United States v. Moshe Porat
76 F.4th 213
3rd Cir.2023Background
- Moshe Porat, former dean of Temple University's Fox School of Business, was charged with conspiracy to commit wire fraud and wire fraud for orchestrating falsified data submissions to U.S. News to inflate Fox’s OMBA and PMBA rankings.
- Porat centralized ranking submissions, directed false reporting (e.g., claiming 100% GMAT participation), and publicly touted the inflated rankings in marketing, emails, and events.
- Evidence at trial showed the inflated rankings increased OMBA and PMBA enrollment sharply (e.g., OMBA from 133 to 336 students) and generated an estimated ~$40 million in additional tuition revenue.
- The scheme was exposed in January 2018; U.S. News moved programs to Unranked and subsequent rankings and enrollments collapsed.
- A jury convicted Porat after a two-week trial; he was sentenced to 14 months and fined. He appealed arguing insufficient proof of (a) intent to deprive victims of money, (b) intent to personally obtain money, and (c) a required “convergence” between the party deceived and the party defrauded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether evidence proved Porat sought to deprive victims of money | Gov: Rankings were used to induce students to enroll and pay tuition; tuition was an object of the scheme | Porat: Victims lost only rankings (not property); students received the education they paid for | Evidence sufficient: jury could find Porat used false rankings to obtain tuition; students did not receive the full benefit of the bargain |
| Whether wire fraud requires proof the defendant sought to personally obtain money | Gov: statute does not limit beneficiary; obtaining money for institution or third party suffices | Porat: "Obtain" should mean bringing money into one’s own possession; must prove personal gain | Rejected: statute and precedent do not require personal receipt; no personal-benefit element required |
| Whether wire fraud requires "convergence" (deceived party = party defrauded) | Gov: not required; scheme may deceive intermediaries and also victims directly | Porat: indictment alleged deception of U.S. News but sought money from students/donors, so no convergence pleaded or proven | Rejected: Third Circuit joins other circuits — no convergence requirement; here evidence also showed direct deception of students |
Key Cases Cited
- Ciminelli v. United States, 143 S. Ct. 1121 (2023) (rejecting broad “right to control” theory of property under fraud statutes)
- Kelly v. United States, 140 S. Ct. 1565 (2020) (property must be an object of the fraud, not merely an incidental byproduct)
- McNally v. United States, 483 U.S. 350 (1987) (fraud statutes limited to protection of property rights)
- Skilling v. United States, 561 U.S. 358 (2010) (narrowing honest-services fraud to bribery/kickbacks)
- Pasquantino v. United States, 544 U.S. 349 (2005) (interpret mail and wire fraud statutes in pari materia regarding property focus)
- Kousisis v. United States, 66 F.4th 406 (3d Cir. 2023) (affirming wire fraud where government paid a premium for DBE participation defendants falsely claimed)
- Takhalov v. United States, 827 F.3d 1307 (11th Cir. 2016) (fraud requires misrepresentation of an essential element of the bargain; mere deceptive inducement not enough)
- Binday v. United States, 804 F.3d 558 (2d Cir. 2015) (discussing when deceit affects economic calculus and benefits/burdens of agreement)
- Guertin v. United States, 67 F.4th 445 (D.C. Cir. 2023) (employee lies that do not change employer’s benefit of the bargain do not constitute wire fraud)
- Riley v. United States, 621 F.3d 312 (3d Cir. 2010) (no requirement that defendant personally benefit to sustain a fraud conviction)