Lead Opinion
Opinion by Judge MURGUIA; Concurrence by Judge CHRISTEN.
OPINION
Ethаn Farid Jinian was charged with fourteen counts of wire fraud in violation of 18 U.S.C. § 1343 stemming from his scheme to defraud his employer. Jinian contends that the district court erred in denying his motions for judgment of acquittal, a new trial, and for an arrest of judgment. Specifically, he argues that (1) routine transmissions occurring during the interbank collection process are not made for the purpose of executing a scheme to defraud or in furtherance thereof, (2) the jury should have been instructed that it was necessary to find that the interstate nature of the wire communications was reasonably likely or foreseeable, (3) there was insufficient evidence to establish that an interstate wire communication was reasonably foreseeable between two California banks, and (4) the wire fraud statute is unconstitutional as аpplied to him. We reject these arguments and affirm Jinian’s conviction and sentence.
I. FACTUAL AND PROCEDURAL BACKGROUND
From 2004 until 2008, Jinian served as the chief executive officer (“CEO”) of Bric-snet FM America, Inc. (“Bricsnet”), a company that developed and sold software. As CEO, Jinian was authorized to spend Bricsnet monies to further its business operations and make executive and financial decisions. He was also responsible for reviewing the company’s daily expenditures. Bricsnet’s board of directors and a majority of its investors were located in Europe, enabling Jinian to control Bric-snet’s operations from the company’s San Francisco, California office with limited daily oversight.
In 2006, Jinian informed Leon Brown, Bricsnet’s finance manager, that the company’s chairman of the board of directors authorized Jinian to rеceive compensation in excess of his annual salary and to draw advances on that compensation. Unbeknownst to Brown, Jinian never received any such authorization. Nevertheless, Brown, in reliance upon Jinian’s representations, began issuing to Jinian checks from Bricsnet’s account at Silicon Valley Bank in Santa Clara, California. Jinian deposited these checks into his account at Mechanics Bank in Hercules, California.
Jinian was indicted on fourteen counts of wire fraud, which corresponded to fourteen Bricsnet checks Jinian deposited into his Mechanics Bank account. At trial, the government presented evidence showing that Mechanics Bank utilized the Federal Reserve Bank as an intermediary between it and Silicon Valley Bank to process the checks for payment. Howard Ng, an internal auditor for the Federal Reserve Bank, testified about the process through which checks were cleared. Ng explained that, when Jinian deposited a check into his Mechanics Bank account, Mechanics Bank sent an electronic image of the check via wire communication to the Federal Reserve Bank, which utilized an image server located in Dallas, Texas to sort and process the сheck. Once the check was processed in Dallas, Ng testified, the Federal Reserve Bank wired an image of the check to Silicon Valley Bank to be negotiated and paid. Ng testified that these wire communications facilitated the check clearing process by ensuring that the appropriate accounts were debited and credited.
At the close of the government’s case and the close of all evidence, Jinian moved, pursuant to Federal Rule of Criminal Procedure 29, for a judgment of acquittal, arguing that the government failed to prove each element of wire fraud beyond a reasonable doubt. The district court denied Jinian’s motion, and the jury returned a guilty verdict on thirteen of fourteen counts charged in the indictment.
Following his conviction, Jinian renewed his motion for judgment of acquittal. Jini-an also moved for a new trial and for an arrest of judgment pursuant to Federal Rules of Criminal Procedure 33 and 34, respectively, arguing, among other things, that there was insufficient evidence that he knew — or knew it was reasonably likely— that interstate wires would be used to further the fraudulent scheme. The district court again denied Jinian’s motions and affirmed the jury’s convictions. It then sentenced Jinian to sixty-four months imprisonment, three years of supervised release, and ordered him to pay restitution of $1,587,860.04.
Jinian timely appealed. We have jurisdiction pursuant to 28 U.S.C. § 1291.
II. STANDARD OF REVIEW
We review de novo a district court’s interpretation of a criminal statute, United States v. Dahl,
III. DISCUSSION
The wire fraud statute criminalizes conduct by any person who, “having devised or intending to devise any scheme or artifice to defraud, ... transmits or causes to be transmitted by means of wire ... communication in interstate or foreign commerce, any writings, signs, signals, pictures, or sounds for the purpose of executing such scheme or artifice.... ” 18 U.S.C. § 1343 (2006). Section 1343, however, “does not purport to reach all frauds, but only those limited instances” wherein use of a wire “is a part of the execution of the fraud, leaving all other cases to be dealt with by appropriate state law.” Kann v. United States,
The elements of wire fraud are: (1) the existence of a scheme to defraud; (2) the use of wire, radio, or television to further the scheme; and (3) a specific intent to defraud. United States v. Pelisamen,
For purposes of 18 U.S.C. § 1343, a wire communication cannot be “part of an after-the-fact transaction that, although foreseeable, was not in furtherance of the defendant’s fraudulent scheme.” Lo,
A.
Jinian’s principle argument is that the Supreme Court’s decision in Kami is legally indistinguishable from this case and, as
The Supreme Court agreed with Kann, explaining that the defendants received the money “irrevocably” once the two checks were cashed or deposited, which constituted the point at which “the scheme in each case had reached fruition.”
Jinian asserts that the wire communications betwеen the two California banks and the Federal Reserve Bank in Dallas, like the mailings in Kann, occurred after he deposited the monies into his Mechanics Bank account and, as a result, were neither initiated for the purpose of defrauding Briesnet nor related to his scheme to defraud. We disagree for two reasons. First, Jinian conducted an ongoing scheme to defraud Briesnet. Second,
Kann involved two discrete, independent transactions. There was no indication that the transactions were sequential or that the success of one depended upon the other. Although the government argued in Kann that the two transactions were part of a larger scheme devised by the defendants to commit future frauds against their employer, the Kann Court construed the scheme narrowly, focusing upon the “transactions in question” and explaining that the scheme was “completely executed” once the defendants “received the money intended to be obtained by their fraud.” Id. at 95,
Jinian’s conduct, in contrast to the circumstances at issue in Kann, suggests that he executed an ongoing scheme to defraud Bricsnet. The government, which charged Jinian with fourteen counts of wire fraud, introduced evidence showing that Jinian deposited nearly 100 checks over the course of a two-year period. Thus, Jini-an’s ability to perpetuate his scheme without interruption for two years was dependent upon the successful completion of the check clearing process for each Bricsnet check Jinian deposited into his Mechanics Bank account. See Schmuck,
While Kami certainly represents an “important limitation[] on the government’s use of the mail fraud statute,” United States v. Lack,
The Supreme Court disagreed with Schmuck’s characterization of the mailings. Id. Focusing upon the “scope” of the fraudulent scheme, the Schmuck Court observed that Schmuck did not engage in a “ ‘one-shot’ operation in which he sold a single car to an isolated dealer” but rather maintained “an ongoing fraudulent venture.” Id. at 711,
We conclude that Jinian’s conduct is more akin to the fraud perpetrated in Schmuck than in Kann. The scheme in Schmuck remained incomplete until the mailing activity, thereby rendering the mailing an “essential step in the successful passage of title,” occurred. Id. at 714,
Our ruling today is consistent with the manner in which we, as well as our sister courts, have interpreted Kann and Schmuck. For example, in United States v. Shipsey, a case involving the diversion of construction loan proceeds through wire payment transfers, we distinguished Kann by observing that the fraudulent scheme “did not ‘reach fruition’ ” when the wire draw requests were submitted and concluded, under the logic of Schmuck, that the wires were incident to an essential part of the fraudulent scheme.
Even if we construe each check Jinian deposited as an individual, discrete scheme, Kann remains distinguishable. The Supreme Court recognized exceptions to the rule it announced in Kann: instances in which the mails — -or, as here, interstate wires — are used as “a means of concealment so that further frauds which are part of the scheme may be perpetuated.”
Here, the mere clearing of a check is enough because the interstate communication was necessary to complete and conceal Jinian’s fraud. The monies Jinian deposited into his Mechanics Bank account, unlike the monies involved in Kann, were not irrevocably his at the moment of deposit. Indeed, the monies did not belong to Jini-an until the checks cleared through Silicon Valley Bank. Evidence introduced at trial showed that the interstate wire communications between Mechanics Bank and the Federal Reserve Bank in Dallas — and between the Federal Reserve Bank in Dallas and Silicon Valley Bank — were a necessary component of the check clearing process. Absent those wire communications through Dallas, Jinian’s deposit was incomplete, and the monies were subject to hold or cancellation, i.e., they were not irrevocably in his possession. Consequently, a rational jury could have concluded that thе interstate wire communications among the three banks were “incident to the execution of,” Lo,
The government also introduced evidence that Jinian directed Brown to issue multiple, smaller-denomination checks, rather than a large, lump-sum payment.
In short, having considered the principles set forth in Kann and Schmuck, we sustain Jinian’s wire fraud conviction.
B.
Next, Jinian, interpreting 18 U.S.C. § 1343 to require that the government prove beyond a reasonable doubt that a defendant intended to use an inter
With regard to each of these 14 counts, in order for the defendant to be found guilty ..., the government must prove each of the following elements beyond a reasonable doubt:
First, the defendant knowingly devised a scheme or plan to defraud or a scheme or plan for obtaining money by means of false or fraudulent pretenses, representations, or promises!.]
Third, the defendant acted with the intent to defraud; that is, the intent to deceive or cheat[.] And fourth, the defendant used or caused to be used a wire communication in interstate commerce to carry out or attempt to carry out an essential part of the scheme.
A wire fraud involves the use of wire in interstate commerce. An interstate wire communication includes a wire transmission so long as it goes across a state line.
A wiring is caused when one knows that a wire will be used in the ordinary course of business or when one can reasonably foresee such use. It does not matter whether the information wired was itself false or deceptive so long as the wire was used аs part of the scheme, nor does it matter whether the scheme or plan was successful or that any money was obtained.
An intent to defraud is an intent to deceive or cheat.
These jury instructions fairly and adequately covered the elements of wire fraud. See Pelisamen,
While there is a presumption in favor of finding an intent requirement in each statutory element that criminalizes otherwise innocent conduct, United States v. X-Citement Video, Inc.,
The significance of labeling a statutory requirement as “jurisdictional” is not that the requirement is viewed as outside the scope of the evil Congress intended to forestall, but merely that the existence of the fact that confers federal jurisdiction need not be one in the mind of the actor at the time he perpetrates the act made criminal by the federal statute. The question, then, is not whether the requirement is jurisdictional, but whether it is jurisdictional only.
United States v. Feola,
“Jurisdictional language need not contain the same culpability requirement as other elements of the offense.” United States v. Yermian,
it has consistently been held that for statutes in which Congress included an “intеrstate nexus” for the purpose of establishing a basis for its authority, the government must prove that the defendant knew he was involved in the wrongful conduct, but need not prove that the defendant knew the “interstate nexus” of his actions.
Lindemann,
A specific intent to defraud is the only mens rea requirement under the wire fraud statute. See United States v. Green,
Jinian’s reliance upon Fowler v. United States, — U.S. -,
The Fowler Court adopted a foreseeability standard because the witness tampering statute addresses hypothetical communications. See
We reject Jinian’s arguments that his conviction should be overturned on the basis that there was insufficient evidence to prove his use of an interstate wire communication was reasonably foreseeable and the jury should have been instructed to find the same. No mens rea requirement exists with regard to the jurisdictional, interstate nexus of Jinian’s actions under 18 U.S.C. § 1343, which requires only that Jinian used — or caused the use of — interstatе wires in furtherance of his scheme to defraud Bricsnet. The government proved each element of wire fraud by introducing sufficient evidence for a reasonable jury to conclude that (1) Jinian devised a scheme with the specific intent to defraud Bric-snet, (2) it was reasonably foreseeable to Jinian that wire communications between Mechanics Bank and Silicon Valley Bank would be made in furtherance of his scheme, and (3) interstate wire communications actually occurred in furtherance of Jinian’s scheme. Accordingly, the district court properly instructed the jury and did not abuse its discretion by refusing to give Jinian’s proposed jury instruction.
Finally, Jinian argues that the district court erred by denying his motion for judgment of acquittal because the wire fraud statute, as applied to his case, constitutes an improper exercise of congressional authority under the Necessary and Proper Clause and violates the Tenth Amendment. We reject these constitutional challenges.
The Necessary and Proper Clause “grants Congress broad authority to enact federal legislation.” United States v. Comstock,
The wire fraud statute falls “within the extensive reach of the Commerce Clause,” United States v. Hook,
Since Congress enacted 18 U.S.C. § 1343 based upon a constitutionally enumerated power, analysis of the statute under the Necessary and Proper Clause is inappropriate. Gonzales,
IV. CONCLUSION
We conclude that Jinian’s fraudulent scheme closely resembles the fraud perpe
AFFIRMED.
Notes
. Kann involved alleged violations of the mail fraud statute. Since mail and wire fraud are both defined as “any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises,” 18 U.S.C. §§ 1341, 1343, "the wire fraud statute is read in light of the case law on mail fraud,” United States v. Manarite,
. The second count alleged that the defendants, who defrauded a contractor hired to build a factory for their shell company, endorsed and cashed in Maryland the contractor's check in the amount of $12,000, which the Maryland bank then “deposited in the mail to be delivered to the bank in Wilmington, Delaware, on which it was drawn.” Kann,
. The Supreme Court, however, rejected Karm's contention that he lacked the requisite intent under the mail fraud statute based upon the fact that he had no reasonable belief that the checks would go through the mails, explaining: "[W]e think it a fair inference that those defendants who drew, or those who cаshed, the checks believed that the banks which took them would mail them to the banks on which they were drawn, and assuming [Kann] participated in the scheme, their knowledge was his knowledge.” Kann,
. The Mills Court also recognized that the defendant’s conduct fell within an exception set forth in Kann, discussed infra, namely that it was conceivable in some settings that the mere clearing of a check would be enough to confer federal jurisdiction under the wire fraud statute. Mills,
. For example, Jinian, on March 3, 2008, deposited two separate checks in the amounts of $17,500 and $15,500, rather than one check for $33,000. On April 4, 2008, Jinian deposited two separate checks in the amounts of $14,000 and $9,000, rather than one check for $23,000.
. The government, however, need not show that the defendant intended to prevent a communication from reaching a law enforcement officer whom the defendant knew to be a federal officer because 18 U.S.C. § 1512(g)(2) provides that "no state of mind need be proved” with respect to the victim's status as a federal officer. Fowler,
. The "reasonable likelihood” standard the Fowler Court adopted reflected the shortcomings of a "mere possibility" standard that, it reasoned, would enable the government "to show little more than the possible commission of a federal offense.”
Concurrence Opinion
concurring:
I concur with the majority opinion. I write separately to emphasize the attribute of Jinian’s fraudulent scheme that'is fatal to his argument that his crime was complete upon the deposit of each check into his account at Mechanics Bank.
When a perpetrator — like Jinian — conceives of an ongoing scheme to defraud, he is necessarily concerned with which party ultimately bears the loss; indeed, his ability to continue the scheme depends upon it. See Schmuck v. United States,
Schmuck involved an “ongoing fraudulent venture”: an automobile distributor turned back the odometers on used cars before selling them to unsuspecting dealers. The dealers resold the cars to consumers at inflated prices, using the mail to transfer title to their customers.
In contrast, the federal prohibition on mail fraud was not triggered in the one-off scheme that took place in Kann. There, businessmen cashed or deposited fraudulently obtained checks and moved on, unconcerned about whether the drawee banks reimbursed the payee banks. See
Jinian convinced an employee at Bric-snet that he had permission to receive funds in excess of his regular compensation. He obtained checks thrоugh this misrepresentation and deposited them into his account at Mechanics Bank. The ability to perpetuate his scam depended on his employer, not Mechanics Bank, bearing the loss. If Mechanics Bank had credited Jinian’s account for any one of his fraudulently-obtained checks and the check had subsequently failed to clear Silicon Valley Bank (Bricsnet’s bank), Mechanics Bank would have sustained the loss, and Jinian would have “jeopardized [his] relationship of trust and goodwill” with Mechanics Bank. Schmuck,
The majority and the district court rely on United States v. Franks,
First, the record does not support the majority’s statement that Jinian’s funds were “subject to hold or cancellation” by Mechanics Bank until after the images of the checks were wired to the Federal Reserve. Majority at 1264. No testimony was offered from employees at Mechanics Bank to establish when deposited funds were credited to customers’ accounts and made available to them to withdraw. It is easy to envision that a bank customer like Jinian, with a large account balance and an active account, may have been given the courtesy of having access to funds in his account before the checks cleared via wire transfer to the Federal Reserve. Without knowing the specifics of Mechanics Bank’s policies, we cannot know whether Mechanics Bank would have been able to recall, and thereby recover, Jinian’s ill-gotten checks. Without this evidence, reliance on the reasoning in Franks is misplaced.
More to the point, the result of Jinian’s case would not change even if Jinian had cashed the checks at Mechanics Bank, rather than depositing them, because Schmuck does not focus on retrievability. Schmuck instructs that the dispositive fact in wire and mail fraud cases such as this one is whether the fraud “as conceived by the perpetrator at the time” was complete before the intended victim suffered a loss.