[white collar crime] [moohr] [outline] [fall 2001] [mccormick]

Download [White Collar Crime] [Moohr] [Outline] [Fall 2001] [McCormick]

Post on 07-Dec-2015




0 download

Embed Size (px)


White Collar Crime Moohr



White Collar Crime - Prof. Moohr

Tracey McCormick - Fall 2001

Four part analysis of WCC cases:1. What is the lie?

2. Who is the liar(s)?

3. Who did they lie to/who was hurt?

4. What was stolen/what were the damages?

White collar crime similarities:

lack of physical harm, lack of force

use of trust and deceit fraud requires a lie


often done in the course of business or occupation

often involves a technical skill

often involves a breach of fiduciary duty

victims not always sympathetic

crimes are planned/calculated, so youd think they could be deterred

Federal Jurisdiction Federal criminal code has no general theft or fraud statutes

A theft must be charged as extortion, mail fraud, etc.

Must include a jurisdictional hook to make something a federal offense

3 types of federal criminal statutes

an act that involves an instrumentality of interstate commerce

an act that is in an interstate commerce channel

laws that affect interstate commerce

I. Traditional White Collar Crimes

A. Mail & Wire Fraud 18 USC 1341, 1343, 1346

Fraud obtaining money or property through a trick, deceit or misrepresentation

Criminal Fraud:

Must be an affirmative misrepresentation

Need no actual damages

Civil Fraud Elements: Misrepresentation of material fact

1. Can be a half-truth, or

2. an omission, IF: it creates an impression, or there is a fiduciary relationship

Intent can be reckless intent

Requires actual damages & reliance by the victim

Mail Fraud Act 1341 passed in 1872

The oldest post Civil War - part of Post Office reform

Congress has no power to simply prohibit fraud, so

used power to have a post office & the necessary and proper clause to protect mails

Wire Fraud Act 1342 passed in 1952

Interpreted the same as Mail Fraud Act 1341

must have used a connection that crossed a state line

Courts have said this covers telephone, fax, Internet (on phone lines)

Honest Services Fraud 1346 passed in

Extends what may be defrauded not just property

Includes depriving another of the intangible right of honest services

Can only be found where there is a fiduciary duty

Elements of Mail & Wire Fraud Use of the mail (or a private carrier)

A scheme to defraud, or engaging in false pretenses

Defraud is depriving another of property (includes the right to honest services)


Mailing or wire

Mailing is just a jurisdictional hook to create a federal offense

Knowing requirement - need only be reasonable foreseeable

need not intend that anyone mail the letter

Mailing for the purpose of executing scheme

Can occur after has the money

Cover-up is part of overall scheme to defraud

Mailing need not be fraudulent

Mailing need only be incidental to an essential part of the scheme

need not mail the letter - could be by a subordinate or even a 3rd party

Some case law legally required mailings not included

This was diluted must be innocent have no deceitful statements.

Scheme to defraud the actus reus

Deception or planned deception - 3 ways to deceive

statement (affirmative)

conduct (affirmative)

failure to disclose w/1346 violation only when a fiduciary duty

5th Circuit in Brumley says must look to state law to see if honest services were owed

other circuits, state law can establish a duty, but duty may still be established without state law

Deception must be about a material fact induced victim to make decision

To obtain $ or property (courts split over whether intangible = property)

1346 defines the intangible right of honest services as property

Intent criminal = specific intent to defraud

Acting with purpose to deprive someone of money or property

even if the fraud has been completed (covering up can be part of scheme)

Inchoate - prosecution does not have to prove the fraud occurred, only intent

High standard from 2nd Circuit 11th says only general intent to deceive needed

Jury can infer specific intent from the circumstances

- Pereira held that mailing need not be an essential part of the scheme need only be incidental to an essential part of the scheme

Guy marries widow, says he is an investor in oil, hotels - takes off with her $ and Cadillac

Mailing - Wifes check was mailed from the presenting bank to the paying bank

Mailing check was incidental to collecting money (the essential part of scheme)

Intent to mail satisfied by reasonable foreseeability that bank would mail check

- Sampson held that mailing can occur after crime has reached fruition cover-up is part of the overall scheme to defraud

Corporation, its officers & employees took fees to secure loans they never intended to get

Mailing after getting fees, s mailed letters to victims assuring they would get loans

Before Sampson, Kann and Parr held the mailing had to occur before fruition

- Schmuck affirmed Pereira & Sampson mailing can be incidental to an essential part of scheme, can occur after crime has reached fruition also, mailing need not be deceptive

Guy rolled back odometers, sold used cars to dealers, who sold to retail customer victims

Mailing after cars were sold, dealers mailed title applications to DOT

Court ongoing & continuous scheme could not have continued w/out mailing

- Brown held reliance is not an element of criminal fraud no scheme to defraud if the representation is about something the customer could easily confirm

Florida developer used false appraisals to sell 2nd homes to snowbelt buyers for high prices

Court puffery is not fraud reasonable buyers would have checked the value

Other circuits disagree with Brown criminal liability should turn on scheme, not victims

Moohr - false financing documents (the appraisals) are probably more than puffery

- Emery Posner holds that an omission or half-truth is actionable as fraud - also differs from Brown because he thinks there is a higher duty to gullible victims

Emery sues finance co. for RICO damages predicate crime is mail fraud

Mailing Finance co. sends borrower offer for loan, but intends to flip original loan

Remanded to determine finance co.s intent (s employees state of mind)

- DAmato 2nd Circuit held intent to deceive is not enough must have specific intent to defraud, which is specific intent to cause a result

Unisys hired senators brother to get senators ear, but paid him for reports

DAmato not guilty of fraud b/c no specific intent to harm Unisys

Evidence is that he did exactly what they wanted him to do

Lie is the deceit (general intent), causing harm is the defraud (need specific intent)

Inchoate, so govt need not show actual harm, only intent

But actual harm is evidence of intent

11th Circuit uses lower (general intent) standard equates deceit with the defraud

Moohr 2nd Circuit uses correct standard

- George 1973 held that a party can be defrauded of the right to honest services when there is a fiduciary relationship

Zenith buyer Yonan took kickbacks from supplier that would have gotten contract anyway

First, Yonan held himself out to be a loyal employee, but did not give his honest services

Second, Yonan did not disclose that supplier would have taken less profit (kickback $)

- McNally 1987 held mail fraud does not cover losses of intangible rights, such as the right to honest and faithful services

Public officials took kickbacks for insurance contracts

There was no property loss, because govt would have paid anyone the same $

1346 now covers honest services, but courts are split on other intangibles

- Brumley 5th Circuit held that 1346 services must be services owed under state law, AND that the govt must prove in a federal prosecution that the services were in fact not delivered

Associate Director of Texas WCC borrowed $ from attorneys who appeared before him Brumley did not give those attorneys more $, but did give them favoritism argued that McNally limited mail fraud to tangible property Court 1346 overturned McNally with respect to the right to honest services argued that 1346 another (victim) should be defined by whoever (criminal), and since whoever has been held to not include the govt, a state can never be a victim Court - it does not make sense to define the victims by the definition of the perpetratorB. Conspiracy 18 USC 3712 Kinds of Conspiracy:1. To commit a crime against the United States (federal crime)

2. To defraud the United States (or any agency of the U.S.)

Conspiracy Elements:

Agreement between 2 or more persons to commit a wrongful (civil) or illegal (criminal) act

Agreement may be tacit Mental actus reus may be difficult to prove courts have allowed juries to infer agreement 371 target offense = offense against the United States , or defraud of the United States

Offense need not be a crime can be violation of executive order or act of Congress

Defraud need not be a crime can be a lie that results in obstructing a govt function

Intent to commit the wrongful or illegal act (target offense)



View more >