Mail and Wire Fraud Flashcards
Mail Statute: 18 U.S.C. § 1341 - what it can forbid
from 1872, a scheme to defraud need not contemplate the commission of an independent crime
a) Fraud itself need not be something that Congress can independently punish
b) Thus, by virtue of its power to regulate the use of the United States mails, Congress can forbid using the mails to execute a fraudulent scheme “whether it can forbid the scheme or not.”
Wire Fraud: 18 U.S.C. § 1343
a) Patterned after mail fraud statute
b) In pari materia with mail statute, so principles developed in the mail fraud cases apply to wire fraud
Wire Fraud: 18 U.S.C. § 1343
a) Patterned after mail fraud statute
b) In pari materia with mail statute, so principles developed in the mail fraud cases apply to wire fraud
Intent to defraud
The scheme need not be fraudulent on its face but must involve some sort of fraudulent misrepresentations or omissions reasonably calculated to deceive persons of ordinary prudence and comprehension
US v. Hawkey - Fundraising agreement, sent information by mail, also established bank accounts. Defendant argues: no scheme or intent to defraud. Holding: still fraud because funds were solicited by saying the profits were intended for charitable organizations, reasonable jury could have found that he intentionally engaged in a scheme
False pretenses
Fraud broader than false pretenses. False pretenses usually do not apply to representations about the future. (fraud can be past present or future)
• The crime of false pretenses is committed when the actor, intending to defraud, knowingly makes a false representation of a past or present fact to induce another to part with title to property. Promises and representations as to the future do not qualify under most false pretenses statutes.
Intent to deceive
different than intent to defraud. Fraud implies not get what paid for/bargained for.
Materiality for Fraud
(Neder) both reasonable person (RP) test and even if not material to a RP, but if D knows other side will attach importance to it then still material
Reasonable Person test - materiality
objective test (Lustiger) Lustiger’s (real estate) misrepresentations could reasonably have led a person of average intelligence and experience to believe that all parcels offered for sale had reasonable access to a water supply. • While the statements in the advertising materials may not have been literally false, taken as a whole they were fraudulently misleading and deceptive puffery often ok because a reasonable person wouldn't believe it.
Intangible rights
Kickback scheme for cabinet purchasing. Victim didn’t feel defrauded. Court says doesn’t matter , Zenith still deprived of “honest and loyal” service
Money or property
- Journalist Winans wrote about stocks for the WSJ that was influential enough to influence markets
- Gave two people to give them early access to article
- Argued they did not obtain “money or property” from the journal (necessary element of crime under McNally v. US
- Holding: conviction upheld. Distinguishable from McNally because confidential business information which is considered (intellectual) property, not just intangible rights (fiduciary duties)
Pasquantino v. US (2005)
• Convicted of wire fraud for attempting to smuggle alcohol from US into Canada
• Ordered liquor over telephone while in NY
• Issue: whether a scheme to defraud a foreign government of tax revenue violates the wire fraud statute
• Holding: it does
(1) Smuggling operation satisfies both elements of wire fraud statute
(a) Taxes are Canada’s property
no extraterritorial effect but phone call was made on US land
Honest services theory
Skilling v. US - Skilling sought to “deprive Enron and its shareholders of the intangible right of honest services”
1346 (which codifies intangible rights/honest services) is not unconstitutional, but should be construed rather than invalidated, to cover bribes and kickbacks (this decision limits honest services theories)
Schmuck v. US
mail does not need to be central to scheme to defraud - although mail occurred after the fraud, mailings in case satisfy statutory element because mailing was essential step in successful passage of title
(1) Rule: must be incidental to an essential part of the scheme
Mail and Wire Fraud Affecting a Financial Institution
1989 law amended statutes to increase penalties if fraud affected a financial institution (affected is not defined)
US v. Bouyea - can include subsidiary of bank. here, gov. presented more than enough evidence (false faxes) for a reasonable juror to conclude that Bouyea engaged in a scheme to defraud the banks
mail and wire fraud with a contract
O’Donnell v. Bank of America - Court overturns conviction and says no fraud under mail and wire fraud. D breached a contractual promise (to provide investment grade mortgages) but for fraud need deception: “contemporaneous fraudulent intent” at time of contractual promises so the gov’t needs to show “statement was knowingly or recklessly false and made with intent to induce harmful reliance”
