Ninth Circuit Reexamines Intent Element Under Wire Fraud Statute

In United States v. Miller, 953 F.3d 1095 (9th Cir. 2020), the United States Court of Appeals for the Ninth Circuit recently held that the wire fraud statue (18 U.S.C. § 1343) requires proof of both an intent to deceive and an intent to cheat. In other words, the government must prove a defendant intended to deprive someone of money or property by means of deception. This is an important departure from the Ninth Circuit’s prior case law under which the intent element was satisfied by proof of an intent to deceive alone.

In Miller, the defendant was charged with five counts of wire fraud and four counts of filing false federal tax returns. The government presented evidence that the defendant (the president and managing member of an online retail platform called MWRC Internet Sales) embezzled more than $300,000 from the company by writing himself a series of checks from one of the company’s bank accounts. The government also alleged that the defendant, who oversaw the company’s finances, disguised his payments as internal transfers between MWRC’s two bank accounts.

At trial, the defendant acknowledged that he wrote the checks, but asserted that he believed the funds to be loans, which he was authorized to issue himself, and that he always intended to (and eventually did) repay the amount taken. The defendant requested a jury instruction stating that to be guilty of wire fraud, he must have intended to “deceive and cheat” the company. The trial court, however, delivered the Ninth Circuit’s model jury instruction instead, which states that wire fraud requires only the intent to “deceive or cheat the victim.” On appeal, the issue was whether the jury instruction misstated the law by stating that wire fraud requires the intent to “deceive or cheat” rather than the intent to “deceive and cheat.”

The court held the uniform instruction did not correctly state the elements of wire fraud. The court explained that wire fraud does not criminalize mere deception—it criminalizes schemes to defraud, i.e., schemes to cheat someone out of something valuable. To be guilty of wire fraud, the court further explained, the defendant must intend to both deceive the victim and deprive the victim of money or property by means of that deception. The problem with the Ninth Circuit’s disjunctive instruction—deceive or cheat—was that it allowed a jury to convict if it found that the defendant’s scheme was one to deceive the victim but not to deprive the victim of anything of value.

The court observed that its holding brought the Ninth Circuit in line with other circuits, including the Seventh and the Second, which have long-held that an “intent to defraud” means to act with the specific intent to deceive for the purpose of causing financial or property loss to another. The court further observed that the Ninth Circuit’s uniform instruction was no longer tenable in light of the United States Supreme Court’s ruling in Shaw v. United States, 137 S. Ct. 462 (2016). In Shaw, the Supreme Court considered—and cast serious doubt on the accuracy of—a jury instruction that defined “scheme to defraud” (for purposes of the bank fraud statute) as “any deliberate plan of action or course of conduct by which someone intends to deceive, cheat, or deprive a financial institution of something of value.” The Supreme Court explained that a scheme to defraud “must be one to deceive the bank and deprive it of something of value.” Although Shaw involved the federal bank fraud statute, the court in Miller found Shaw’s reasoning applied equally to the mail and wire fraud statutes as they “all use highly similar language.” In light of Shaw, the court said the wire fraud statute required both an intent to deceive and an intent to cheat.

Of further note, the Miller court cautioned that its holding does not go so far as to require an intent to permanently deprive a victim of property. Therefore, the defendant’s claim that he always intended to repay the money—previously rejected under United States v. Treadwell, 593 F.3d 990 (9th Cir. 2010)—is still not viable. But, the court did acknowledge that the subsequent repayment of the loan may still bear on the issue of intent.

United States Supreme Court Holds Oregon’s Non-Unanimous Jury System Unconstitutional

The United States Supreme Court recently issued its long-awaited opinion in Ramos v. Louisiana, which will have far reaching effects on the future of the Oregon criminal justice system. In Ramos, the Supreme Court considered the constitutionality of Louisiana’s and Oregon’s criminal jury trial systems that allowed a criminal defendant to be convicted of a felony when there was not complete juror unanimity on a verdict.

Reviewing the text of the United States Constitution, the Supreme Court recognized that the Sixth Amendment term “trial by an impartial jury” carries with it some meaning about the content and requirements of a jury trial. One such requirement in federal cases is that a jury must reach a unanimous verdict in order to convict a criminal defendant. Recognizing the importance of the Sixth Amendment right to an impartial jury, the Supreme Court held that criminal jury trial systems in Louisiana and Oregon were unconstitutional and that the entirety of the Sixth Amendment’s right to an impartial jury trial applies to the states as well as the federal government. Therefore, moving forward, a jury must reach a unanimous verdict to convict someone of a crime in Oregon (rather than by a vote of 10-2 under the previous system).

Ramos will have its most immediate effect on those convicted of crimes in Oregon by a non-unanimous jury verdict whose convictions are currently on direct appeal. However, there may be additional retroactive effects of the Supreme Court’s decision that could have far-ranging consequences for those seeking post-conviction relief as a result of being convicted by a non-unanimous jury verdict and whose direct appeals have already ended.

Court Finds Extraordinary and Compelling Circumstances to Release “Colorful” Rapper with Respiratory Health Issues in Light of COVID-19 Pandemic

Daniel Hernandez, the flamboyant, rainbow-haired rapper better known by his stage name Tekashi 6ix9ine, was compassionately released from federal custody earlier this month under the federal courts’ growing appreciation that the COVID-19 pandemic is an “extraordinary and compelling circumstance” warranting a sentence reduction under 18 U.S.C. § 3582(c) if an inmate has a severe underlying health issue. By law, courts have the authority to grant compassionate release to persons who are incarcerated due to “extraordinary or compelling circumstances” such as imminent death or serious incapacitation. See 18 U.S.C. § 3582(c)(1)(A)(i).

In December 2019, Mr. Hernandez was sentenced to two years in prison for racketeering and, at the time of his release, had already served approximately 17 months of that sentence and was expected to be released in August of this year. Mr. Hernandez, who suffers from severe asthma, was initially denied release under 18 U.S.C. § 3582(c) because the statute permits a court to reduce a prisoner’s sentence only after the inmate has exhausted their remedies through the Bureau of Prisons (“BOP”). At the time of his motion and the court’s order, Mr. Hernandez had not made any request for relief from BOP. Immediately following the court’s denial, Mr. Hernandez made a request for release through BOP that was denied for unique administrative reasons: Mr. Hernandez had been serving his sentence at a private facility and not at a regular BOP facility. Therefore, the BOP was unable to evaluate his request. After BOP’s denial of his application, Mr. Hernandez made a second, proper application with the court.

In granting Mr. Hernandez’s application, the court found that “[t]he COVID-19 pandemic is extraordinary and unprecedented in modern times in this nation” and “presents a heightened risk for incarcerated defendants like Mr. Hernandez with respiratory ailments such as asthma.” The court went on to note the unique situation for incarcerated individuals because “a high-risk inmate who contracts the virus while in prison will face challenges in caring for himself.” Thus, faced with the real risk of medical complications, the court found that the combination of Mr. Hernandez’s asthma and the ongoing pandemic constituted such “extraordinary and compelling reasons” to reduce his sentence, release him from federal custody, and allow him to start serving his term of supervised release in home confinement.

Of additional interest, in its order releasing Mr. Hernandez from confinement, the court noted that a number of additional federal courts across the country had engaged in similar sentence reductions beginning in March related to the growing pandemic. Courts across the country are now recognizing that the risk of contracting the virus in prison may satisfy the requirement under 18 U.S.C. § 3582 that an inmate demonstrate an “extraordinary and compelling reason” warranting a sentence reduction. Inmates with certain health risks may be entitled to seek early release from prison provided that (as shown in Mr. Hernandez’s case) they exhaust administrative remedies by seeking relief through the BOP in the first instance.