Thursday, August 27, 2020

US v. Hussain, No. 19-10168 (8-26-20)(Bress w/R. Nelson & Gwin). It was a con in the boardroom. The scheme, involving complex fraudulent transactions, deception, misleading statements, and hoodwinking – conned Hewlitt-Packard into buying a startup, Autonomy Corporation, a British company, at a grossly inflated value. It worked – for a while, and until the books were carefully examined.  Because of this elaborate accounting scheme, HP got an overvalued company. Meanwhile, the start up’s CFO pocketed a cool $16 million. Alas, he was eventually convicted of wire fraud, conspiracy, and securities fraud in a district court in Cal N.

On appeal, defendant argues the wire fraud statute is an impermissible extraterritorial application of US law to foreign conduct. The 9th rejects this argument and affirms the convictions. Using the test of Morrison, 561 US 247 (2010), the first step is whether the statute, 1343, clearly states it applies extraterritorially. It does not. If it does not, then does the statute involve a domestic application by looking at the “focus.” Did enough sufficient conduct take place in the US that is the object of the statute. In an issue of first impression in the circuit, the 9th concludes the main focus of the statute is misuse of the wires to defraud. This aligns with the analysis of other circuits.  As for this case, there was sufficient evidence produced to support the convictions as wires were extensively used.

The decision is here:


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