I believe we should reject Wood’s
argument for a more fundamental reason–he offered
insufficient evidence to support a finding that the Graham and
Miller transactions were short sales against the box
transactions.
Long sales of securities occur when the owner of certain
stocks sells them, delivers them, and consequently pays taxes
on the profits. In short sales, an investor borrows stock,
typically from his broker, and sells that stock in the hopes that
he can later return the stock the investor had borrowed from
the broker with stock purchased at a lower price. If the price
of the security declines, the investor profits by the difference
between the price at which he sold the stock and the price at
which he later purchases the stock (minus any sales
commissions and margin fees that his broker assesses). Short
sales can also help customers avoid taxes. Short sale
transactions close when the short seller returns an equal
number of shares to the lender.
Short sales are risky. The short seller loses when the price
of the security rises and the cost of covering the borrowed
securities increases. Because no metaphysical cap exists on
how high a security price can rise, losses continue to increase
as the stock borrowed for the short sale gains value. The loss
is theoretically unlimited. As a result, “[a] material
misrepresentation concerning the risks of a short sale
transaction . . . can form the basis of a private suit under SEC
Rule 10b-5.”1
Short sales “against the box” differ from short sales by
attempting to reduce the risk associated with borrowing
stocks and agreeing to replace the borrowed stocks. In these
transactions, an investor already owns equities, but borrows
(generally through a broker) an equal number of shares of the
same class of stock to sell short in the open market. The

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No. 01-2548 United States v. Wood, et al. 25
investor posts the “long” (owned) shares as collateral. The
broker then generally holds the shares in a safety deposit
box–thus the name, “against the box.” The broker uses the
shares from the box to complete the short sale only if the
investor is unable or unwilling to return the borrowed stock.
Theoretically, those who invest “against the box” perfectly
hedge against market risk. If the market price of the stock
increases, this increases the value of their long (owned)
shares. Yet, if the market price decreases, this increases the
value of the short (borrowed) shares. While an investor will
not profit from a short against the box transaction–since
losses in the short or long transaction offset any gains in the
other–such transactions can allow investors to liquidate stock
without incurring taxes on the original sale.
Defendant Wood claims he did not defraud First Financial
customers because securities taken from customers’ accounts
were covered by an “in the box” transaction. With his
argument, the Defendant turns the idea of a short sales against
the box on its head. Most importantly, Wood’s argument fails
because he never had any long shares “in the box” to cover
the shares he borrowed in the short sale. Without permission,
Defendant Wood sold securities that customers had pledged
to secure loans the customers had received. At the time he
sold the pledged securities, no evidence showed that he
placed equivalent securities “in the box,” as required for a
short sale against the box.
Although he never covered the securities used, Wood tries
to overcome this problem by arguing that he could have
purchased shares to place “in the box” if his customers’ loans
were repaid: “Once borrowers from First Financial had
repaid their loans, First Financial had a pool of capital with
which to purchase securities in the open market to close the
short position, which would in turn free the borrower’s
pledged securities from ‘the box’ and allow their return to the
borrower.” (Def. br. at 12).
26 United States v. Wood, et al. No. 01-2548
This argument fails. Most important, the presence of
collateral to satisfy the short seller’s obligation to return the
borrowed shares distinguishes an “in the box” transaction.
Wood showed no evidence that he placed equivalent
otherwise-unencumbered securities “into the box.” For
example, the shorted security, Sonic Environmental Systems,
was very thinly traded and not readily obtainable. In essence,
Wood makes the argument that a transaction is a short sale
against the box if funds are available to cover the borrowed
security. If we accepted this argument, any trustee who
absconded with securities could characterize any short sale as
no sale. Even if Wood’s unsupportable argument were
allowed, he loses for another simple reason. Wood showed
no evidence that he dedicated funds to obtain replacement
shares for the Sonic Environmental Systems shares he had
shorted. The evidence showed that Wood used the Graham
proceeds to cover the loan to the Millers. In addition, Wood
offered no evidence that he maintained unencumbered assets
of any kind that would allow the purchase of cover for the
shorted stock.
Moreover, I am not convinced that it would make a
difference even if Defendant Wood could show the
transactions were short sales against the box. Even if his
assertions are true, the Government could still convict him for
fraudulent behavior.
The defendant argues that a short sale “against the
box”does not encumber the stock posted or make up a sale as
a matter of law. The defendant cites no authority for his
assertion that a short sale against the box can never be a
“sale” violating the Security and Pledge Agreement. Cf.
United States v. Rubin, 449 U.S. 424, 429, 431 (1981)
(expansively interpreting the words “sale” to hold that a
pledge of stock as collateral for a loan is a “sale”under the
Securities Act, even without a default on the loans).
The defendant goes on to assert that a short sale against the
box never amounts to an encumbrance, citing Schreiber v.

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No. 01-2548 United States v. Wood, et al. 27
First Fin. Acceptance, 965 F. Supp. 397 (E.D.N.Y. 1997).
The Schreiber case also involved Defendant Wood. The
Schreiber court found that “the question of encumbrance
amounts to whether the defendants could have returned the
securities to [plaintiff], at any given time, had [plaintiff]
repaid the loan in full.” Id. at 400. The Schreiber court
opined that short sales against the box do not encumber the
stock if the defendant maintained “sufficient equity in the
account” to satisfy margin requirements. Id. This holding
confuses short sales with short sales against the box. While
the former transactions depend upon margin requirements, the
later transactions revolve around posted shares, not the
availability of other assets that could be used to satisfy the
obligation to cover the borrowed shares. Furthermore, the
Eastern District of New York engaged in a unique definition
of equity when it considered outstanding payments on
Defendant Wood’s loan as collateral for the obligation to post
securities. Id. This definition, which Defendant Wood urges
the Court to adopt in the present case, is not persuasive.
Typically, to engage in a short sale, one must maintain a
margin account related to the market value of the borrowed
stock. Until Schreiber, speculative future earnings have never
been considered part of posted equity for purposes of
fulfilling margin requirements. Essentially, the Schreiber
court redefines securities law with its anomalous view of an
“encumbrance.” As a result, commentators have criticized
Schreiber as Aflagrantly wrong.@ See, e.g., Kenneth C.
Kettering, Repledge and Pre-Default Sale of Securities
Collateral under Revised Article 9, 74 CHICAGO-KENT L.
REV. 1109, n. 13 (1999) (“Schreiber seems flagrantly wrong
and is explicable only on the supposition that the court had
little patience with the suit because the secured party was in
fact solvent.”).
Moreover, Schreiber breaks from the momentum of
Supreme Court precedent. Recall that, in United States v.
Rubin, 449 U.S. 424, 429, 431 (1981), the Supreme Court
held that a pledge of stock as collateral for a loan is a “sale”
28 United States v. Wood, et al. No. 01-2548
under the Securities Act, even without a default on the loans.
Extending this holding to conclude that a short sale against
the box is an encumbrance of the stock would be logical.
Even if this court were to apply the questionable reasoning
of Schreiber, the facts of the Graham loan would still amount
to an encumbrance. The Schreiber court says that a defendant
must be prepared to return the securities upon payment of the
loan in full. Yet, Graham did repay his loan and Defendant
Wood did not produce his 35,000 shares of Sonic stock that
Graham had posted to secure the loan.
An analysis of the Miller case, under the common
definition of margin requirements, also reveals an
encumbrance. Wood sold the Millers’ Comerica stock on
December 8, 1994, less than three months after the Millers
pledged the stock to secure the loan to them. Defendant
Wood did not maintain long shares of Comerica stock “in the
box” nor did he post margin requirements. By the end of
December 1994, all that remained in that brokerage account
was $1,117. Because the price of stock can increase
dramatically, the only way to insure an economically feasible
purchase of stock to close a short sale is by posting margin
requirements before-the-fact. This court would need to
engage in pure fantasy to pretend that Wood did not
encumber the Miller stock–that Defendant Wood could
magically come up with identical shares when the Millers
repaid the loan. That the Comerica stock tripled in value by
May 1996 and Wood failed to produce replacement Comerica
stock drives this point home.
Ultimately, Defendant Wood argues that by considering a
short sale against the box as an unlawful sale or encumbrance,
the lower court allowed the jury to find that these types of
transactions are illegal. Nevertheless, the jury instructions
never say that a short sale against the box is per se an illegal
transaction. The jury instructions explain that the jury cannot
convict the Defendant apart from fraudulent behavior.
Nothing in the jury instructions says that engaging in a short

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No. 01-2548 United States v. Wood, et al. 29
2Technica lly, the Sixth Amendment addresses only “vicinage” (the
place from which jurors are to be selected) rather than ven ue. See United
States v. Brennan, 183 F.3d 139, 144 n.5 (2d Cir. 1999) (citing Charles
Alan W right, Federal Practice and Procedure: Criminal 2d § 301, at 190
(1982)). This distinction is meaningless, however, “because the
requirement that the jury be chosen from the state and district where the
crime was committed presupposes that the jury will sit where it is
chosen.” Id. (quoting United States v. Passodelis, 615 F.2d 975 , 977 n.3
(3d Cir. 1980)).
sale against the box, by itself, is fraudulent behavior. Rather,
the Grand Jury charged Defendant Wood with knowingly
deceiving investors about the status of their stock. The jury
convicted the Defendant of fraud, not for engaging in short
sales against the box, assuming we could so characterize his
transactions. Summarizing, Wood fails to show that he ever
posted covering shares for the stock that he sold short.
Additionally, he fails to offer evidence that he had the
resources to provide covering shares for the stock that he sold
short. Having failed to give any evidence that his short sale
of the pledged securities was covered, he cannot argue that
there was no sale or encumbrance of the securities that Miller
and Graham had pledged to secure their loans.
II. Venue
In a criminal case, the question of venue has not only
pragmatic, but also constitutional implications. Article III
requires that “[t]he Trial of all Crimes . . . shall be held in the
State where the said Crimes shall have been committed.”
U.S. CONST. art. III § 2 cl. 3. The Sixth Amendment takes
this requirement a step further by requiring that the trial take
place in the same district as that in which the crime was
allegedly committed. U.S. CONST. amend. VI. (“In all
criminal prosecutions, the accused shall enjoy the right to . . .
trial, by an impartial jury of the State and district wherein the
crime shall have been committed[.]”).2 Various federal
statutes further define these provisions. See, e.g., Fed. R.
Crim. P. 18 (“Except as otherwise permitted by statute or by
30 United States v. Wood, et al. No. 01-2548
these rules, the prosecution shall be had in a district in which
the offense was committed.”); 18 U.S.C. § 3237, infra. Read
as a whole, these provisions manifest a strong constitutional
policy disfavoring trials removed from the situs of the alleged
criminal activity.
A. Applicability of 18 U.S.C. § 3237(a)
The general venue provisions for continuing offenses are
found at 18 U.S.C. § 3237. Section 3237(a) reads, in relevant
part, “Any offense involving use of the mails . . . is a
continuing offense and . . . may be . . . prosecuted in any
district from, through, or into which such . . . mail matter . . .
moves.” The majority states that mail fraud is such a
continuing offense. After referencing that provision, the
majority finds that venue exists where mail related to the
fraud “is deposited, received, or moves through, even if the
fraud’s core was elsewhere.” Majority opinion at ¶ 28. I
cannot agree.
Section 3237 has a limited application. The Supreme Court
has long noted that § 3237 is inapplicable to statutes which
contain their own specific venue provisions. See Travis v.
United States, 364 U.S. 631, 636-37 (1961) (“[V]enue should
not be made to depend upon the chance use of the mails,
when Congress has so carefully indicated the locus of the
crimes.”); see also United States v. Brennan, 183 F.3d 139,
147 (2d Cir. 1999). Furthermore, the second paragraph of
§ 3237(a) broadly refers to offenses involving the “use of the
mails.” Thus, any statutes which do not so broadly
criminalize acts involving the “use of the mails” are not likely
covered under § 3237. See infra.
In United States v. Brennan, 183 F.3d 139, the Second
Circuit spoke to the applicability of § 3237 to the mail fraud
statute. In Brennan, the government argued that venue was
appropriate under § 3237(a) because mail had moved through
the Eastern District of New York. The Second Circuit

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No. 01-2548 United States v. Wood, et al. 31
rejected this argument and found that § 3237(a) does not
establish venue in mail fraud cases:
Defendants maintain . . . that § 3237(a) does not apply to
mail fraud prosecutions. Their argument rests on the
contention that the mail fraud statute does not proscribe
conduct involving “the use of the mails” within the
meaning of § 3237(a). We agree. Though perhaps
surprising, this conclusion is strongly supported by
consideration of the history and purpose of § 3237(a) and
the constitutional protection of defendants' venue rights.
Id. at 146.
Examining the legislative history of § 3237(a), the Second
Circuit found that this venue provision was enacted in
response to the Supreme Court’s opinion in United States v.
Johnson, 323 U.S. 273 (1944), where the Court articulated a
rule favoring restrictive construction of venue provisions. In
Johnson, the defendant had been charged with an offense
involving “use [of] the mails or any instrumentality of
interstate commerce.” Finding there was insufficient venue
under the continuing violation provision of the first paragraph
of § 3237(a), the Court overturned the conviction. In
response to the Court’s ruling in Johnson, Congress expanded
§ 3237(a) by adding a second paragraph expanding
continuing violations to include “the use of the mails.”
Brennan, 183 F.3d at 146.
Against this backdrop, the Second Circuit in Brennan held
that mail fraud is not a continuing violation and,
consequently, that § 3237 is inapplicable to the mail fraud
statute:
[W]e agree with defendants that § 3237(a) is best read as
not applying to statutes, like the mail fraud statute, that
specify that a crime is committed by the particular acts of
depositing or receiving mail, or causing it to be
delivered, rather than by the more general and ongoing
32 United States v. Wood, et al. No. 01-2548
3The Brennan court cited the following code sec tions:
18 U.S.C. §§ 43(a)(1) (animal enterprise terrorism); 514(a)(3)
(false or fictitious instruments or obligations; 844(e) (threats or
false statements concerning explosive materials); 1461 (ob scene
or crime-inciting matter); 17 17(b) (miscellaneous no nmailable
matter); 1735(a)(1)(sexually oriented advertisements; 1738(a)
(private identification documents without disclaimer); 1952(a)
(various unlawful activities); 21 01 (inciting, and other activity
connected to, riots); 2332b (b)(1)(A ) (acts of terrorism
transcending national bounda ries).
183 F.3d at 147.
act of “us[ing] the mails.” Rather than make a defendant
like Brennan subject to prosecution in any district
through which a mail truck carrying his mail happened to
drive (or perhaps even in any district over which an
airplane carrying the mail happened to fly, or in which it
happened to make an interim stop), we think Congress's
more particularized and careful phrasing in the mail fraud
statute takes it outside the scope of § 3237(a) and is best
read less expansively.
Id. at 147 (brackets in original). This well-reasoned decision
also is consistent with dicta from the Third Circuit. See
United States v. Turley, 891 F.2d 57, 60 (3d Cir. 1989)
(acknowledging and approving government concession that
“18 U.S.C. § 3237 . . . is not applicable to mail fraud.”).
A close comparison of the text of § 3237(a) with that of the
mail fraud statute, 18 U.S.C. § 1341, compels this conclusion.
Recall that § 3237(a) applies to crimes involving “use of the
mails.” As the Brennan court noted, “[t]here are today many
. . . statutes that expressly prohibit ‘use of the mails’ in
connection with various activities for various purposes.” 183
F.3d at 147.3 Mail fraud, however, “specif[ies] that a crime
is committed by the particular acts of depositing or receiving
mail, or causing it to be delivered, rather than by the more
general and ongoing act of ‘us[ing] the mails.’” Id. (second
brackets in original). Had Congress intended to include mail
fraud as a “continuing offense” under § 3237(a), it would

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No. 01-2548 United States v. Wood, et al. 33
have defined mail fraud as involving “use of the mails.” Its
refusal to do so, especially considered in light of the
numerous statutes invoking “use of the mails,” is a
compelling reason not to apply § 3237(a) to mail fraud.
Furthermore, § 3237 is inapplicable to statutes which
contain their own venue provisions. See Travis, 364 U.S. at
636-37 (1961). Section 1341 specifically defines the locus of
mail fraud prosecutions as the situs of “scheme or artifice to
defraud,” or the location where the defendant “places”,
“causes to be deposited”, or “takes or receives” an item for
delivery through the Postal Service. 18 U.S.C. § 1341. These
provisions expressly contemplate the acts which trigger venue
and preempt the more general venue provisions contained in
§ 3237(a). See id. at 147.
Based on these considerations, the United States
Department of Justice policy opines that § 3237 is
inapplicable to the mail fraud statute: “The locus for mail
fraud prosecutions is specifically set forth in section 1341;
since Congress has ‘otherwise expressly provided [the situs
for venue],’ section 3237 is inapplicable to mail fraud.”
United States Department of Justice, Criminal Resource
Manual 966 (1997).
Moreover, the majority’s holding that a prosecutor can
establish venue in any district that the mail moves through is
extremely expansive, and invites conflict with the
Constitution’s guarantee that trials be held at the location of
the crime. The Sixth Amendment’s requirement that
defendants be tried in the district where their alleged crimes
took place reveals a policy against enhancing the already-
onerous burdens of trial by establishing venue in a far-off
locale. The majority’s reasoning impairs this important
34 United States v. Wood, et al. No. 01-2548
4 The Supreme Court’s opinion in United States v. Johnson reflects
the imp ortance of this p olicy:
Questions of venue in crim inal case s, therefore, are not merely
matters of formal legal procedure. They raise deep issues of
public policy in the light of which legislation must be construed.
If an enactme nt of Congress equally permits the underlying spirit
of the constitutional concern for trial in the vicinage to be
respected rather than to b e disrespected, co nstruction should go
in the direction of constitutional policy even though not
com manded by it.
323 U.S. 273 , 276 , (194 4).
5As the Second Circuit recognized in Brennan, this might be the case
even if the mail did not travel through the Kansas City distribution center,
but merely traveled in an airplane that crossed over Missouri airspace en
route to California. See Brennan, 183 F.3d at 147.
constitutional policy.4 By applying § 3237(a) to mail fraud,
the majority could permit the government to hale a defendant
into court in distant jurisdictions having virtually no relation
to the underlying crime. To illustrate, consider a defendant
who initiated a Ponzi scheme by mailing letters from
Cleveland soliciting “investments” to residents of California.
Suppose further that the U.S. Postal Service routs mail from
Cleveland to California through a postal center in Kansas
City. The defendant could potentially be forced to stand trial
in Kansas City despite the fact that his mail fraud concerned
nary a Missourian.5 This example shows how Government
could use this expansive interpretation of venue to increase
the burden of defending a case in federal court.
The majority argues that using § 3237 does not expand
Wood’s vulnerability to suit in far-away jurisdictions.
Although true in this case, the majority’s holding greatly
expands the number of locations other defendants may be
summoned to. Indeed, future defendants will likely be
summoned to trial in a distant jurisdiction merely because the
postal system happened to route a piece of mail though that
location. As I see it, this outcome plainly violates the
constitutional policy, expressed in Article III and the Sixth

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No. 01-2548 United States v. Wood, et al. 35
6The majority aptly notes that the current policy of the United Stated
Department of Justice (“DOJ”) “opposes mail fraud ve nue based solely
on the mail matter p assing through a jurisdiction.” United States
Attorney’s Manual 9-43.300 (1997). However, such a policy does not
resolve the dissent’s concerns that defendants may be tried in a distant
district based on the tenuous connection that a piece of mail passed
though this location. § 3 237 (a). First, the DO J policy is based on the
presumption that § 3237 is inapp licable to mail fraud – a presumption
which this court contradicts. See Criminal Resource Manual at 966.
Second, the DOJ policy is not binding law. Indeed, the policy does not
even presume to bind the United States Attorneys as it “opposes” such an
app lication o f the law but does not “prohibit” it.
Amendment, against exacerbating the burdens of trial by
establishing venue in far-away locations.6
B. Appropriateness of Venue Where the Scheme Was
Hatched
At the outset of this discussion, I wish to highlight that this
case presents an unusual factual setting for discussing venue
under the mail fraud statute. Typically, the district where a
defendant set up and carried the scheme to defraud also is the
place from which mail was sent or received. Thus, most
federal courts have never addressed whether venue under
§ 1341 is also appropriate where the defendant carried out the
scheme to defraud, in the rare circumstances that a mailing is
not easily traceable to that area. Only a handful of district
courts have dealt directly with the matter and they have not
come to any consensus. Compare United States v. Mikell,
163 F. Supp. 2d 720, 728 (E.D. Mich. 2001) (holding that
venue was proper in any district through which the mail
moved), with United States v. Olen, 183 F. Supp. 212, 218
(S.D.N.Y. 1960) (holding that venue was proper in the district
where the defendants initially devised their fraudulent
scheme). As district courts take opposing sides on the issue,
the only thing that is clear is that the law is unclear.
Thus, no binding precedent exists from the Sixth Circuit
Court of Appeals (or any other circuit) addressing the
36 United States v. Wood, et al. No. 01-2548
7The Sixth Circuit has not previously addressed the applicability of
§ 3237(a) to the mail fraud statute in a p ublished op inion. T he ma jority
cites to the unpublished opinion of United States v. Ho lt, Nos. 89-6070,
89-6092, 899 F.2d 15, 1 990 W L 37 613 (6th C ir. Apr. 3, 1990). In the
Sixth Circuit, unpublished decisions “carry no precedential weight [and]
have no binding effect on anyone other than the parties to the ac tion.”
Sheets v. Moo re, 97 F.3d 1 64, 1 67 (6th Cir. 199 6).
The majo rity also cites Kreuter v. United States, 218 F.2d 532 (5th
Cir. 195 5) for the pro position that ve nue would not be appropriate at the
locus of the scheme to defraud apart from a mailing. The dicta o f Kreuter
states: “The place where the schem e is conceived or put in motion is
immaterial”to venue . Id. at 534. However, this case more narrowly holds
that venue is appropriate at the place of a ma iling or delivery by mail,
even if the scheme to defraud did not occur in that jurisdiction. I do not
dispute this finding, indicating the deposit of mail establishes venue under
§ 134 1. W hat is at dispute here is whether a trial for mail fraud cannot
take place at the locus of the scheme to defraud without a mailing. The
Fifth Circuit does not address this point in Kreuter and the dicta in
Kreuter canno t amount to a F ifth Circuit holding on the matter.
appropriateness of venue in the present matter.7 The Eastern
District of Michigan, in Mikell, notes that the Sixth Circuit
never before has decided the matter: “This issue is a novel
one, especially in light of the Supreme Court decision in
Rodriguez-Moreno.” 163 F. Supp. 2d 720, 728 (reversed on
other grounds). Further, in Brennan the Second Circuit –the
only other Circuit to decide (albeit in passing) whether venue
under § 1341 can be based on the scheme to
defraud–described the lack of clarity in this area of the law:
“We cannot tell whether the reasoning of [the Supreme Court
in] Rodriguez-Moreno would make venue appropriate for a
prosecution under § 1341 not only in districts where mail
matter was sent or received in furtherance of a fraud [sic]
scheme, but also in any district where any aspect of the
‘scheme or artifice to defraud,’ 18 U.S.C. § 1341, was
practiced.” 183 F.3d 139, 145 (2d Cir. 1999) (emphasis
added).
Given that this ruling sets precedent regarding the scope of
venue under § 1341, we should look to the text of the statute,
the legislative history, the Supreme Court’s mandates for how

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No. 01-2548 United States v. Wood, et al. 37
to interpret the statutory text in such situations, and public
policy concerns. I fear that the majority adopts a frame of
analysis that ignores great inconsistencies and practical
difficulties created by its approach.
In United States v. Rodriguez-Moreno, 526 U.S. 275
(1999), the Supreme Court addressed how to decide where
venue lies. To decide whether venue is appropriate “a court
must initially identify the conduct making up the offense (the
nature of the crime) and then discern the location of the
commission of the criminal acts.” Id. at 279. The Supreme
Court has said that the “locus delicti [of the charged offense]
must be determined from the nature of the crime alleged and
the location of the act or acts constituting it.” United States
v. Cabrales, 524 U.S. 1, 6-7 (1998) (quoting United States v.
Anderson, 328 U.S. 699, 703 (1946)). The Rodriguez-
Moreno Court recognized that essential conduct elements may
be “embedded in a prepositional phrase and not expressed in
verbs,” and asserted that verbs are not “the sole consideration
in identifying conduct that constitutes an offense.” Id. at 280.
A study of the mail fraud statute will clarify the essential
conduct elements of the statue.
The mail fraud statute describes the central acts forbidden:
“Whoever, having devised or intending to devise any scheme
or artifice to defraud . . . places, . . . deposits, or causes to be
deposited . . . or knowingly causes to be delivered [mail
matter]. . . shall be fined under this title or imprisoned not
more than 20 years. . . .” 18 U.S.C. § 1341. The mail fraud
statute therefore involves (1) a scheme to defraud and (2) a
deposit or a delivery of mail. The majority asserts that venue
is proper where mail is placed, deposited, travels through or
is delivered through the postal system. The majority does not
pay heed to the critical phrase of § 1341–“[w]hoever, having
devised or intending to devise any scheme or artifice to
defraud.” The ultimate dispute is one of textual
interpretation.
38 United States v. Wood, et al. No. 01-2548
8These remarks were made during the debate on H.R. 229 5, the
recodification legislation introduced during the 41st Congress. The
recodification bill was not passed by the 41st Congress, but was
reintroduced and passed by the 42d Congress with the antifraud section
intact. Act of June 8, 1872, ch. 335, §§ 149 and 301, 17 Stat. 302 and 323.
First of all, the text of the statute establishes that venue is
appropriate in the district encompassing the situs of the
scheme to defraud. Applying the standard established in
Rodriguez-Moreno, the scheme to defraud is the more
essential conduct element in mail fraud. As the statute reads,
the mailings themselves are illegal only to the extent that they
further an ongoing fraudulent scheme. See, e.g., United
States v. Griffith, 17 F.3d 865, 874 (6th Cir.1994). In this
sense, the mailing is merely a jurisdictional “hook,”
secondary in importance to the substantive scheme.
Additionally, the mail fraud statute’s legislative history
supports the conclusion that the fraud, and not the mailing, is
the central conduct of the mail fraud offense. The legislative
history that exists establishes that, when enacting the mail
fraud statute, Congress primarily concerned itself with the
alleviation of fraud, not the protection of the mails. In 1948,
Congress passed the current mail fraud statute, codified in
part at 18 U.S.C. § 1341. The modern statute stems from a
predecessor statute, originally enacted in 1872 as part of the
recodification of the postal laws. The legislative history for
the mail fraud statute is sparse. However, in 1870 the sponsor
of the original statute noted that the mail fraud component
was intended “to prevent the frauds which are mostly gotten
up in the large cities . . . by thieves, forgers, and rapscallions
generally, for the purpose of deceiving and fleecing the
innocent people in the country.” McNally v. United States,
483 U.S. 350, 356 (1987) (quoting Remarks of Rep. John
Franklin Farnsworth, Cong. Globe, 41st Cong., 3d Sess. 35
(1870) (emphasis added)).8 Commentators who have studied
the legislative history of the mail fraud statute also have
described the purpose of the statute as seeking to eliminate

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No. 01-2548 United States v. Wood, et al. 39
fraud: “There existed a perceived need for federal intervention
to dispel widespread fraud.” Jed S. Rakoff, The Federal Mail
Fraud Statute (Part I), 18 DUQ. L. REV. 771 (1980) (emphasis
added).
Third, contemporary case law supports the view that the
scheme to defraud comprises the integral part of mail fraud.
For example, the Supreme Court has minimized the
importance of mailings in establishing a mail fraud offense:
“To be part of the execution of the fraud, however, the
use of the mails need not be an essential element of the
scheme. It is sufficient for the mailing to be ‘incident to
an essential part of the scheme,’ or ‘a step in [the] plot.’”
Schmuck v. United States, 489 U.S. 705, 710-11 (1989)
(internal citations omitted). The Sixth Circuit also has
downplayed the importance of mailings in establishing
mail fraud, noting that a legal mailing will violate the
federal mail fraud statute if it furthers a fraudulent
scheme. United States v. Hopkins, 357 F.2d 14, 17 (6th
Cir. 1966).
Indeed, the Southern District of New York also has
explained that the mailing is merely the hook to federal
jurisdiction, while the fraud is the essence of the offense:
It is [ ] true . . . that the “gist” of a mail fraud case is the
mailing. This statement, however, is true only in the
sense that until a use of the mail occurs, no federal
jurisdiction exists. The evil to be combated, of course, is
the fraud and I have no doubt that Congress could
constitutionally provide for trial of a mail fraud case in
the district where the scheme was hatched even though
all mailings took place in another district.
Olen, 183 F. Supp. at 218. For these reasons, the scheme to
defraud, not the protection of the mails, is the central
prohibited activity of fraudulent mailing under § 1341.
40 United States v. Wood, et al. No. 01-2548
After considering the conduct making up the offense of
mail fraud, it is difficult to find justification for holding
Wood’s trial in the Southern District of Ohio or the Eastern
District of Michigan. At best, the only connections with those
places are the incidental mailing of less important documents.
The fraud’s core centered in the Western District of Michigan
and most of the evidence and connections lay there. It is
notable that the “independent value in trial at the place of
offense” is that “this may be where the witnesses will be
located.” Charles Alan Wright, Federal Practice and
Procedure: Criminal § 301(3d ed. 2000). Most of the
witnesses and evidence are found near the situs of the
fraudulent scheme–the obvious location for a fair trial.
Further, the majority’s holding implicates judicial economy
and fairness to the defendant. It is unnecessarily duplicitous
if federal prosecutors pursue–and judges must try–separate
cases for each location where defendants sent or received
mail. Four decades ago, the Second Circuit noted that
modern policy concerns may merit an expansion of venue
under the mail fraud statute. Such concerns are even more
pressing today:
[W]e cannot ignore the fact that the venue rule for mail
fraud cases was developed many decades ago, when
more restricted notions of the limits of federal power
prevailed than exist today. Were the issue of the
appropriate place of trial in such cases to arise [de] novo
in 1960, it is by no means clear that trial would not be
permitted at the place where the fraudulent scheme was
developed as well as at the place where the mailing has
its impact.
United States v. Cashin, 281 F.2d 669, 674 (2d Cir. 1960);
see also Wright, supra, § 303, at 323 (“A similar principle
should apply as to use of the mails to defraud. . . . [I]t can be
fairly argued that the place where the scheme to use the mails
to defraud was devised is also a proper venue.”).

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No. 01-2548 United States v. Wood, et al. 41
I would therefore find that venue exists where the
fraudulent conduct is centered, where items of mail are
deposited, where they are received, and where they are caused
to be delivered. In this case, the Western District of Michigan
is where the scheme was centered, where Wood sent out
advertising to national publications soliciting customers, sent
out packets of information in response to inquiries from
potential customers, took telephone messages and offer
excuses why Defendant could not answer a customer’s call,
prepared loan documents; disbursed loan proceeds, accepted
the stock offered as collateral, directed the distribution of the
proceeds from the sale of the stock, and sent letters to traders
concerned about the fate of their collateral.
In summation, when considering the mail fraud statute in
light of legislative history, a plain reading of the text, the
Supreme Court’s mandates for textual interpretation, and
public policy, venue for mail fraud may be based on the situs
of the scheme to defraud.
III. Conclusion
To summarize, I respectfully dissent from the majority’s
conclusion that venue was improper as to the mail fraud
counts. While I agree with all of the other legal conclusions
of this Court, I have provided supplemental reasoning
regarding why Defendant Wood’s transactions are not
protected under the rubric of “short sales against the box.”

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