United States v. Milovanovic
2012 U.S. App. LEXIS 10329
| 9th Cir. | 2012Background
- Washington outsourced CDL testing to private testers who administer tests and certify results.
- Milovanovic, a bilingual translator, aided Bosnian-speaking applicants, sometimes guiding answers and providing Spokane addresses.
- Lamb, a third-party tester, falsified skills-test results for bribes; kept logs that sometimes showed failed attempts to mislead auditors.
- Hot, Kovacic, Bilanovic, and Djordjevic paid for fraudulent CDLs obtained through cheating and misrepresentation.
- District court dismissed the superseding indictment as requiring a formal fiduciary duty and economic harm; the government appealed to reinstate the charges.
- En banc Ninth Circuit reversed, holding that a fiduciary duty can be informal, and that the indictment properly charges honest services fraud under 18 U.S.C. §§ 1341, 1346, 1349, and 2, with material misrepresentations and use of mails.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether breach of fiduciary duty is an element of honest services fraud. | Milovanovic and Lamb owed fiduciary duties to the State. | No formal fiduciary relationship required; independent contractors may still breach a duty. | Yes; breach of fiduciary duty is required, but can be informal, not necessarily formal. |
| Whether the superseding indictment states an honest services offense. | Indictment tracks mail fraud statutes and alleges breach of trust with bribes. | Argues lack of formal fiduciary duty undermines validity. | Indictment properly states an honest services offense. |
| Whether economic harm is an element of honest services fraud under 1341/1346. | Economic harm may be required due to traditional framing. | Economic harm not required in honest services fraud against the state. | Foreseeable economic harm is not required; materiality and intent suffice. |
Key Cases Cited
- Skilling v. United States, 561 U.S. 358 (2010) (redefines honest services scope; bribe/kickback core limitations)
- McNally v. United States, 483 U.S. 350 (1987) (limits mail fraud to property rights; pre‑McNally era)
- Rybicki v. United States, 354 F.3d 124 (2d Cir. 2003) (expands honest services to require materiality and intent)
- Davis v. United States, 336 F.3d 920 (9th Cir. 2003) (indictment tracking statute language can be sufficient)
- Williams v. United States, 441 F.3d 716 (9th Cir. 2006) (intangible rights theory extended to non-formal fiduciaries)
- Lupton, 620 F.3d 790 (7th Cir. 2010) (agency concept in private contractor context)