Argued and Submitted October 18, 2012—San Francisco, California
Appeal from the United States District Court for the Northern District of California Jeffrey S. White, District Judge, Presiding D.C. No. 3:09-cr-01103-JSW-1
Benjamin L. Coleman, Coleman & Balogh LLP, San Diego, California; and Ethan A. Balogh, Coleman & Balogh LLP, San Francisco, California, for Defendant–Appellant.
Suzanne Miles, Assistant United States Attorney, San Francisco, California, for Plaintiff–Appellee.
Before: Dorothy W. Nelson, Mary H. Murguia, and Morgan Christen, Circuit Judges.
ORDER AND AMENDED
The panel amended its opinion filed March 26, 2013, and deleted Judge Christen's concurrence, in a case in which the panel affirmed a defendant's conviction and sentence on thirteen counts of wire fraud in violation of 18 U.S.C. § 1343 stemming from a scheme to defraud his employer, Bricsnet FM America, Inc., by diverting part of the company's profits to a shell company through which the defendant and other employees distributed the diverted profits in the form of salaries, dividends, and bonuses.
The defendant asserted that routine wire communications between two California banks and the Federal Reserve Bank in Dallas occurred after the defendant deposited the monies into his Mechanics Bank account and, as a result, were neither initiated for the purpose of defrauding Bricsnet nor related to his scheme to defraud. In the amended opinion, the panel disagreed because the defendant conducted an ongoing scheme to defraud Bricsnet, and even if each check the defendant deposited is viewed as a discrete fraudulent scheme, the interstate wire communications were necessary to complete the fraud. The panel explained that the wire transfer was necessary to complete and conceal the fraud because until the checks cleared, the defendant could not be certain it would be Bricsnet that would be swindled.
The panel rejected the defendant's arguments that his conviction should be overturned because there was insufficient evidence to prove that his use of an interstate wire communication was reasonably foreseeable and because the jury should have been instructed to find the same. The panel wrote that no mens rea requirement exists with regard to the jurisdictional, interstate nexus of the defendant's actions under § 1343, which requires only that the defendant used – or caused the use of – interstate wires in furtherance of his scheme to defraud Bricsnet.
The panel held that § 1343 is a valid extension of congressional power under the Commerce Clause, and that since Congress enacted the statute based upon a constitutionally enumerated power, analysis of the statute under the Necessary and Proper Clause is inappropriate. The panel also held that because § 1343 is a valid exercise of powers delegated to Congress by the Commerce Clause, the defendant's Tenth Amendment challenge to the statute fails.
The panel denied a petition for panel rehearing and the court denied a petition for rehearing en banc.
The Opinion filed March 26, 2013, appearing at 712 F.3d 1255, is amended as follows:
1. On page 7 of the slip opinion, first paragraph that begins on the previous page (712 F.3d at 1259), replace in the penultimate sentence "instruction's" with "instructions'". As amended, the new sentence is:
If the district court's instructions fairly and adequately covered the elements of the offense, then we review the instructions' "'precise formulation' for an abuse of discretion." Id.
2. On page 13 of the slip opinion, first full paragraph (712 F.3d at 1263), replace the third and fourth sentences with Similarly, "the execution of the scheme as conceived" by Jinian depended upon each check successfully clearing through the federal reserve because, if either bank had been left holding the dishonored check, Jinian's scheme would have been discovered. Id. at 715.
As amended, the paragraph is:
We conclude that Jinian's conduct is more akin to the fraud perpetrated in Schmuck than in Kann. The scheme in Schmuck remained incomplete until the mailing activity, thereby rendering the mailing an "essential step in the successful passage of title, " occurred. Id. at 714. Similarly, "the execution of the scheme as conceived" by Jinian depended upon each check successfully clearing through the federal reserve because, if either bank had been left holding the dishonored check, Jinian's scheme would have been discovered. Id. at 715. As long as Bricsnet was the victim of his crime, Jinian could cover his tracks by giving false assurances to Brown.
3. Beginning on page 15 of the slip opinion (712 F.3d at 1264), second full paragraph, delete the second sentence and remainder of the paragraph. Add a new second sentence:
The wire transfer was necessary to complete the fraud because, until the checks cleared, Jinian could not be certain it would be Bricsnet that would be swindled.
On page 16 of the slip opinion, first full paragraph, replace from the first sentence "The government also" with "The government" and merge the remainder of the paragraph with the preceding paragraph. The new sentence is:
The government introduced evidence that Jinian directed Brown to issue multiple, smaller-denomination checks, rather than a large, lump-sum payment.6
As amended, the second full paragraph beginning on page 16 of the slip opinion is:
Here, the mere clearing of a check is enough because the interstate communication was necessary to complete and conceal Jinian's fraud. The wire transfer was necessary to complete the fraud because, until the checks cleared, Jinian could not be certain it would be Bricsnet that would be swindled. The government introduced evidence that Jinian directed Brown to issue multiple, smaller-denomination checks, rather than a large, lump-sum payment.6 Such conduct gives rise to inferences that Jinian intended to conceal his transactions entirely from detection by Bricsnet or structure the transactions in a manner that gave them the appearance of regular or necessary business expenditures. Jinian's conduct further suggests that depositing multiple, smaller-denomination checks insulated his conduct from suspicion ...