United States v. Tagliaferri, 820 F.3d 568

James Tagliaferri ran TAG Virgin Islands, an investment advisory firm managing ~$252M across ~115 client accounts and personally oversaw most investments.
Beginning in 2007, Tagliaferri (1) accepted undisclosed fees/kickbacks from entities (e.g., IAEH and the Galanis brothers) tied to client investments; (2) executed undisclosed cross‑trades between client accounts; and (3) created and deposited fictitious "sub‑notes" for purported loan investments (NMDA) and used cross‑trades to cover redemptions.
He acknowledged conflicts and some improprieties but testified he believed his investments were in clients’ best interests and that he expected to make clients whole.
Indicted in 2013 (superseding indictment 2014) on counts including investment adviser fraud under 15 U.S.C. § 80b‑6/§ 80b‑17, securities fraud, wire fraud, and Travel Act violations; jury convicted on 12 of 14 counts, including § 206 investment adviser fraud.
At trial the defense requested a jury instruction that § 206 requires proof of intent to harm clients (in addition to intent to deceive); the district court instructed that "intent to defraud" means intent to deceive (no requirement of intent to harm).
Sentenced to 72 months; on appeal Tagliaferri challenged sufficiency of evidence and jury instructions; this opinion addresses only whether intent to harm is an element of criminal § 206 liability.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether a criminal conviction under § 206 (via § 80b‑17) requires proof of intent to harm clients	Gov't: § 206 criminal liability requires willfulness but not intent to harm; intent to deceive suffices	Tagliaferri: § 206 should incorporate common‑law fraud elements in criminal prosecutions, requiring both intent to deceive and intent to harm	Court: No. Criminal § 206 requires willfulness (knowledge/wrongful purpose) and intent to deceive where applicable, but not a separate intent to harm element

SEC v. Capital Gains Research Bureau, Inc., 375 U.S. 180 (1963) (construed § 206 to reach fiduciary conflicts and practices that operate as fraud without requiring intent to injure)
Aaron v. SEC, 446 U.S. 680 (1980) (analyzed scienter under securities statutes and distinguished subsections that require knowing misconduct from those focused on effects)
Screws v. United States, 325 U.S. 91 (1945) ("willful" in criminal statutes generally means action with a bad purpose)
Bryan v. United States, 524 U.S. 184 (1998) ("willfully" requires knowledge that conduct was unlawful)
SEC v. DiBella, 587 F.3d 553 (2d Cir. 2009) (applied Capital Gains reasoning in a civil damages context; intent to harm not required for § 206(2) violation)
United States v. Litvak, 808 F.3d 160 (2d Cir. 2015) (clarified scienter for securities fraud; consistent with not requiring intent to harm)