953 F.3d 1095
9th Cir.2020Background
- James Miller, president/managing member of MWRC Internet Sales, was indicted for five counts of wire fraud (18 U.S.C. § 1343) and four counts of filing false tax returns (26 U.S.C. § 7206(1)) after embezzling roughly $330,000 and failing to report it as income.
- Trial evidence: repeated unauthorized check withdrawals disguised in company ledgers, recorded admissions to the owner, partial repayments, and tax filings; jury convicted on all counts; sentenced to nine months’ imprisonment and supervised release.
- At trial the court used the Ninth Circuit model instruction requiring intent to “deceive or cheat”; Miller requested an instruction requiring intent to “deceive and cheat.”
- Early in the investigation, AUSA Gregory Lesser (a 1.25% MWRC member and son of the victim) contacted the FBI and had limited contact with agents before disclosing his conflict; the Central District later recused and the Southern District prosecuted the case.
- Defense sought additional discovery and dismissal based on Lesser’s conflict, alleged false grand-jury testimony, and later-disclosed relationship between the lead FBI agent and a recused Central District AUSA; the district court denied relief.
- The Ninth Circuit held the “deceive or cheat” instruction was erroneous under controlling precedent but that the error was harmless, and that Lesser’s misconduct did not require dismissal; it affirmed the conviction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Correct jury instruction for wire fraud (mens rea) | Gov: model instruction (“deceive or cheat”) correctly states law | Miller: wire fraud requires intent to both deceive and to deprive ("deceive and cheat") | Instruction was erroneous; wire fraud requires intent to deceive and to deprive, but error was harmless and conviction stands |
| Prosecutorial conflict/Interested prosecutor (Greg Lesser) | Miller: Lesser’s early involvement and post-recusal contacts tainted the prosecution and require dismissal | Gov: DOJ cured any taint by recusal and transferring prosecution to disinterested SDNY prosecutors; no material influence shown | Lesser acted improperly, but misconduct did not materially affect the prosecution; no dismissal warranted |
| Grand jury false testimony / Due Process | Miller: false testimony to grand jury (misstating majority ownership) was material and requires dismissal | Gov: testimony was immaterial; petit-jury conviction renders any grand-jury error harmless | District court correctly denied dismissal; alleged false testimony was immaterial or harmless |
| Post-conviction/new evidence & discovery (FBI agent’s undisclosed relationship) | Miller: undisclosed relationship and possible communications with recused AUSA were Brady/newly discovered evidence meriting new trial or discovery | Gov: relationship would be only impeachment; investigation produced no material evidence; not Brady-material | District court did not err — evidence not material and would not likely have produced acquittal |
| Sufficiency of interstate wire element (Rule 29) | Miller: insufficient evidence that interstate wire communications were used | Gov: bank operations witness testified checks were processed via interstate clearing (Fed Reserve/FCN) | Sufficient evidence supported interstate-wire element; Rule 29 denied |
Key Cases Cited
- United States v. Shaw, 137 S. Ct. 462 (2016) (Supreme Court clarified scheme-to-defraud instruction must include intent to deprive)
- Young v. United States ex rel. Vuitton et Fils S.A., 481 U.S. 787 (1987) (supervisory-power reversal where prosecutor had disqualifying conflict)
- United States v. Walters, 997 F.2d 1219 (7th Cir. 1993) (mail fraud requires scheme to obtain money or property from victim)
- United States v. Regent Office Supply Co., 421 F.2d 1174 (2d Cir. 1970) (fraudulent intent must contemplate harm to victim’s money or property)
- United States v. Treadwell, 593 F.3d 990 (9th Cir. 2010) (prior Ninth Circuit precedent discussed regarding intent to deprive; limited by this panel)
- United States v. Restrepo, 930 F.2d 705 (9th Cir. 1991) (standard for due-process relief based on outrageous prosecutorial conduct)
- United States v. Basurto, 497 F.2d 781 (9th Cir. 1974) (indictment tainted by known perjured testimony violates due process)
- Kyles v. Whitley, 514 U.S. 419 (1995) (Brady materiality standard: reasonable probability of a different outcome)