Mail & Wire Fraud Elements - 18 USC 1341-1343 Federal Criminal Law - US District Courts - United States Attorney California - United States Code - Mail Fraud - Wire Fraud - RICO Racketeering

8:1. Federal mail and wire fraud statutes, 1 White Collar Crime 8:1 (2d ed.
1 White Collar Crime 8:1 (2d ed.)

White Collar Crime
Database updated June 2011
Joel Androphy
Chapter 8. Substantive Law: Mail Fraud, Wire Fraud
I. Fraud Statutes
References
8:1. Federal mail and wire fraud statutes
Wests Key Number Digest

Wests Key Number Digest, Postal Service
35(1)
Wests Key Number Digest, Telecommunications
1014(1)
A.L.R. Library
Federal Criminal Prosecutions Under Wire Fraud Statute (18 U.S.C.A. 1343) for Use of Blue Box or
Similar Device Permitting User to Make Long-Distance Telephone Calls Not Reflected on Companys
Billing Records, 34 A.L.R. Fed. 278
Law Reviews and Other Periodicals
Disgorgement in 13 Enforcement, Wire Fraud Charges and Compliance Under FCPA Provisions, 15 No.
5 Bus. Crimes Bull. 7 (January, 2008)
Additional References
Corporate Counsels Guide to White-Collar Crime 2:2
The federal mail fraud statute1 is a powerful tool employed by prosecutors against a litany of crimes.2 The statute
has undergone considerable changes as both the Supreme Court3 and Congress4 have sought to redefine it.
The mail fraud statute provides in pertinent part:
Whoever, having devised or intending to devise any scheme or artifice to defraud for the purpose
of executing such a scheme or artifice or attempting to do so, [uses or causes the mails to be used],
shall be fined under this title or imprisoned not more than 20 years, or both. If the violation
affects a financial institution, such person shall be fined not more than $1,000,000 or imprisoned not
more than 30 years, or both.5
The wire fraud statute similarly provides:
Whoever, having devised or intending to devise any scheme or artifice to defraud for the purpose
of executing such scheme or artifice, [uses or causes the wires to be used in interstate or foreign
2012 Thomson Reuters. No claim to original U.S. Government Works.
8:1. Federal mail and wire fraud statutes, 1 White Collar Crime 8:1 (2d ed.)
commerce], shall be fined under this title or imprisoned not more than 20 years, or both. If the
violation affects a financial institution, such person shall be fined not more than $1,000,000 or
imprisoned not more than 30 years, or both.6
It is important to note, however, that a mailing or wire performed by a government agent solely for the purpose of
manufacturing federal jurisdiction will not support a mail or wire fraud prosecution.7 Additionally, the Supreme
Court has limited the applicability of the fraud statutes in some respects.
For example, in Cleveland v. United States, the Court held that the mail fraud statute does not reach fraud in
obtaining a statute or municipal license because a license is not property in the government regulators
hands.8
The Court reasoned that the original impetus behind the mail fraud statute was to protect the people from
schemes to deprive them of their money or property [e]quating the issuance of licenses or permits with
deprivation of property would subject to federal mail fraud prosecution a wide range of conduct traditionally
regulated by state and local authorities.9 As a result, the Court held that absent a clear Congressional mandate, it
would not read the statute to place conduct traditionally policed by the States under federal control.10
Westlaw. 2011 Thomson Reuters. No Claim to Orig. U.S. Govt. Works.
Footnotes
1
18 U.S.C.A. 1341.
2
In 2004, the Justice Department decided to take a more aggressive approach in prosecuting fraud under the
internal revenue laws. The Tax Division may now use mail fraud or wire fraud charges against an
individual who used the mails or wires either to file multiple fraudulent tax returns seeking tax refunds or
to promote fraudulent tax schemes.
McNally v. U.S., 483 U.S. 350, 107 S. Ct. 2875, 97 L. Ed. 2d 292, R.I.C.O. Bus. Disp. Guide (CCH) P
6663 (1987) superseded by statute as stated in Skilling v. United States, __ U.S. __, 130 S. Ct. 2896, 2907,
177 L. Ed. 2d 619 (2010) (holding 1341 does not sanction the use of the intangible rights theory for
mail fraud convictions).
In response to the Supreme Courts decision in McNally, Congress added a definition of scheme or
artifice to defraud in 1988, providing that such term includes a scheme or artifice to deprive another of
the intangible right of honest services. 18 U.S.C.A. 1346; see McNally v. U.S., 483 U.S. 350, 107 S. Ct.
2875, 97 L. Ed. 2d 292, R.I.C.O. Bus. Disp. Guide (CCH) P 6663 (1987) superseded by statute as stated in
Skilling v. United States, __ U.S. __, 130 S. Ct. 2896, 2907, 177 L. Ed. 2d 619 (2010).
18 U.S.C.A. 1341.
18 U.S.C.A. 1343.
See U.S. v. Coates, 949 F.2d 104, 106 (4th Cir. 1991).
Cleveland v. U.S., 531 U.S. 12, 20, 121 S. Ct. 365, 148 L. Ed. 2d 221, R.I.C.O. Bus. Disp. Guide (CCH) P
9970 (2000).
Cleveland v. U.S., 531 U.S. 12, 1824, 121 S. Ct. 365, 148 L. Ed. 2d 221, R.I.C.O. Bus. Disp. Guide
(CCH) P 9970 (2000).
8:1. Federal mail and wire fraud statutes, 1 White Collar Crime 8:1 (2d ed.)
10
Cleveland v. U.S., 531 U.S. 12, 27, 121 S. Ct. 365, 148 L. Ed. 2d 221, R.I.C.O. Bus. Disp. Guide (CCH) P
9970 (2000).
End of Document
2012 Thomson Reuters. No claim to original U.S.

Government Works.
8:2. Elements of mail and wire fraud, 1 White Collar Crime 8:2 (2d ed.)

White Collar Crime
Joel Androphy
I. Fraud Statutes
References
8:2. Elements of mail and wire fraud

35(2)
1014(2)
Treatises and Practice Aids
Villa, Banking Crimes 7:4 to 7:15
Clark, Ninth Circuit: Wire Fraud Conviction Need Not Include Showing of Conduct Violating Other
Statute or Regulation, 17 No. 7 Bus. Crimes Bull. 5 (March, 2010)
The elements of mail and wire fraud are identical.1 They are: (1) devising or intending to devise a scheme or
artifice to defraud another by means of a material misrepresentation, with (2) the intent to defraud through (3) the
use of mail or interstate wires.2
Footnotes
1
18 U.S.C.A. 1341.
See also 18 U.S.C.A. 1343; U.S. v. Pasquantino, 305 F.3d 291 (4th Cir. 2002), on rehg en banc, 336
F.3d 321 (4th Cir. 2003), judgment affd, 544 U.S. 349, 125 S. Ct. 1766, 161 L. Ed. 2d 619, 96 A.F.T.R.2d
2005-5392, 4 A.L.R. Fed. 2d 747 (2005) ( 1343 is not applicable to schemes to defraud foreign
governments of their revenues).
Carpenter v. U.S., 484 U.S. 19, 24, 108 S. Ct. 316, 98 L. Ed. 2d 275, 14 Media L. Rep. (BNA) 1853, 5
U.S.P.Q.2d 1059, Fed. Sec. L. Rep. (CCH) P 93423, R.I.C.O. Bus. Disp. Guide (CCH) P 6785 (1987).
See also U.S. v. Jackson, 346 F.3d 22 (2d Cir. 2003), adhered to on rehg, 362 F.3d 160 (2d Cir. 2004),
cert. granted, judgment vacated on other grounds, 543 U.S. 1097, 125 S. Ct. 1109, 160 L. Ed. 2d 988
(2005) (affirming wire fraud conviction based on defendants fraudulent use of victims credit card
8:2. Elements of mail and wire fraud, 1 White Collar Crime 8:2 (2d ed.)
information).
2
Neder v. U.S., 527 U.S. 1, 119 S. Ct. 1827, 144 L. Ed. 2d 35, 99-1 U.S. Tax Cas. (CCH) P 50586, 83
A.F.T.R.2d 99-2668 (1999) (holding that while materiality of falsehood is an element of the federal mail
fraud, wire fraud, and bank fraud statutes, the harmless error rule can salvage a conviction without proof of
materiality); U.S. v. Fernandez, 282 F.3d 500 (7th Cir. 2002) (holding that although indictment failed to
expressly allege materiality element of mail fraud offense, allegations as a whole encompassed concept of
materiality; therefore, indictment was not defective).
End of Document

Government Works.
8:3. Elements of mail and wire fraudIntent to defraud, 1 White Collar Crime 8:3...

White Collar Crime
Joel Androphy
I. Fraud Statutes
References
8:3. Elements of mail and wire fraudIntent to defraud

35(5)
1014(3)
Forms
Am. Jur. Pleading and Practice Forms Annotated, Telecommunications 149.16
Proof of a specific intent to defraud is required under both the mail and wire fraud statutes.1 It is hornbook law
that a good faith belief by the defendant that his representation or promises are true necessarily negates fraudulent
intent and is, therefore, a defense to mail fraud.2
Note, however, than an expert witness may not testify that the defendant had the intent or state of mind necessary
to commit the crime because the defendants intent is an ultimate fact issue that must be decided by the jury.3
However, an expert may testify as to whether the defendant engaged in a scheme. For example, in United States v.
Winkle, the Sixth Circuit held that an experts testimony that the defendant carried out a check-kiting scheme was
properly admitted over the defendants objection.4 The court stated that the testimony helped the jury understand
a complex check-kiting scheme, and because the expert did not take a position on the defendants intent, the
testimony was properly admitted.5
In United States v. Keller,6 the Fifth Circuit held that the requisite intent to defraud exists if the defendant acts
knowingly and with the specific intent to deceive, ordinarily for the purpose of causing some financial loss to
another or bringing about some financial gain to himself.7
Similarly, in United States v. Czubinski,8 the First Circuit held that the government failed to prove that an IRS
agent committed wire fraud by accessing confidential information. In so holding, the court reasoned that on order
to establish the intent requirement, either some articulable harm must befall the holder of the information as a
result of the defendants activities, or some use must be intended by the person accessing the information, whether
or not this use is profitable in the economic sense.9
If the alleged victim receives what he bargains for, establishing intent to defraud may be problematic. In United
States v. Novak, the Second Circuit held that a lead union operator who demanded kickbacks from union
members in order to submit their timesheets could not be convicted of mail fraud because the union members
received exactly what they bargained for, which was not enough to satisfy the intent to defraud element in the
mail fraud statute.10
It is important to note, however, that it is not necessary to prove that the victim was actually defrauded, so long as
the defendant intended him to be defrauded and the scheme had the potential to defraud an ordinary person.11
Footnotes
1
Specific intent to defraud, however, need not be charged in the indictment. U.S. v. Brown, 459 F.3d 509,
519 (5th Cir. 2006); U.S. v. Brown, 147 F.3d 477, 483, 50 Fed. R. Evid. Serv. 165, 1998 FED App. 0179P
(6th Cir. 1998); U.S. v. Cosentino, 869 F.2d 301, 30708 (7th Cir. 1989).
2
Durland v. U S, 161 U.S. 306, 31314, 16 S. Ct. 508, 40 L. Ed. 709 (1896); U.S. v. Rabinowitz, 327 F.2d
62, 7677 (6th Cir. 1964).
U.S. v. Winkle, 477 F.3d 407, 416, 72 Fed. R. Evid. Serv. 592, 2007 FED App. 0070P (6th Cir. 2007).
U.S. v. Keller, 14 F.3d 1051, 1056 (5th Cir. 1994).
U.S. v. Keller, 14 F.3d 1051, 1056 (5th Cir. 1994). See U.S. v. Gray, 367 F.3d 1263, 1268 (11th Cir. 2004)
(stating that the mail fraud statute requires proof that the defendants scheme to defraud involved the use of
material, false representations or promises).
U.S. v. Czubinski, 106 F.3d 1069, 107475, 97-2 U.S. Tax Cas. (CCH) P 50622, 79 A.F.T.R.2d 97-1664
(1st Cir. 1997).
U.S. v. Czubinski, 106 F.3d 1069, 107475, 97-2 U.S. Tax Cas. (CCH) P 50622, 79 A.F.T.R.2d 97-1664
(1st Cir. 1997).
10
U.S. v. Novak, 443 F.3d 150, 159, 152 Lab. Cas. (CCH) P 10640 (2d Cir. 2006), subsequent determination,
188 Fed. Appx. 9 (2d Cir. 2006).
11
U.S. v. Schaffer, 599 F.2d 678, 67980 (5th Cir. 1979); U.S. v. Stouffer, 986 F.2d 916, 922 (5th Cir. 1993).
End of Document

Government Works.
8:4. Elements of mail and wire fraudScheme or..., 1 White Collar Crime...

White Collar Crime
Joel Androphy
I. Fraud Statutes
References
8:4. Elements of mail and wire fraudScheme or artifice to defraud

35(6)
1014(4)
A.L.R. Library
What Constitutes Causing Mail to Be Delivered for Purpose of Executing Scheme Prohibited by Mail
Fraud Statute (18 U.S.C.A. 1341), 9 A.L.R. Fed. 893
Because the courts have not established a clear definition of what actually constitutes a scheme or artifice to
defraud, the issue has been the subject of a great deal of litigation.1 A scheme to defraud does not have to be
fraudulent on its face; rather, it just must be reasonably calculated to deceive.2 The fact that a particular scheme is
impracticable or ultimately unsuccessful is not necessarily inconsistent with it being a fraudulent scheme.3
Rather, the essence of fraud is that the victim is persuaded to believe that which is not so.4
In Pasquantino v. United States, the Supreme Court held that a scheme to defraud a foreign government of tax
revenue violates the federal wire fraud statute.5 The defendants were convicted of smuggling discounted alcohol
from the United States into Canada without paying Canadian excise taxes.6 The Court concluded that the
uncollected tax revenue qualified as property because it constituted a valuable entitlement.7 The Court also
held that the defendants schemed to defraud the Canadian government within the meaning of the statute because
they concealed and failed to disclose the imported liquor to the Canadian authorities and on customs forms.8
The Court rejected the defendants argument that the convictions were barred by the common law revenue rule,
which prohibits courts from enforcing tax obligations of foreign countries.9 In rejecting this argument, the Court
concluded that the defendants convictions were permitted under the wire fraud statute because they did not
represent an attempt by the government to collect a foreign tax liability; rather, the Government was doing
nothing more than prosecuting domestic criminal conduct.10
At the core of the judicially defined scheme to defraud is the notion of a fiduciary trust owed to another and a
subsequent breach of that trust.11 Jurisdictions, however, differ in their analysis of whether the violation of a
fiduciary duty constitutes a violation of the mail or wire fraud statutes.
For example, in United States v. Little,12 the Fifth Circuit held that a kickback scheme violated a fiduciary
trust, even though no actual monetary loss was involved. The court found that the defendants willingness to sell
his product for the state-set priceless the kickback amountconstituted a property loss and therefore a
violation of a fiduciary trust and the mail fraud statute. Other courts, however, have determined that violations
of fiduciary duties were insufficient to trigger liability under the fraud statutes.13
Footnotes
1
See U.S. v. Leahy, 464 F.3d 773, 790, 71 Fed. R. Evid. Serv. 479 (7th Cir. 2006) (scheme to defraud
existed where a private contractor misrepresented itself as a minority-owned or woman-owned business in
order to obtain a government despite the fact that the city suffered no monetary loss or pecuniary harm
because the contract was fully performed at the agreed price).
But see U.S. v. Lake, 472 F.3d 1247, 1255 (10th Cir. 2007) (holding mandatory reports filed with the SEC
were not transmitted as part of any unlawful scheme because the government failed to show that there was
anything misleading in the reports and their submission was required by law). See also U.S. v. Green, 592
F.3d 1057, 1064, 252 Ed. Law Rep. 608 (9th Cir. 2010) (holding that, to prove a scheme to defraud, the
government is not required to prove that the defendants conduct was otherwise illegal; therefore, the
government is not required to prove that the defendants conduct violated a specific statute or regulation).
2
U.S. v. Bruce, 488 F.2d 1224, 1229, Fed. Sec. L. Rep. (CCH) P 94335 (5th Cir. 1973).
U.S. v. Church, 888 F.2d 20, 24 (5th Cir. 1989).
U.S. v. Church, 888 F.2d 20, 24 (5th Cir. 1989). For a discussion of unreasonable reliance on the part of
the victim, see Section 8.7 infra.
Pasquantino v. U.S., 544 U.S. 349, 125 S. Ct. 1766, 1771, 161 L. Ed. 2d 619, 96 A.F.T.R.2d 2005-5392, 4
A.L.R. Fed. 2d 747 (2005). For further discussion of this case, see G.J. Terwilliger III, United States v.
Pasquantino, NATL L.J., Nov. 7, 2005, at 16.
A.L.R. Fed. 2d 747 (2005).
Pasquantino v. U.S., 544 U.S. 349, 125 S. Ct. 1766, 177172, 161 L. Ed. 2d 619, 96 A.F.T.R.2d
2005-5392, 4 A.L.R. Fed. 2d 747 (2005). See also U.S. v. Ali, 620 F.3d 1062, 106768 (9th Cir. 2010)
(holding that potential profits constitute money or property).
A.L.R. Fed. 2d 747 (2005).
2005-5392, 4 A.L.R. Fed. 2d 747 (2005).
10
2005-5392, 4 A.L.R. Fed. 2d 747 (2005).
11
U.S. v. Capozzi, 883 F.2d 608, 616, 28 Fed. R. Evid. Serv. 898 (8th Cir. 1989); U.S. v. Martin, 195 F.3d
961 (7th Cir. 1999) (recognizing that the fraud element of mail fraud may be predicated on breaches of
fiduciary duties created by federal law, and is not limited to breaches of state-law fiduciary duties). But see
U.S. v. Sancho, 957 F. Supp. 39, 4243 (S.D. N.Y. 1997), affd, 157 F.3d 918 (2d Cir. 1998) (overruled on
other grounds by, U.S. v. Rybicki, 354 F.3d 124 (2d Cir. 2003)) (holding that the plain language of 1343
and 1346 does not limit culpability to cases involving fiduciaries).
12
U.S. v. Little, 889 F.2d 1367, 1368 (5th Cir. 1989).
13
U.S. v. Ochs, 842 F.2d 515, 25 Fed. R. Evid. Serv. 238 (1st Cir. 1988) (holding that a breach of fiduciary
duty is not sufficient property deprivation to constitute mail fraud); U.S. v. Zauber, 857 F.2d 137 (3d Cir.
1988) (rejecting constructive trust as basis for mail fraud conviction); U.S. v. Slay, 858 F.2d 1310 (8th Cir.
1988) (stating that withholding information from a governmental entity is insufficient to uphold a mail
fraud conviction); U.S. v. Lance, 848 F.2d 1497 (10th Cir. 1988) (paying kickbacks does not violate the
property requirement); U.S. v. Conover, 845 F.2d 266 (11th Cir. 1988) (breach of fiduciary duty does not
violate the mail fraud statute).
But see U.S. v. Hedaithy, 392 F.3d 580, 595 (3d Cir. 2004) (holding that a scheme in which imposters took
standardized tests and sent results to schools purportedly as defendants own scores deprived the
educational testing company of two property interests: confidential business information and tangible score
reports).
End of Document

Government Works.
8:5. Elements of mail and wire fraudUse of mail or..., 1 White Collar Crime...

White Collar Crime
Joel Androphy
I. Fraud Statutes
References
8:5. Elements of mail and wire fraudUse of mail or wires to execute scheme to defraud

35(10)
1014(5)
A.L.R. Library
Federal Criminal Prosecutions Under Wire Fraud Statute (18 U.S.C.A. 1343) for Use of Blue Box or
Similar Device Permitting User to Make Long-Distance Telephone Calls Not Reflected on Companys
Billing Records, 34 A.L.R. Fed. 278
Clark, Fax Sent by Victim Sufficient to Establish Wire Fraud, 17 No. 7 Bus. Crimes Bull. 5 (March, 2010)
Corporate Counsels Guide to White-Collar Crime 2:4 to 2:7
In a wire fraud case, the government must prove the use of interstate wire communications in furtherance of the
scheme to defraud.1 It is not necessary, however, to prove that the defendant himself personally performed the
fraudulent wire transfer in order to satisfy the element of causing a wire transmission in furtherance of the
fraudulent scheme.2 Rather, this element can be satisfied by showing that the defendant acted with knowledge
that a wire transfer would follow in the ordinary course of business or that such use could reasonable be
foreseen.3
For example, in United States v. Turner, the defendant, Cecil Turner, conspired with three janitors to defraud the
state by collecting inflated salaries based on falsified attendance logs.3.10 Turner argued that the direct deposit of
his inflated paychecks did not constitute a use of interstate wires because the use of such wires was a regular
part of his employment, and therefore not in furtherance of a fraudulent scheme.3.20
The court, however, concluded that routine or innocent wire transfers can form the basis of a wire fraud
conviction if they are part of the execution of the scheme.3.30 Because the money or property connected to the
janitors schemeunearned salarieswere received via wire transmission by way of fraud, the court held that the
defendant used interstate wires.3.40
The Second Circuit has held that the wire fraud statute applies to foreign communications made in the furtherance
of a scheme to defraud. The court reasoned that Congress specifically amended the statute in 1956 to insert the
words foreign commerce in reaction to a failed prosecution of a defendant who made calls from Mexico to the
United States in furtherance of a scheme to defraud and who was able to successfully argue that the statute did not
apply to foreign communications.4 In so holding, the court stated:
There would seem to be no logical reason for holding that Congress intended to punish those who
cause the violation of a law regulating and protecting foreign commerce only when they act within
the borders of the United States or that Congress is powerless to protect foreign commerce and those
who engage in foreign commerce from intentionally injurious acts, simply because those acts occur
outside our borders. We therefore believe that Congress clearly intended conduct such as [foreign
communications] to be within the reach of our criminal laws.5
In a mail fraud case, the government must prove that the United States mails were used to further the fraudulent
scheme.6 Because the jurisdictional basis of the mail fraud statute derives from the Postal Power, it is not
necessary for the prosecution to prove the existence of an interstate mailing.7 The mail fraud statute covers all
items passing through the United States mails, even if intrastate.8 However, the connection between the alleged
fraud and the use of the mails must be real and proximate, not merely abstract or remote, in order for a conviction
for mail fraud to stand.9
Although the government is required to show that particular documents were sent through the United States mails
and not by hand delivery by the bidder or its agent, or delivered via messenger or courier, the government does
not need to show that any of the defendants themselves mailed anything.10 Rather, the government must show
only that the defendants caused mailings in furtherance of the scheme to defraud.11
The in furtherance requirement under the mail fraud statute is satisfied by proving that the defendant acted
with knowledge that the use of the mails will follow in the ordinary course of business, or where he could
reasonably foresee that the use of the mail would result. It is not necessary to prove the accused actually
intended the mail to be used.12
While the general rule is that mailings subsequent to the fruition of the scheme do not trigger liability under the
mail fraud statute because they do not fulfill the in furtherance requirement, there are exceptions to this rule.
For example, if the mails are used as a means of concealment so that further frauds that are part of the scheme
may be perpetrated, then such mailings satisfy the in furtherance requirement.13 This kind of mailing is called a
lulling letter because it is designed to lull the victims into a false sense of security, postpone their ultimate
complaint to the authorities, and therefore make the apprehension of the defendant less likely than if no mailings
had taken place.14
In light of the Supreme Courts decision in Schmuck v. United States, the relationship between the mailing and
the scheme must undergo a subjective examination to address whether the mailing is part of the execution of the
scheme as conceived by the perpetrator at the time [of the mailing], regardless of whether the mailing later,
through hindsight, may prove to have been counterproductive and return to haunt the perpetrator of the fraud.15
Essentially, this case has greatly broadened the reach of the mail fraud statute in that innocent mailings can supply
the use of the mail element for mail fraud.16
The accused, Wayne T. Schmuck, was a used car wholesaler in Wisconsin who, after purchasing a used car,
would roll back odometers and resell to unwitting retailers.17 Because of their supposedly low mileage, the prices
of these cars were fraudulently inflated. This fraudulent price inflation was passed on to consumers who had no
idea that their cars had been driven many more miles than their odometers indicated. Importantly, to complete the
resale, the retailer had to submit title applications to the Wisconsin Department of Transportation on behalf of his
customers; this step of the process supplied the use of the mail requirement for each of the mail fraud counts
against Schmuck.18
In affirming his conviction, the Court reasoned that although Schmuck himself never mailed anything in
furtherance of his scheme and the registration forms that were mailed did not directly contribute to the duping of
either the retailers or the individual customers, these mailings were necessary to the passage of title, which in
turn was essential to the perpetuation of Schmucks scheme.19 As the Supreme Court noted, a rational jury
could have concluded that the success of Schmucks venture depended upon his continued harmonious relations
with, and good reputation among, retail dealers, which in turn required the smooth flow of cars from the dealers to
their Wisconsin customers.20
In a strongly worded dissent, Justice Scalia condemned the majority opinion for not following precedent with
respect to the scope of the in furtherance requirement. Scalia asserted that the statute does not reach every
fraudulent scheme, but rather only those in which the use of mails is a part of the execution of the fraud.21 In
other words, he wrote, it is mail fraud, not mail and fraud, that incurs liability.22
Scalia asserted that both United States v. Maze23 and Kann v. United States24 hold that, in cases where the
scheme has reached its fruition, subsequent mailings immaterial to the scheme do not trigger the statute. Scalia
then argued that these two cases were on point because Schmucks scheme had reached its fruition when he sold
the cars to the wholesalers; the subsequent mailings were immaterial to Schmuck since he had already received
his money.25
The Schmuck ruling seems to indicate that a mailing which furthers the scheme, whether that mailing aids or
actually hinders the scheme, will trigger the mail fraud statute; in other words, the mailing need only be related to
the scheme. As the Court concluded in Schmuck, [t]he mail fraud statute includes no guarantee that the use of the
mails for the purpose of executing a fraudulent scheme will be risk free. Those who use the mails to defraud
proceed at their peril.26
Footnotes
1
U.S. v. Prince, 214 F.3d 740, 748, 2000 FED App. 0186P (6th Cir. 2000).
2
U.S. v. Adcock, 534 F.3d 635, 640 (7th Cir. 2008). U.S. v. Griffith, 17 F.3d 865, 40 Fed. R. Evid. Serv.
565, 1994 FED App. 0067P (6th Cir. 1994) (citing U.S. v. Campbell, 845 F.2d 1374, 25 Fed. R. Evid.
Serv. 960 (6th Cir. 1988)).
U.S. v. Adcock, 534 F.3d 635, 640 (7th Cir. 2008).
3.10 U.S. v. Turner, 551 F.3d 657, 660 (7th Cir. 2008), cert. denied, 129 S. Ct. 2748, 174 L. Ed. 2d 249 (2009).
4
U.S. v. Kim, 246 F.3d 186, 189 (2d Cir. 2001) (citing U.S. v. Braverman, 376 F.2d 249, 251 (2d Cir.
1967)); but see U.S. v. Radziszewski, 474 F.3d 480, 485 (7th Cir. 2007), as amended on denial of rehg,
(May 14, 2007) (defendants intention to repay fraudulently obtained funds does not support a good faith
defense to mail and wire fraud because the crime of fraud is complete when the funds are obtained under
false pretenses).
5
U.S. v. Kim, 246 F.3d 186, 189 (2d Cir. 2001) (citing U.S. v. Braverman, 376 F.2d 249, 251 (2d Cir.
1967)).
See U.S. v. Hatch, 926 F.2d 387, 392, 32 Fed. R. Evid. Serv. 556 (5th Cir. 1991). Note that the government
may be able to prove use of the mails circumstantially, or through a witness who testifies that a specific
item would have been mailed as a matter of routine or custom. U.S. v. Scott, 668 F.2d 384, 388, 9 Fed. R.
Evid. Serv. 899 (8th Cir. 1981); but see U.S. v. Massey, 827 F.2d 995, 999 (5th Cir. 1987) (use of
circumstantial evidence to prove a mailing does not relieve the government of its burden of establishing the
elements of the offense charged beyond a mere likelihood or probability or by more than mere
speculation); U.S. v. United Skates of America, Inc., 727 F. Supp. 430, 431 (N.D. Ill. 1989) ([W]hile
circumstantial evidence and the inferences drawn therefrom may certainly be sufficient to support a finding
on a particular element of an offense, mere suspicion or speculation cannot be the basis for the creation of
logical inferences.).
U.S. v. Elliott, 89 F.3d 1360, 1364 (8th Cir. 1996).
U.S. v. Elliott, 89 F.3d 1360, 1364 (8th Cir. 1996).
See U.S. v. Hopkins, 357 F.2d 14, 16 (6th Cir. 1966).
10
U.S. v. Tencer, 107 F.3d 1120, 1125 (5th Cir. 1997).
11
U.S. v. Tencer, 107 F.3d 1120, 1125 (5th Cir. 1997).
12
U.S. v. Fermin Castillo, 829 F.2d 1194, 1198 (1st Cir. 1987). But see U.S. v. Smith, 934 F.2d 270 (11th
Cir. 1991) (rejected by, U.S. v. Pimental, 380 F.3d 575 (1st Cir. 2004)) (holding that defendant cannot be
convicted of mail fraud based on mailing between insurance companys offices to approve his payment
draft because it was not reasonably foreseeable to defendant that company would mail draft.). Examples of
mailings which are not in furtherance of a scheme are routine mailings made without the presence of a
fraudulent scheme, and mailings which occur after the completion of the scheme. See Parr v. U.S., 363
U.S. 370, 80 S. Ct. 1171, 4 L. Ed. 2d 1277 (1960); U.S. v. Maze, 414 U.S. 395, 94 S. Ct. 645, 38 L. Ed. 2d
603 (1974).
13
Kann v. U.S., 323 U.S. 88, 9495, 65 S. Ct. 148, 89 L. Ed. 88, 157 A.L.R. 406 (1944).
14
U.S. v. Maze, 414 U.S. 395, 403, 94 S. Ct. 645, 38 L. Ed. 2d 603 (1974). See also, U.S. v. Evans, 473 F.3d
1115, 1123 (11th Cir. 2006) (holding that a fax transmission from the victim to the defendant confirming a
meeting to discuss the status of the victims account fell within the lulling doctrine because it was part and
parcel of the scheme to delay detection of the fraud by lulling [the victim] into believing that the parties
difficulties would be worked out).
15
Schmuck v. U.S., 489 U.S. 705, 715, 109 S. Ct. 1443, 103 L. Ed. 2d 734 (1989).
16
Schmuck v. U.S., 489 U.S. 705, 109 S. Ct. 1443, 103 L. Ed. 2d 734 (1989); see U.S. v. Arledge, 553 F.3d
881 (5th Cir. 2008), cert. denied, 129 S. Ct. 2028, 173 L. Ed. 2d 1088 (2009) (holding that the mailing of
legitimate claims to recover from a class action settlement fund satisfied the use of mails requirement
because those claims served to facilitate the submission of other fraudulent claims).
17
18
19
20
21
Schmuck v. U.S., 489 U.S. 705, 723, 109 S. Ct. 1443, 103 L. Ed. 2d 734 (1989) (citing Kann v. U.S., 323
U.S. 88, 95, 65 S. Ct. 148, 89 L. Ed. 88, 157 A.L.R. 406 (1944).
22
23
U.S. v. Maze, 414 U.S. 395, 94 S. Ct. 645, 38 L. Ed. 2d 603 (1974).
24
Kann v. U.S., 323 U.S. 88, 95, 65 S. Ct. 148, 89 L. Ed. 88, 157 A.L.R. 406 (1944).
25
Schmuck v. U.S., 489 U.S. 705, 723, 109 S. Ct. 1443, 103 L. Ed. 2d 734 (1989). See also U.S. v. Evans,
148 F.3d 477 (5th Cir. 1998).
26
End of Document

Government Works.
8:6. Elements of mail and wire fraudMateriality, 1 White Collar Crime 8:6 (2d ed.)

White Collar Crime
Joel Androphy
I. Fraud Statutes
References
8:6. Elements of mail and wire fraudMateriality

35(2)
1014(2)
In order for your client to be convicted of mail or wire fraud, the government must prove that your client made a
material misrepresentation or omission and had the intent to deprive his customers of property (money) or honest
services.1
Case law provides several bases to attack the conclusion that the statements (or omissions) made in
communications rise to the level of being criminally material or reflect the requisite intent, and thus are fraudulent
within the meaning of the mail and wire fraud statutes.
In Neder v. United States, the United States Supreme Court held that materiality of falsehood is an element of
mail and wire fraud.2 The Court cited the definition found in the Second Restatement of Torts, which states that a
matter is material if:
(a) a reasonable man would attach importance to its existence or nonexistence in determining his
choice of action in the transaction in question; or
(b) the maker of the representation knows or has reason to know that its recipient regards or is likely
to regard the matter as important in determining his choice of action, although a reasonable man
would not so regard it.3 In 2003, a circuit court articulated the Neder requirement as follows: [I]t is
clear that as an element of the scheme to defraud requirement, the government must prove that the
defendant said something materially false.4
In United States v. DeSantis, the court affirmed a mail fraud conviction despite the defendants challenge to the
materiality of his statements.5 Without discussion, the court concluded that reasonable minds could differ whether
the defendants statementsthat his commissions were only 10% when they were actually 20%were material.
Materiality, the court explained, is a fact question for the jury.6

In United States v. Daniel, the court concluded that a reasonable jury could find that the defendants
misrepresentations were material when the defendant lied to his company to obtain loans for personal reasons by
stating that the loans were for company investment purposes.7 The court reasoned that the false statements were
arguably material because the defendant knew the statements were false, and the statements would have affected a
reasonable persons actions in the situation.8
Daniel serves as an interesting example of how courts may frame the issue of intent under the mail and wire fraud
statutes by blending intent with the concept of materiality. To convict a defendant of wire fraud the government
must prove specific intent, which means not only that a defendant must knowingly make a material
misrepresentation or knowingly omit a material fact, but also that the misrepresentation or omission must have the
purpose of inducing the victim of the fraud to part with property or undertake some action that he would not
otherwise do absent the misrepresentation or omission.9
In its analysis following this rule, the court framed the issue as follows: The question here is whether Daniel
made his representations intending to get Century to loan him money that it would not have otherwise loaned
him.10 The answer was yes.11
The question of materiality (or intent) comes down to two alternative burdens. Under the first alternative, the
purpose of the statement or omission must be to induce the victim of the fraud to part with property. Under the
second alternative, the question is whether the misrepresentation or omission would influence someone to
undertake some action that he would not otherwise do if it were not for the misrepresentation or omission.12
The second alternative would probably be an easier burden to meet. At first blush, it has a certain but for logic
to it. But for the omission or misrepresentation, the buyer would not have made a purchase; thus, it is material.
There is an enormous risk, however, in applying such logic to arms length sales transactions because anything
said or not said becomes material; it risks materializing everything about a sales transaction.
Any consumer would like to know more about the kind of deal he is getting, so just about anything is going to
seem material to the consumer when money is changing hands. To combat such a result, many circuits have
tempered the reach on arms length transactions by focusing on intent to defraud or requiring reasonable reliance
by the consumer, as discussed below.
Footnotes
1
Note that it is no defense that the defendant had an honest belief that the scheme would work. Such a belief
does not negate the falsity of misrepresentations or knowledge that statements were false when made. U.S.
v. Alexander, 743 F.2d 472, 478, Bankr. L. Rep. (CCH) P 70011 (7th Cir. 1984).
2
Neder v. U.S., 527 U.S. 1, 119 S. Ct. 1827, 1840, 144 L. Ed. 2d 35, 99-1 U.S. Tax Cas. (CCH) 50586, 83
A.F.T.R.2d 99-2668 (1999).
Neder v. U.S., 527 U.S. 1, 119 S. Ct. 1827, 1840, 144 L. Ed. 2d 35, 99-1 U.S. Tax Cas. (CCH) 50586, 83
A.F.T.R.2d 99-2668 (1999) (quoting Restatement (Second) of Torts 538 (1977)). U.S. v. Daniel, 329
F.3d 480, 486, 2003 FED App. 0153P (6th Cir. 2003) (material misrepresentations or omissions are those
that might affect a reasonable persons actions in a situation); U.S. v. Rybicki, 354 F.3d 124, 145 (2d Cir.
2003) (en banc) (holding that misrepresentation or omission at issue is material when that
misinformation or omission would naturally tend to lead or is capable of leading a reasonable employer to
change its conduct).

4
U.S. v. Daniel, 329 F.3d 480, 486, 2003 FED App. 0153P (6th Cir. 2003).
U.S. v. DeSantis, 134 F.3d 760, Fed. Sec. L. Rep. (CCH) 90120, 48 Fed. R. Evid. Serv. 807, 1998 FED
App. 0018P (6th Cir. 1998).
U.S. v. DeSantis, 134 F.3d 760, 764, Fed. Sec. L. Rep. (CCH) 90120, 48 Fed. R. Evid. Serv. 807, 1998
FED App. 0018P (6th Cir. 1998). See also U.S. v. Cornish, 68 Fed. Appx. 557, 559 (6th Cir. 2003) (stating
there was sufficient evidence that defendants deceit was material because defendant induced victim
company to actually purchase an account receivable from him based on his misrepresentations).
10
11
12
See U.S. v. Gray, 96 F.3d 769, 77576, 112 Ed. Law Rep. 637 (5th Cir. 1996).
End of Document

Government Works.
8:7. Elements of mail and wire fraudUnreasonable reliance, 1 White Collar Crime ...

White Collar Crime
Joel Androphy
I. Fraud Statutes
References
8:7. Elements of mail and wire fraudUnreasonable reliance

35(2)
1014(2)
Historically, [i]n order to establish a scheme to defraud, an essential element of mail fraud, there must be proof
of fraudulent misrepresentations or omissions reasonably calculated to deceive persons of ordinary prudence and
comprehension.1
In recent years, the requirement of showing that the scheme would deceive a person of ordinary prudence has
generally been superseded by a less strict standard.2 Some circuits, however, have adopted the rule in their
jurisdictional case law.3
The circuits that have the rule rarely exercise it in favor of a defendant. United States v. Brown is the only major
criminal case in which the court absolved the defendants by finding unreasonable reliance by the alleged victim of
fraud, and it has been subsequently overruled on point by the Eleventh Circuit.4 In Svete, the Eleventh Circuit
overruled Brown and held that the offense of mail fraud does not require proof of a scheme to deceive a person of
ordinary prudence.5
In overruling Brown, the Eleventh Circuit noted the overwhelming criticism of the Brown decision by both courts
and scholars alike.6 Specifically, the court noted that the decision had been disagreed with by every other court
that had addressed the issue, and that the decision was inconsistent with the plain language of the mail fraud
statute, which prohibits any scheme or artifice to defraud.7
The defense of unreasonable reliance was similarly rejected in United States v. Maxwell.8 In Maxwell, the
defendant challenged a wire fraud conviction on the grounds that no reasonable person would have believed her
misrepresentations. The court held that the issue of unreasonable belief by the victim is irrelevant; instead, the
only relevant issue is whether there is a plan, scheme, or artifice intended to defraud.9
The movement away from requiring reasonable reliance stems from the concern that such a requirement unfairly
penalizes victims while rewarding defendants for targeting nave individuals. As Judge Posner commented in
reaction to the Brown decision, it is hard to believe [that the holding in Brown] was intended to be understood
literally, for if it were it would invite con men to prey on people of below-average judgment or intelligence, who
are anyway the biggest targets of such criminals and hence the people most needful of the laws protection.10
Additionally, as the Tenth Circuit noted in United States v. Drake, the focus of the fraud analysis is supposed to
be on the violatornot the victim.11
Footnotes
1
Blount Financial Services, Inc. v. Walter E. Heller and Co., 819 F.2d 151, 153, R.I.C.O. Bus. Disp. Guide
(CCH) 6633, 1987-1 Trade Cas. (CCH) 67580 (6th Cir. 1987) (citing U.S. v. Van Dyke, 605 F.2d 220,
225, 4 Fed. R. Evid. Serv. 1160 (6th Cir. 1979)).
2
See, e.g., U.S. v. Rosby, 454 F.3d 670, 674 (7th Cir. 2006); U.S. v. Ciccone, 219 F.3d 1078, 1083 (9th Cir.
2000) (rejecting defendants argument that the government had to prove the scheme was reasonably
calculated to deceive an ordinary, prudent person because it is immaterial whether only the most gullible
would have been deceived by the scheme);
U.S. v. Coffman, 94 F.3d 330, 334 (7th Cir. 1996) (rejecting the rule generally but reasoning that a
reasonable person analysis may be appropriate: (1) as circumstantial evidence of the issue of intent where
defendant claims he did not intend to deceive anyone and there is little available evidence as to intent; or
(2) in cases that involve the indistinct border between real fraud and sharp dealing, such as distinguishing
between the small lies of puffery and elaborate fraudulent schemes); U.S. v. Maxwell, 920 F.2d 1028, 1038
(D.C. Cir. 1990) (rejecting the rule); U.S. v. Brien, 617 F.2d 299, 311 (1st Cir. 1980) (rejecting the rule).
See, e.g., U.S. v. Goodman, 984 F.2d 235, 237 (8th Cir. 1993) (citing the rule); U.S. v. Bruce, 488 F.2d
1224, 1229, Fed. Sec. L. Rep. (CCH) 94335 (5th Cir. 1973) (citing the rule). But see U.S. v. Davis, 226
F.3d 346, 358359 (5th Cir. 2000) (concluding that the trial court did not err by giving jury instructions
stating that the navet of the victim did not excuse criminal liability because defendants argument that a
material misrepresentation is only material if a reasonable person would rely on it overlooked the two
alternative definitions for materiality in Neder v. U.S., 527 U.S. 1, 119 S. Ct. 1827, 144 L. Ed. 2d 35, 99-1
U.S. Tax Cas. (CCH) 50586, 83 A.F.T.R.2d 99-2668 (1999), reasoning that one of them does not require
reasonable reliance if the maker knew or had reason to know his victim would rely). Cf. U.S. v. Boyd, 2
Fed. Appx. 86 (2d Cir. 2001) (collecting cases from the circuits that disavow the rule but not deciding the
issue); U.S. v. Falkowitz, 214 F. Supp. 2d 365, 376377 (S.D. N.Y. 2002) (discussing the applicability of
the rule in criminal fraud, arguing that it is a part of civil fraud but not all circuits have imported it into
their criminal law fraud and giving reasons why it should not be applied to criminal fraud).
The rule has only appeared once in an opinion in a criminal case in the Sixth Circuit. See U.S. v. Van
Dyke, 605 F.2d 220, 225, 4 Fed. R. Evid. Serv. 1160 (6th Cir. 1979) (citing the rule and finding reasonable
reliance on false statements by jewelry franchise conman who advertised the start-up franchise program in
magazines). See also, U.S. v. Frost, 125 F.3d 346, 372, 1997 FED App. 0274P (6th Cir. 1997) (although
the rule is not discussed, the case illustrates a jury instruction that has the rule in it).
U.S. v. Brown, 79 F.3d 1550, 1558 (11th Cir. 1996) (overruled by, U.S. v. Svete, 556 F.3d 1157 (11th Cir.
2009)).
U.S. v. Svete, 556 F.3d 1157, 1160 (11th Cir. 2009) (en banc).
U.S. v. Svete, 556 F.3d 1157, 116768 (11th Cir. 2009) (en banc).
U.S. v. Svete, 556 F.3d 1157, 116768 (11th Cir. 2009) (en banc) (emphasis in original).
U.S. v. Maxwell, 920 F.2d 1028, 1036 (D.C. Cir. 1990).
See U.S. v. Taylor, 832 F.2d 1187, 1192 (10th Cir. 1987).
10
U.S. v. Svete, 556 F.3d 1157, 116768 (11th Cir. 2009) (en banc) (quoting U.S. v. Coffman, 94 F.3d 330,
334 (7th Cir. 1996) (Posner, J.)).
11
U.S. v. Drake, 932 F.2d 861, 86364, 33 Fed. R. Evid. Serv. 64 (10th Cir. 1991).
End of Document

Government Works.

Mail &amp; Wire Fraud Elements - 18 USC 1341-1343 Federal Criminal Law - US District Courts - United States Attorney California - United States Code - Mail Fraud - Wire Fraud - RICO Racketeering

Hochgeladen von

Dokumentinformationen

Copyright

Verfügbare Formate

Dieses Dokument teilen

Dokument teilen oder einbetten

Freigabeoptionen

Stufen Sie dieses Dokument als nützlich ein?

Sind diese Inhalte unangemessen?

Copyright:

Verfügbare Formate

Mail &amp; Wire Fraud Elements - 18 USC 1341-1343 Federal Criminal Law - US District Courts - United States Attorney California - United States Code - Mail Fraud - Wire Fraud - RICO Racketeering

Hochgeladen von

Copyright:

Verfügbare Formate

8:1. Federal mail and wire fraud statutes, 1 White Collar Crime 8:1 (2d ed.

1 White Collar Crime 8:1 (2d ed.)

8:1. Federal mail and wire fraud statutes

Wests Key Number Digest

2012 Thomson Reuters. No claim to original U.S.

2012 Thomson Reuters. No claim to original U.S. Government Works.

1 White Collar Crime 8:2 (2d ed.)

8:2. Elements of mail and wire fraud

Wests Key Number Digest

2012 Thomson Reuters. No claim to original U.S.

2012 Thomson Reuters. No claim to original U.S. Government Works.

1 White Collar Crime 8:3 (2d ed.)

8:3. Elements of mail and wire fraudIntent to defraud

Wests Key Number Digest

U.S. v. Keller, 14 F.3d 1051, 1056 (5th Cir. 1994).

2012 Thomson Reuters. No claim to original U.S.

2012 Thomson Reuters. No claim to original U.S. Government Works.

2012 Thomson Reuters. No claim to original U.S. Government Works.

1 White Collar Crime 8:4 (2d ed.)

8:4. Elements of mail and wire fraudScheme or artifice to defraud

Wests Key Number Digest

U.S. v. Church, 888 F.2d 20, 24 (5th Cir. 1989).

U.S. v. Little, 889 F.2d 1367, 1368 (5th Cir. 1989).

2012 Thomson Reuters. No claim to original U.S.

2012 Thomson Reuters. No claim to original U.S. Government Works.

1 White Collar Crime 8:5 (2d ed.)

Wests Key Number Digest

U.S. v. Adcock, 534 F.3d 635, 640 (7th Cir. 2008).

U.S. v. Elliott, 89 F.3d 1360, 1364 (8th Cir. 1996).

U.S. v. Elliott, 89 F.3d 1360, 1364 (8th Cir. 1996).

See U.S. v. Hopkins, 357 F.2d 14, 16 (6th Cir. 1966).

U.S. v. Tencer, 107 F.3d 1120, 1125 (5th Cir. 1997).

U.S. v. Tencer, 107 F.3d 1120, 1125 (5th Cir. 1997).

2012 Thomson Reuters. No claim to original U.S.

2012 Thomson Reuters. No claim to original U.S. Government Works.

1 White Collar Crime 8:6 (2d ed.)

8:6. Elements of mail and wire fraudMateriality

Wests Key Number Digest

Materiality, the court explained, is a fact question for the jury.6

change its conduct).

2012 Thomson Reuters. No claim to original U.S.

2012 Thomson Reuters. No claim to original U.S. Government Works.

1 White Collar Crime 8:7 (2d ed.)

8:7. Elements of mail and wire fraudUnreasonable reliance

Wests Key Number Digest

U.S. v. Maxwell, 920 F.2d 1028, 1036 (D.C. Cir. 1990).

2012 Thomson Reuters. No claim to original U.S.

2012 Thomson Reuters. No claim to original U.S. Government Works.

Das könnte Ihnen auch gefallen

Mail & Wire Fraud Elements - 18 USC 1341-1343 Federal Criminal Law - US District Courts - United States Attorney California - United States Code - Mail Fraud - Wire Fraud - RICO Racketeering

Mail & Wire Fraud Elements - 18 USC 1341-1343 Federal Criminal Law - US District Courts - United States Attorney California - United States Code - Mail Fraud - Wire Fraud - RICO Racketeering