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.