Defendant David W. Warren, a practicing osteopathic physician in Kansas City, Missouri, was convicted after a jury trial of three counts of mail fraud in violation of 18 U.S.C. Secs. 1341 & 2.1 Defendant appeals his conviction on the grounds that (1) the outrageous conduct of the Government investigators violated the Due Process Clause of the Fifth Amendment; (2) there was insufficient evidence to support the guilty verdict; (3) the trial court failed to properly instruct the jury on the elements of the offense under 18 U.S.C. Sec. 1341; and (4) the trial court abused its discretion in denying defendant's motion for disclosure of proceedings before the grand jury. We disagree with all of defendant's contentions and affirm.

* Facts

In 1980, United States postal inspectors in Kansas City, Missouri, began an undercover operation directed at insurance fraud by doctors and lawyers. The operation was dubbed "MAIL-Fraud" (Medical And Insurance Liability Fraud). The inspectors conducted the undercover operation as follows.

First, the inspectors purchased automobile insurance policies under fictitious names for non-existent automobiles from insurance companies with claims offices in Kansas. III R. 82; VI R. 134-35. Second, the inspectors, with the cooperation of the Kansas City Police Department, prepared false accident reports. III R. 9-11, 82-83; IV R. 142; V R. 45. Third, Kansas City police officers prepared traffic tickets charging the inspectors with violations of municipal traffic ordinances. III R. 11-13. Fourth, the inspectors appeared in municipal court and entered pleas of guilty to the falsified charges under their assumed identities. III R. 13; V R. 60, 104-08 (motion hearing).

Four agents testified that they contacted an attorney to represent them in filing claims against their insurance company.2 The attorney advised the agents to consult a physician and obtain a medical report to augment their claims against the insurance company. The agents then went to defendant Warren's office. They told defendant that although they were not injured in the accidents, they wanted to reach a settlement with their insurance company. Defendant arranged numerous office visits for each agent; during these visits the agents often received no medical treatment. Defendant then submitted falsified medical reports to the attorney, who forwarded them to the insurance company. Defendant falsely stated that the agents were partially disabled, and charged for some treatments that were never given and for an inflated number of office visits.3

The three mail fraud counts on which defendant was convicted were based on a letter from the attorney to the insurance company's claims adjuster transmitting medical bills and reports prepared by defendant (Count 3), and letters from the claims adjuster to the attorney transmitting settlement drafts and releases (Counts 4 and 5).

The claim of outrageous governmental conduct

Defendant argues that the conduct of the postal inspectors was so outrageous as to violate due process. Defendant contends that "the deliberate misuse of the judicial system and falsification of official reports by law enforcement offices" requires reversal of his conviction. Reply Brief of Appellant 3. We disagree.

The Supreme Court has stated that it "may some day be presented with a situation in which the conduct of law enforcement agents is so outrageous that due process principles would absolutely bar the government from invoking judicial processes to obtain a conviction." United States v. Russell, 411 U.S. 423, 431-32, 93 S. Ct. 1637, 1642-43, 36 L. Ed. 2d 366 (1973); see also Hampton v. United States, 425 U.S. 484, 491-95, 96 S. Ct. 1646, 1650-52, 48 L. Ed. 2d 113 (1976) (Powell and Blackmun, JJ., concurring); id. at 495-500, 96 S.Ct. at 1652-1655 (Brennan, Stewart and Marshall, JJ., dissenting). Yet Justice Powell has cautioned that "[p]olice overinvolvement in crime would have to reach a demonstrable level of outrageousness before it could bar a conviction." Id. at 495 n. 7, 96 S. Ct. at 1653 n. 7.

We recognize that undercover activities are "a recognized and permissible means of investigation." United States v. Russell, 411 U.S. at 432, 93 S.Ct. at 1643.4 Federal courts therefore should not exercise a " 'chancellor's foot' veto over law enforcement practices of which [they do] not approve." Id. at 435, 93 S.Ct. at 1644. The outrageous governmental conduct defense is manifestly reserved for only "the most intolerable government conduct." United States v. Jannotti, 673 F.2d 578, 608 (3d Cir.1982).5

Neither the Supreme Court6 nor this court7 has ever overturned a conviction on the ground of outrageous governmental conduct. Moreover, other courts of appeals have rejected most due process challenges to allegedly improper governmental activity;8 the only two federal courts of appeals cases upholding outrageous governmental conduct defenses have involved facts readily distinguishable from the present case.9

We rejected a claim of outrageous governmental conduct on very similar facts in United States v. Gamble, 737 F.2d 853 (10th Cir.1984). Gamble involved the same undercover investigation at issue here. The defendant was a physician practicing in Kansas City. The undercover inspectors staged phony accidents, prepared false accident reports and traffic tickets, and entered pleas of guilty to the falsified charges under their assumed identities.

We held that "[a] defendant may not invoke the Due Process Clause, however, unless the government's acts, no matter how outrageous, had a role in inducing the defendant to become involved in the crime." Id. at 858. We concluded that the inspectors' fabrications were not so outrageous as to violate due process because that conduct did not itself induce defendant to commit insurance fraud. We stated that the inspectors "displayed shocking disregard for the legal system. But the actions did not directly induce defendant to participate in the fraudulent scheme .... [D]efendant did not rely on any display of fictitious credentials or falsified documents; apparently he relied entirely upon what his 'patients' told him." Id. at 859. We reached this conclusion even though the defendant there "had no criminal record and ... the agents had no apparent hint of [defendant's] predisposition to criminal activity." Id.

We similarly must hold here that the inspectors' conduct in preparing phony accident reports and traffic tickets, and in entering pleas of guilty to the falsified charges under their assumed identities, did not violate due process.10 There is no indication in our record that defendant relied in any way on the phony accident documents or guilty pleas in submitting the falsified medical reports and bills. In these circumstances, we cannot say that the inspectors' conduct was so outrageous that "due process principles would absolutely bar the government from invoking judicial processes to obtain a conviction." United States v. Russell, 411 U.S. at 431-32, 93 S.Ct. at 1642-43.

Defendant contends that there was insufficient evidence to support his conviction of mail fraud under 18 U.S.C. Sec. 1341.11 We disagree.

The elements of mail fraud under Sec. 1341 are (1) a scheme or artifice to defraud or obtain money or property by false pretenses, representations or premises; and (2) use of the United States mails for the purpose of executing the scheme. Pereira v. United States, 347 U.S. 1, 8, 74 S. Ct. 358, 362, 98 L. Ed. 435 (1954); United States v. White, 673 F.2d 299, 302 (10th Cir.1982). In viewing the sufficiency of the evidence to support defendant's conviction, we must view the evidence in the light most favorable to the Government. Hamling v. United States, 418 U.S. 87, 124, 94 S. Ct. 2887, 2911, 41 L. Ed. 2d 590 (1974); Glasser v. United States, 315 U.S. 60, 80, 62 S. Ct. 457, 469, 86 L. Ed. 680 (1942); United States v. Gatewood, 733 F.2d 1390, 1392 (10th Cir.1984).

Defendant does not take issue with the sufficiency of the evidence relating to a scheme to defraud. Instead, he argues that he did not cause the use of the mails to further the scheme to defraud. We conclude that there is sufficient evidence to support the conviction under Sec. 1341. Correspondence between the attorney and the claims adjuster from the inspectors' insurance company formed the basis of the mail fraud counts upon which defendant was convicted. The first correspondence was a demand letter from the attorney to the claims adjuster. The subsequent letters transmitted settlement drafts from the claims adjuster to the attorney. Defendant had submitted falsified medical reports and bills to the attorney and was later reimbursed from the insurance company's settlement.

The Supreme Court has held that one causes the use of the mails when he "does an act with knowledge that the use of the mails will follow in the ordinary course of business, or where such use can reasonably be foreseen, even though not actually intended." Pereira, 347 U.S. at 8-9, 74 S.Ct. at 362-363 (quoted in United States v. Maze, 414 U.S. 395, 399, 94 S. Ct. 645, 647, 38 L. Ed. 2d 603 (1974)); see also United States v. Roylance, 690 F.2d 164, 167 (10th Cir.1982); United States v. Curtis, 537 F.2d 1091, 1095 (10th Cir.1976); Marvin v. United States, 279 F.2d 451, 454 (10th Cir.1960). Although the mailing must be in furtherance of the scheme, "it is not necessary that the scheme contemplate the use of the mails as an essential element." Pereira, 347 U.S. at 8, 74 S.Ct. at 362 (quoted in Maze, 414 U.S. at 400, 94 S.Ct. at 648).

The crucial question here is "whether these mailings were sufficiently closely related to [defendant's] scheme to bring his conduct within the statute." Maze, 414 U.S. at 399, 94 S.Ct. at 648. See also Kann v. United States, 323 U.S. 88, 95, 65 S. Ct. 148, 151, 89 L. Ed. 88 (1944); United States v. Primrose, 718 F.2d 1484, 1489 (10th Cir.1983), cert. denied, 52 U.S.L.W. 3828, --- U.S. ----, 104 S. Ct. 2352, 80 L. Ed. 2d 825 (U.S. May 14, 1984). Defendant argues that "[t]here was absolutely no evidence in the record that the defendant Warren knew or anticipated that the insurance company and the attorney would in fact use the mails in this manner." Brief of Appellant 24. We have examined the record and are convinced that there was sufficient evidence that the settling of claims, including medical payments, in the ordinary course of the insurance business contemplated the use of the mails and that such use of the mails was reasonably foreseeable.

The insurance adjuster here testified concerning the routine use of the mails in settling insurance claims, including medical payments. III R. 26, 33-38, 51-56. We feel the evidence was sufficient to support an inference that acts were done by defendant with knowledge that use of the mails would follow in the ordinary course of business, or that such use could reasonably be foreseen even though it was not actually intended, thus causing use of the mails. Pereira, 347 U.S. at 8-9, 74 S.Ct. at 362-363. The Third Circuit held in similar circumstances that:

The evidence in this case shows that the mails were used to obtain approval of the defendant's [fraudulent] applications for insurance payments and to send checks from the insurance companies' main offices in Iowa to local agents in Florida who transmitted the checks to the defendants. Such use of the mails by adjusters, local agents, and insurance companies as part of the usual business practice in settling and paying claims was reasonably foreseeable by the defendants and was an essential step in the process by which they obtained the fruits of their plot.

Glenn v. United States, 303 F.2d 536, 541 (3d Cir.1962).

In United States v. Gamble, 737 F.2d 853 (10th Cir.1984), we relied on Glenn in upholding the mail fraud conviction of a physician under Sec. 1341. In Gamble, a claims adjuster testified that he routinely used the mails to request medical reports and to send out settlement drafts. In addition, Gamble admitted that he knew the mails would be used to execute the scheme, id. at 855-56, which knowledge was not admitted by defendant here.

Defendant attempts to avoid the conclusion in Glenn by arguing that the insurance adjuster and the attorney here could have settled the claims without resort to the mails because the physical distance between them (Kansas City, Missouri to Overland Park, Kansas) was far less than the distance in Glenn (Iowa to Florida). See Reply Brief of Appellant 7-8. This facile distinction ignores the evidence which supports an inference that use of the mails could be foreseen.

United States v. Perkal, 530 F.2d 604 (4th Cir.), cert. denied, 429 U.S. 821, 97 S. Ct. 70, 50 L. Ed. 2d 82 (1976), supports our holding. In that case, the Fourth Circuit affirmed the conviction of a doctor under Sec. 1341 who participated in a scheme to defraud an insurance company by submitting inflated and false claims of disability and medical expenses arising out of automobile accidents, even though the doctor himself did not mail the fraudulent medical bills and reports. See also United States v. Reicin, 497 F.2d 563 (7th Cir.) (discussing scheme of doctor and attorney to defraud insurance company by submitting false medical reports), cert. denied, 429 U.S. 996, 95 S. Ct. 309, 42 L. Ed. 2d 269 (1974); United States v. Sternback, 402 F.2d 353 (7th Cir.1968) (affirming conviction of physician under Sec. 1341 who prepared false medical reports and bills in connection with insurance claimants who had been involved in automobile accidents), cert. denied, 393 U.S. 1082, 89 S. Ct. 862, 21 L. Ed. 2d 774 (1969).

For the above reasons, we conclude that there was sufficient evidence to support defendant's conviction under Sec. 1341.

Defendant challenges the district court's refusal to give his requested instruction that the use of the mails must be an "integral part" of the scheme to defraud.12 The district court did not give the requested instruction because it believed that its instructions adequately covered the elements of Sec. 1341. IV R. 176. We agree.

The district court instructed the jury that in order to find defendant guilty of violating Sec. 1341, it must find "[t]he act or acts of so using or causing the use of the United States mails wilfully, and with the specific intent to carry out some essential step in the execution of said scheme or artifice to defraud, or to attempt to do so as charged." II R. 110 (emphasis added). This language is patterned after 2 E. Devitt & C. Blackmar, Federal Jury Practice and Instructions Sec. 47.05 (1977). Another instruction stated that Sec. 1341 required a finding that defendants have mailed or caused to be mailed, "with the intent to carry out some essential step in the execution of the scheme to defraud." II R. 112 (emphasis added). This instruction is patterned after Sec. 47.08 of Devitt and Blackmar. We believe these instructions satisfy the requirement in Pereira that the mailing be "incident to an essential part of the scheme." 347 U.S. at 8, 74 S.Ct. at 363 (emphasis added). Cf. United States v. Brien, 617 F.2d 299, 311-12 (1st Cir.) (emphasis added) (Upholding, on other grounds, instruction stating that "[i]f you find that the particular mailing was not sent with the intent to carry out an essential step in a scheme to do fraud, then you must reach a not guilty verdict as to that mailing.... In order to reach a guilty verdict as to any particular mailing alleged in the indictment, you must find beyond a reasonable doubt that the mailed article in question was sent with the intent to carry out an essential step in the alleged scheme to defraud."), cert. denied, 446 U.S. 919, 100 S. Ct. 1854, 64 L. Ed. 2d 273 (1980).

Defendant also renews his objection to the following instruction given by the district court: "The punishment provided by law for the offenses charged is a matter exclusively within the province of the court and may not be considered by the jury in any way in arriving at a verdict as to the guilt or innocence of the defendant." II R. 131. This instruction is patterned after 1 E. Devitt & C. Blackmar, Federal Jury Practice and Instructions Sec. 18.02 (1977). We recognize that "[i]nformation about sentencing or other consequences of a verdict is prejudicial." United States v. Greer, 620 F.2d 1383, 1385 (10th Cir.1980). Indeed, defendant's counsel admitted at trial that the district court's instruction reflects "the present state of the law." IV R. 182. Accordingly, defendant's argument that such an instruction must "include a statement that the charges against the defendant were serious felonies and that if convicted a substantial term of imprisonment could be assessed on each charge"13 is without merit.

Defendant argues that the district court erred in refusing to order disclosure of testimony before the grand jury. Defendant points to alleged perjury by the inspectors concerning whether they told defendant that they had suffered no injuries in the accident. The district court held that defendant made "an insufficient showing" to require disclosure of the entire grand jury proceedings. VI R. 215.14 We agree.

There is "a long-established policy that maintains the secrecy of the grand jury proceedings in the federal courts." United States v. Proctor & Gamble Co., 356 U.S. 677, 681, 78 S. Ct. 983, 986, 2 L. Ed. 2d 1077 (1958) (footnote omitted). The Supreme Court has stated that "the proper functioning of our grand jury system depends upon the secrecy of grand jury proceedings." Douglas Oil Co. v. Petrol Stops Northwest, 441 U.S. 211, 218, 99 S. Ct. 1667, 1672, 60 L. Ed. 2d 156 (1979). The Court consistently has held that Fed.R.Crim.P. 6(e)(3)(C)(i) requires a strong showing of particularized need before grand jury materials are disclosed. See United States v. Sells Engineering, Inc., 51 U.S.L.W. 5059, 5066, 463 U.S. 418, 103 S. Ct. 3133, 77 L. Ed. 2d 743 (U.S. June 30, 1983); see also Illinois v. Abbott & Associates, Inc., 460 U.S. 557, 567 & n. 14, 103 S. Ct. 1356, 1361 & n. 14, 75 L. Ed. 2d 281 (1983); Douglas Oil, 441 U.S. at 217-24; Pittsburgh Plate Glass Co. v. United States, 360 U.S. 395, 400, 79 S. Ct. 1237, 1241, 3 L. Ed. 2d 1323 (1959).

Rule 6(e)(3)(C)(ii) of the Federal Rules of Criminal Procedure provides that disclosure of grand jury materials may be had "when permitted by a court at the request of the defendant, upon a showing that grounds may exist for a motion to dismiss the indictment because of matters occurring before the grand jury." Fed.R.Crim.P. 6(e)(3)(C)(ii). We must examine whether the district court abused its discretion in denying defendant's motion for disclosure of the grand jury material. See, e.g., United States v. Cronic, 675 F.2d 1126, 1130 (10th Cir.1982), rev'd on other grounds, --- U.S. ----, 104 S. Ct. 2039, 80 L. Ed. 2d 656 (May 14, 1984); In re September 1975 Grand Jury Term, 532 F.2d 734, 737 (10th Cir.1976) ("The proceedings before the grand jury are secret. Breach of that secrecy rests in the sound discretion of the trial court."); United States v. Parker, 469 F.2d 884, 889 (10th Cir.1972) ("The determination of whether 'a particularized need' existed [for disclosure of grand jury materials] is peculiarly a matter resting in the sound judicial discretion of the trial court.").

The evidence at trial indicated that the inspectors told defendant that they had not suffered any injuries in the accidents. E.g., II R. 86-87, 96 (testimony of inspector Armstrong); id. at 130 (testimony of inspector Gillis); IV R. 145 (testimony of inspector Bush). The purportedly inconsistent statements relied on by defendant in his brief all concern statements made by the inspectors to persons other than defendant and involve other cases resulting from the mail-fraud investigation. See Brief of Appellant 35-38. We cannot say that in these circumstances the district court abused its discretion in concluding that defendant did not make the requisite showing of particularized need15 necessary to justify disclosing the grand jury materials.16

For the foregoing reasons, the judgment of the district court is

AFFIRMED.