FRAUD

A false representation of a matter of fact—whether by words or by conduct, by false or misleading allegations, or by concealment of what should have been disclosed—that deceives and is intended to deceive another so that the individual will act upon it to her or his legal injury.

Crematory Owner Pleads Guilty to Dumping Bodies on Property

Ray Brent Marsh, a 30-year-old crematory operator in Georgia, pleaded guilty in 2004 to charges that he scattered bodies throughout his property rather than cremating them. Under a plea agreement with prosecutors, March received a sentence of 12 years in prison. The case also led to a multi-million-dollar civil lawsuit brought by those whose family members' remains were mishandled at Marsh's crematory.

Ray Brent Marsh's family was reportedly highly respected in Walker County, Georgia. Tommy Ray Marsh, Ray Brent's father, operated a gravedigging and vault company, while Clara Marsh, the defendant's mother, was a former schoolteacher and had been named Citizen of the Year in the county. Tommy Ray Marsh opened the Tri-State Crematory in Walker County in 1982 and operated it until 1996, when his health began to fail. Ray Brent Marsh's older sister, LaShea, assisted her father in the business until 1996.

The Tri-State Crematory avoided several regulations during the 1990s. Although a 1990 state law in Georgia required all crematories to hire a licensed funeral director, the Marshes were temporarily exempted, through the help of a state representative. Later in the decade, legislation proposed by the Georgia Funeral Services Board would have required all Georgia crematories to obtain a state license and to submit to regular inspections. Legislators later omitted portions of the bill related to crematories, however. Neither Tommy Ray Marsh nor Ray Brent Marsh was a licensed funeral director.

Funeral homes in Tennessee, Alabama, and Georgia sent bodies to Tri-State for cremation, for which the crematory received $200 to $250 per body. Until 1996, Tommy Ray Marsh reportedly kept the property neat and tidy. LaShea Marsh testified that her father had prepared bodies for cremation "in a reasonable amount of time after he received [them]." She also said that the remains were properly identified in preparation for their return to a funeral home or to a family member.

Ray Brent Marsh, then 22, took over the Tri-State Crematory in 1996. Some time during 1997, according to allegations made in court, Marsh stopped performing cremations on some of the bodies that he received. The number of bodies that he did not cremate increased each year. Family members who expected to receive the remains of their loved ones actually received cement dust instead. Neighbors said that they did not know that Marsh was stacking corpses on his property, which was not visible from the nearest roadway.

In April 2001, a man delivering gas to the crematory saw some bodies in a pit on the crematory property. The man, Gerald Cook, told his supervisor, who in turn notified the Walker County Sheriff's Department. The department did not act on the information. Sheriff Steve Wilson stated, "I felt it was a regulatory issue at the time. Basically, it dealt with bodies not being disposed of in a timely fashion. There wasn't much we could do about it then." At the time of the delivery man's observation, nothing under Georgia law rendered improper disposal of bodies as illegal.

Cook again saw bodies at the property during a delivery in November 2001. This time, he told his aunt, Fay Deal, who worked for a local office of the Federal Bureau of Investigation. Instead of informing the FBI, Deal contacted the Environmental Protection Agency. Through some miscommunication between Deal and the EPA agent, the EPA believed that a woman's dog had found a human skull on the property. The EPA contacted the Walker County Sheriff's Department, which dispatched an officer to the property in November 2001. The officer did not conduct a thorough search of the property at that time.

Deal contacted the EPA again in February 2002 after Cook informed her that he had seen human remains on the property for a third time. She gave a more complete description to the EPA, and the EPA sent agents to the crematory. The agents discovered a human skull outside of a fence on the property. From that point, the EPA, the Walker County Sheriff's Department, and the Georgia Bureau of Investigation searched the premises for bodies. More than 60 bodies had been sent to Tri-State between April 2001, when officials first received the information about the crematory, and February 2002.

Investigators discovered a gruesome scene in which bodies were discarded in pits and vaults on the property. Officials located a total of 339 bodies at the site. Marsh maintained a record of the bodies that he received, which helped officials to identify the bodies. During the months that followed the initial discovery, investigators were able to identify about 225 bodies. Some of the corpses had been embalmed, which made it impossible to collect DNA samples. Inspectors of the property testified later that the property was in "serious disrepair," with cremated remains scattered in several locations.

Marsh faced criminal charges and civil actions related to his activities at the crematory. About 1,700 family members of the deceased whose remains had been sent to Tri-State from 1997 to February 2002 sued the crematory, Marsh, 52 funeral homes that had sent bodies to Tri-State, and the Georgia Farm Bureau, which had insured Marsh's property. The plaintiffs settled with the funeral homes for $36 million, much of which was paid. The plaintiffs also settled with Marsh for $80 million.

The state of Georgia brought a total of 787 charges against Marsh, including 439 counts of theft, 179 counts of abuse of a corpse, 122 counts of burial service fraud , and 47 counts of making false statements. Marsh initially pleaded not guilty to the charges. Had he been convicted, he would have faced prison sentences of more than 8,000 years.

Marsh instead pleaded guilty in November 2004 under a plea agreement with prosecutors. He was sentenced to 12 years in prison, followed by a lengthy probation. He will be eligible for parole in about four years. He also received a $20,000 fine. Prior to sentencing, Marsh faced relatives of some of the people whose remains were supposed to have been cremated. During one of the statements, a family member said to Marsh, "I believe you will come to meet your maker one day, and the hell you put us through will come back to you. You may not have killed my father, but a part of my heart died when you put his body in a vault with 20 others."

Pasquantino v. United States

Fraud schemes can cross national borders and can involve two or more sovereign governments. In the United States, prosecutors have used the federal wire fraud statute , 18 U.S.C.A. §1343, against individuals who have defrauded foreign governments of tax revenue by smuggling goods that are subject to excise taxes. The federal courts of appeal, however, had split over whether such prosecutions were permissible. The U.S. Supreme Court resolved the issue in Pasquantino v. United States, __U.S. __, 125 S.Ct. 1766, __ L.Ed.2d __ (2005), ruling that the wire fraud statute could be used against persons who smuggled liquor into Canada. In doing so, the Court rejected the application of a common law rule that prohibits U.S. courts from enforcing the tax laws of foreign governments.

Carl J. Pasquantino, David Pasquantino, and Arthur Hilts were convicted of violating the wire fraud statute. They had smuggled large amounts of liquor into Canada from the United States. The Pasquantinos, who lived in New York, called discount liquor stores in Maryland and placed orders for liquor. They hired Hilts and other persons to pick the liquor up and drive it across the Canadian border. The drivers avoided paying excise taxes on the liquor by concealing it in their vehicles and by failing to tell Canadian customs agents about their cargo. During the years of the criminal enterprise (1996 to 2000), Canada heavily taxed imported liquor. At trial, the government presented evidence showing the uncollected taxes were double the liquor's purchase price.

Before trial, the defendants challenged the wire fraud indictment, arguing that the U.S. government lacked a sufficient interest in enforcing Canada's tax laws. The district court rejected this argument. After their convictions, the defendants appealed and renewed this argument, contending that the use of the wire fraud statute contravened the "common-law revenue rule" because it required the court to take notice of Canadian revenue laws. The U.S. Court of Appeals for the Fourth Circuit found no merit in this argument, ruling that the common-law revenue rule only forbade U.S. courts from enforcing the tax judgments of foreign governments. Because the U.S. Court of Appeals for the First Circuit had previously ruled that a scheme to defraud a foreign nation of tax revenues did not violate the wire fraud statute, the Supreme Court agreed to hear the defendants' appeal.

The Supreme Court, in a 5-4 ruling, agreed with the Fourth Circuit that the common-law revenue rule did not apply. Justice Clarence Thomas, in his majority opinion, noted that the defendants had challenged two parts of the wire fraud statute. The first concerned whether the object of their fraud was the money or property in the victim's hands. Justice Thomas found that Canada's right to uncollected excise taxes was "property" in its hands. This right was an entitlement and "something of value" to Canada. The failure to pay the required taxes was an economic injury "no less than had they embezzled funds from the Canadian treasury." The second issue in dispute was whether the defendants' actions were "a scheme or artifice to defraud" Canada of its tax revenue. Thomas concluded that the failure to declare the liquor as it passed through Canadian customs was conduct that came under the statute.

Justice Thomas then examined the application of the common-law revenue rule to this case. The defendants relied on a rule of statutory construction that directs courts to ignore statutes that conflict with common-law rules unless the legislature demonstrates its intent to override the common law. Therefore, Thomas examined the common law of 1952, the year that Congress enacted the wire fraud statute. He discovered that as of 1952 there was no common-law revenue rule case "that held or clearly implied that the revenue rule barred the United States from prosecuting a fraudulent scheme to evade foreign taxes."

Turning to the traditional bases for the revenue rule, Thomas found that, since the nineteenth century, U.S. courts had used the rule to bar "the enforcement of tax liabilities of one sovereign in the courts to another sovereign, such as a suit to enforce a tax judgment." These cases shaped the current understanding of the rule as prohibiting the collection of foreign tax claims." In the present case, however, Canada was not seeking to enforce a tax claim; rather, the U.S. government was acting in its "sovereign capacity to punish domestic criminal conduct." Although Justice Thomas acknowledged that the wire fraud prosecution "enforced" Canadian revenue law in "an attenuated sense," it did not contravene the revenue rule.

Justice Ruth Bader Ginsburg, in a dissenting opinion, argued that the majority had "ascribed an exorbitant scope to the wire fraud statute" and that it had ignored the will of Congress. She pointed out that Congress had addressed international smuggling by permitting criminal enforcement of customs laws of a foreign nation, but only when the nation has a reciprocal law criminalizing smuggling into the United States. Canada did not have such a reciprocal law. Ginsburg believed that the better course would have been to have Canada extradite the defendants and to prosecute them in the Canadian courts.