944 F.3d 72
2d Cir.2019Background
- The defendants, Pablo Calderon and Brett C. Lillemoe, arranged GSM‑102 USDA‑guaranteed export finance transactions as third‑party intermediaries who purchased or rented trade flows and assembled letters of credit for banks.
- To obtain payment from U.S. confirming banks (and to qualify for USDA guarantees) they presented shipping documents—notably bills of lading—that they altered: stamping “original” over “copy non‑negotiable” and changing on‑board dates to fall within guarantee windows.
- The altered documents were presented to Deutsche Bank and CoBank; loans were disbursed and later the Russian issuing bank (IIB) defaulted, after which USDA reimbursed banks under the GSM‑102 guarantees.
- Indictment charged conspiracy, wire fraud, bank fraud, money laundering and related counts; after trial juries convicted both defendants of conspiracy and several wire‑fraud counts but acquitted on other counts.
- The district court ordered restitution (over $18 million to USDA and additional amounts to CoBank); on appeal the Second Circuit affirmed the convictions but reversed and vacated the restitution orders for lack of proximate causation.
Issues
| Issue | Government's Argument | Defendants' Argument | Held |
|---|---|---|---|
| Sufficiency of evidence (materiality & intent for wire/bank fraud) | Alterations were material and intended to expose banks to economic risk; testimony and documentary evidence supported conviction | Alterations were trivial or immaterial and defendants lacked intent to cause bank loss | Conviction supported: evidence of material misrepresentations and intent to risk harm was sufficient |
| "No ultimate harm" jury instruction | Proper because defense repeatedly emphasized ultimate USDA reimbursement, creating a factual predicate | Instruction was prejudicial because banks ultimately suffered no net loss | Instruction permissible: factual predicate existed; instruction required intent finding and did not confuse jury |
| Jury instruction on bank‑fraud elements (whether contemplated harm is required) | Charge tracked statute; Loughrin supports narrower intent requirements for §1344(2) | Court should have instructed that contemplated actual/potential harm is an element of bank fraud | Even assuming omission, no plain error: no prejudice (acquittal on bank‑fraud count) and ambiguity in caselaw precludes clear error |
| Modified Allen charge to a deadlocked jury | Properly worded, non‑coercive, and included safeguards (reminder not to abandon conscientious judgment) | Coercive and deficient for not reinstructing on burden of proof | No abuse of discretion: modified Allen charge was careful and non‑coercive; not reversible error |
| Restitution under MVRA (proximate causation) | USDA and banks were victims entitled to full recompense because they were reimbursed and suffered loss under guarantees | Banks’ and USDA’s losses were not proximately caused by the document alterations—the actual loss resulted from the foreign banks’ default unrelated to those alterations | Reversed: MVRA restitution vacated because defendants did not proximately cause the losses reimbursed by USDA |
Key Cases Cited
- Neder v. United States, 527 U.S. 1 (1999) (materiality standard for fraudulent misrepresentations)
- Loughrin v. United States, 573 U.S. 351 (2014) (interpretation of bank‑fraud elements under §1344)
- Paroline v. United States, 572 U.S. 434 (2014) (discussion of proximate causation as a limiting concept)
- United States v. Paul, 634 F.3d 668 (2d Cir. 2011) (MVRA proximate‑cause analysis where misrepresentation bore on loan origination)
- United States v. Binday, 804 F.3d 558 (2d Cir. 2015) (fraud that exposes lender to unexpected economic risk supports fraud conviction)
- United States v. Ferguson, 676 F.3d 260 (2d Cir. 2011) (upholding "no ultimate harm" instruction where immediate harm to victims existed)
- United States v. Haynes, 729 F.3d 178 (2d Cir. 2013) (test for coercive Allen charges)
- United States v. Vargas‑Cordon, 733 F.3d 366 (2d Cir. 2013) (abuse‑of‑discretion review of supplemental Allen charges)
- United States v. Rigas, 490 F.3d 208 (2d Cir. 2007) (materiality inquiry tied to contractual or statutory limits on decisionmaking)
- United States v. Marino, 654 F.3d 310 (2d Cir. 2011) (zone‑of‑risk formulation for proximate causation under MVRA)