United States v. Segal
2011 U.S. App. LEXIS 9038
| 7th Cir. | 2011Background
- Segal was indicted in 2002 with NNIB on racketeering, fraud, embezzlement, false statements, and conspiracy to impede the IRS; multiple supersessions culminated in a 2004 fourth version.
- A jury found Segal guilty on most counts; the district court later dismissed seven counts, leaving 19 convictions against Segal and NNIB.
- Segal was sentenced to 121 months, restitution of $841,527.96, and forfeit $30 million plus his interest in NNIB.
- On appeal, we remanded for forfeiture review after Skilling v. United States raised questions about honest services theory.
- Skilling narrowed honest services fraud to bribery or kickback schemes; the court concluded any error was harmless because money/property fraud supported the verdict.
- On remand, the district court set a $15 million forfeiture; we affirmed most aspects but remanded for potential resentencing if honest services affected the sentence.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Was the honest services instruction harmless beyond a reasonable doubt? | Segal argues the jury relied on honest services, invalid post-Skilling. | Segal contends Skilling requires reversal if honest services existed. | Harmless beyond doubt; money/property fraud supported conviction. |
| Whether the conviction rests on money/property fraud regardless of honest services. | Evidence showed misappropriation of premium funds as monetary fraud. | Argues there was no substantive monetary fraud beyond honest services. | Conviction for monetary fraud stands whether or not honest services was considered. |
| Whether Neder requires specific intent to injure for fraud under mail/wire statutes. | Neder concerns materiality, not a required intent to cause harm. | Neder should require more than general intent or misrepresentation. | Neder does not demand a specific intent to injure; the intent to obtain money suffices. |
| Remand for resentencing if honest services affected the sentence. | Honest services could have increased punishment. | No resentencing needed if same sentence would have imposed. | Remand to address potential impact of any honest services conviction on sentence. |
Key Cases Cited
- Skilling v. United States, 130 S. Ct. 2896 (2010) (honest services narrowed to bribery or kickback schemes; harmless error analysis possible)
- United States v. Black, 625 F.3d 386 (7th Cir. 2010) (affirming monetary fraud theory supports conviction despite honest services issue)
- United States v. Swanson, 394 F.3d 520 (7th Cir. 2005) (standard of review for remand/disposition on forfeiture)
- Neder v. United States, 527 U.S. 1 (Supreme Court 1999) (materiality as an element of fraud; does not require specific intent to injure)
- United States v. Sorich, 523 F.3d 702 (7th Cir. 2008) (loss not required to prove fraud; knowledge and deceit suffice)
- United States v. Hamilton, 499 F.3d 734 (7th Cir. 2007) (intent may be satisfied by substantial risk of loss to victims)
- United States v. Davuluri, 239 F.3d 902 (7th Cir. 2001) (intent can be inferred from defendant's deception and profit motive)