United States v. Steven Fenzl, 670 F.3d 778

Ritter and Fenzl led Urban Services of America, charged with mail and wire fraud in a 2005 bid for Chicago; Ritter pled guilty, Fenzl tried and convicted with 16 months’ imprisonment and fines.
The City opened a July 2004 investigation into Ritter/Urban based on an anonymous tip about illegal checks and negative press articles; a prior April bid round had produced no award.
Urban sought to improve its chances by slashing its bid and encouraging other bidders, including one owned by Ritter/Fenzl, to bid and potentially subcontract to Urban; Urban won as the low bidder with the winning bid funds potentially routed through subcontracting.
Urban claimed it would subcontract to a minority- and women-owned business, as required by the City, but did not do so; the minority-subcontracting issue produced acquittal for Fenzl on that specific charge.
Prosecutors initially pursued an antitrust theory but charged fraud instead; Brown, a City investigator, testified about what the Department of Procurement Services would have done, a key evidentiary issue; the government relied on lay testimony rather than procurement officials; the prosecution also argued that Urban’s failure to subcontract constituted fraud.
The district court’s rulings and the trial strategy are central to the reversal and remand for acquittal on the general “enlisting other bidders” fraud charge and retrial on the minority-business-enterprise fraud charge.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Admissibility of Brown’s lay testimony on materiality	Government: Brown’s testimony admissible as lay observation.	Fenzl: Brown’s lay testimony is improper expert-like opinion; not permissible lay testimony.	Brown’s testimony improperly admitted; reversal/remand needed.
Prosecutorial closing argument conflating minority-subcontracting with fraud	Government argued failure to subcontract showed fraud.	Argument blended contract breach with fraud; improper framing.	Closing argument error; not harmless; requires remand for retrial on related fraud charge.
Validity of fraud theory based on enlisting other bidders	Urban’s scheme to attract bidders to insure outcome could be fraud.	Structure aimed at insurance against loss, not anticompetitive scheme per se.	Concludes reversal/remand on that charge; not upheld as proven fraud.
Fraud liability for minority-business-enterprise by Urban	Evidence supported fraud under false subcontracting promises.	Evidence weak and contingent; likelihood of fraud uncertain.	Remand for retrial on minority-business-enterprise fraud.

Neder v. United States, 527 U.S. 1 (1999) (evidentiary admissibility and materiality considerations)
United States v. Rosby, 454 F.3d 670 (7th Cir. 2006) (prosecution evidence and witness reliability)
United States v. Fernandez, 282 F.3d 500 (7th Cir. 2002) (scope of fraud misrepresentation in bidding)
United States v. Oriedo, 498 F.3d 593 (7th Cir. 2007) (lay witness versus expert testimony standard)
Bullcoming v. New Mexico, 131 S. Ct. 2705 (2011) (limits on surrogate expert testimony and reliability)
Lockhart v. Nelson, 488 U.S. 33 (1988) (harmless-error standard and when to remand for acquittal)
United States v. Tranowski, 702 F.2d 668 (7th Cir. 1983) (prosecutorial errors and trial strategy)
Habitat Education Center v. U.S. Forest Service, 607 F.3d 453 (7th Cir. 2010) (antitrust/competition considerations in bidding context)
James Cape & Sons Co. v. PCC Construction Co., 453 F.3d 396 (7th Cir. 2006) (price-fixing and bid-rigging context in procurement)
United States v. Heffernan, 43 F.3d 1144 (7th Cir. 1994) (antitrust considerations in bid contexts)