Monday, March 03, 2014

United States v. Tanke, No. 12-10362 (3-3-14 )(Fisher with Berzon; Wallace concurring). 

When does a fraud scheme end?  When the scheme is completed?  The last proceeds trickle in?  Or when a last act, like a lulling letter, is sent?  And how does this play out with mail fraud?  Here, the 9th considers a fraudulent scheme and bankruptcy fraud that occurred when the defendant, an officer with and employed by, say Paul Inc., borrowed without authority from Peter Inc.  The question here was whether a letter sent after completion of the fraudulent borrowings sent to put that matter to bed was fraudulent?  The 9th held that mailings designed to avoid detection or responsibility for fraudulent scheme falls within the mail fraud statute when they are sent before the scheme is completed.  As for when the scheme ends, the scope of the scheme as devised by the perpetrator is examined. (Page 18).  Thus there is a totality of circumstances test, looking at the acts of the defendant, and whether a lulling letter is actually within the scheme.  In this case, a jury could have found that a lulling letter was part of the scheme, designed to conceal.
In the future, this will require courts and juries to look at a continuum of actions, and to make such determinations.

The 9th also affirmed the enhancements for sophisticated means.  The case is remanded however because there was error in restitution (conceded to by the government).
Concurring, Wallace argues that the majority went too far in fashioning a statute of limitations test, looking at acts to signal closure of a fraud, instead of a totality of circumstances.   Wallace believes that a totality of circumstances takes in this case, and that the majority need not extend the test of looking at a specific ending act.


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