Before his trial in the Western District of Wisconsin, he had been denied a motion to have the jury instructed that they could vote to convict him of tampering with the odometer, at the time a less serious offense, if they did not find him guilty of mail fraud.

The government appealed that decision to an en banc panel of the circuit, which restored the conviction, holding that the odometer tampering was not "inherently related" to the mail fraud.

Since other appellate circuits had preferred a different test for lesser included charges, Schmuck successfully petitioned the Supreme Court to hear the case.

In order for the retail transaction to take place, the dealers needed to mail a title application, including the falsified odometer reading, to the state Department of Transportation.

[2] Around 1981 his scheme was discovered when suspicious regulators wrote to the vehicles' previous owners, whose addresses were on the dealer's applications, and learned what the odometers had said at the time of sale.

He was arrested by federal authorities and indicted on 12 counts of mail fraud, a felony, for cars he had sold to five different dealers, some as many as five times[3] over a two-year period.

[8] But concurring Judge Richard Dickson Cudahy, calling the statute "judicially hypertrophied" warned that "the present case takes us to what (for now) may be the outer limits".

A defense could request a lesser-charge instruction later in the trial as the facts became clearer, yet a prosecution making the same motion could well fail on the grounds that the defendant had not received sufficient prior notice such as is usually given in the indictment.

"These new layers of analysis add to the uncertainty of the propriety of an instruction in a particular case: not only are there more issues to be resolved, but correct resolution involves questions of degree and judgment, with the attendant probability that the trial and appellate courts may differ.

When they had held the previous year in McNally v. United States that the mail-fraud statute only applied to schemes to acquire money or property and not what was later codified as honest services fraud, they had reiterated an old principle "that where you're faced with two possible interpretations, you should choose the less harsh one and also that you shouldn't create constructive crimes".

[1] He was interrupted by Justice Anthony Kennedy, who wanted him to address the government's argument that the ongoing nature of the fraud made the odometer readings on the title applications essential to the scheme.

"[1] On rebuttal, Steinberg returned to another point he had been trying to make: that the title-application mailings were actually potentially counterproductive to Schmuck's scheme, since they increased the chance that his odometer alteration would be discovered.

This had been part of the Court's holding in United States v. Maze, where invoices that reflected the use of a stolen credit card were found not to constitute mail fraud since they increased the likelihood of detection.

Harry Blackmun wrote the majority opinion, joined by Chief Justice William Rehnquist, Byron White, John Paul Stevens, and Anthony Kennedy.

He further agreed that the inherent-relationship test was inconsistent with that language, and that mutuality was not something that could be discarded so casually since it would violate the long-held constitutional and common law principle that a defendant not be required to answer any charges not in the indictment.

"The three judges of the original appellate panel split in their application of the inherent relationship test to the offenses of mail fraud and odometer tampering," Blackmun wrote.

Like Schmuck, the defendants had bought used vehicles, formerly rental cars, from California and Texas, and rolled back the odometers before selling them to an Arizona taxi service.

[43] Other types of third-party mailings—among them stock-purchase confirmation slips,[44] annual reports and proxy statements[45]—have also been found to be part of ongoing fraudulent schemes and thus supporting mail fraud convictions.

[46] In a civil suit under RICO, Schmuck was read to allow the plaintiff telephone company to argue that the bills it sent customers allegedly bilked by the defendant premium texting provider constituted mail fraud.

[48] The Third Circuit relied on Schmuck to determine that a scheme to embezzle fuel tax payments by using a long series of wire transfers not only supported the fraud conviction but, by extension, one for money laundering.

[50] In 1998, the Fifth Circuit heard United States v. Evans, an appeal of a parole officer's conviction on mail-fraud charges stemming from falsified travel vouchers she filed to conceal a relationship and bribery scheme with a parolee.

Judge Harold R. DeMoss, Jr., primarily relied on Kann, Parr and Maze in finding that the mailings occurred after Evans' scheme had come to fruition (when she submitted the vouchers to her supervisor) and were not essential to them.

"[53] In United States v. Strong, involving another complicated used-car scheme called "punching titles", the Fifth Circuit unanimously found another significant distinction from Schmuck.

While the auction house was waiting for the draft to clear, they would apply to a branch office of the Texas Department of Transportation (TDOT) for a certified copy (CCO) of the original, which they could get on the spot, using forged documents to "authenticate" themselves as the owner.

[54] Judge E. Grady Jolly noted that while Schmuck had reached a different result than Kann, Parr and Maze about the utility of the mailings to the scheme, it had not overruled those cases.

While Strong was right that, unlike Schmuck, clear title never passed to the buyers of the fraudulently obtained cars, neither were the TDOT mailings as distant from the scheme as they had found to be in the other cases.

[57] In dissent, Ruth Bader Ginsburg criticized Thomas's opinion as a "woodenly literal construction" of the statutes that ignored the underlying common law and gave prosecutors too much power at the expense of juries.

Ellen Podgor, a professor at Georgia State, wrote in 1994 for the National Association of Criminal Defense Lawyers that it would appear that the decision left previous limitations to the statute, particularly from Maze, Kann and Parr, "questionable."

In 1985 Nebraska Senator James Exon introduced a bill that not only did that but required stronger reporting and disclosure; it was signed into law by President Ronald Reagan as the Truth in Mileage Act of 1986 just before that year's elections.

"[64] Text of Schmuck v. United States, 489 U.S. 705 (1989) is available from: Cornell Findlaw Google Scholar Justia Library of Congress Oyez (oral argument audio)