United States v. Milovanovic
627 F.3d 405
9th Cir.2010Background
- Defendants Milovanovic and Lamb allegedly arranged to obtain Washington commercial driver’s licenses for out-of-state applicants by cheating on written tests and falsifying residency in exchange for bribes.
- Lamb worked for a firm contracted by the state to administer the driving test; Milovanovic assisted in tests and translated for applicants.
- The licenses were issued via a chain of contractors; Milovanovic supplied false residency and test-answers, Lamb falsified driving-test results, and licenses were mailed to false addresses.
- The state contracts described Milovanovic and Lamb as independent contractors, not agents or fiduciaries, and the government did not lose the license fees.
- The district court dismissed the indictment for alleged lack of fiduciary duty and absence of damages, and the United States appealed.
- The parties debate whether “honest services” mail fraud requires a fiduciary relationship and how §1346 should be read in light of McNally
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does honest services mail fraud require a fiduciary relationship? | Milovanovic and Lamb owed fiduciary duties to the state. | No fiduciary requirement; misrepresentation suffices. | No fiduciary requirement; statute reaches nonfiduciaries. |
| Is the indictment sufficient without alleging a heightened duty to the DOL? | Indictment should plead honest-services breach. | Heightened duty must be pled. | Indictment sufficient for proceeding; district court erred in dismissal. |
| Must the government prove damages to the government or victim? | Damages not strictly required for honest-services fraud. | Damages or loss to government may be needed. | Damages are not a required element of honest-services mail fraud. |
| Do the contractor/agency statuses affect liability under §1346? | Agency/contractor role may establish duty. | Independent contractors negate fiduciary duty. | Duty analysis governs; not determinative that they were contractors. |
Key Cases Cited
- United States v. Williams, 441 F.3d 716 (9th Cir. 2006) (discusses scope of honest services; not necessary to decide if ‘another’ includes nonfiduciaries)
- United States v. Bohonus, 628 F.2d 1167 (9th Cir. 1980) (honest services involves intangible rights; early articulation of theory)
- United States v. Rybicki, 354 F.3d 124 (2d Cir. 2003) (en banc; limits potential reach of §1346; discusses fiduciary duty and heighted duty concepts)
- McNally v. United States, 483 U.S. 350 (1987) (holding that mail fraud did not reach honest services pre‑1346 restoration)
- Skilling v. United States, 130 S. Ct. 2896 (2010) (discussion of limits on honest services and fiduciary duty concepts)
- United States v. Sancho, 157 F.3d 918 (2d Cir. 1998) (noting broadened honest services reach; later modified by Rybicki)