Skip to main content

Ninth Circuit rules that "Honest Services" Mail Fraud Does Not Require Proof of Fiduciary Relationship

The Ninth Circuit Court reversed a district court order on Friday, December 3rd, that dismissed an indictment, remanding the action for further proceedings. The Court held that "honest services" mail fraud did not require proof of a fiduciary relationship nor did it require damages to the money or property of the victim. 

Brano Milovanovic and three others, (collectively Milovanovic), were indicted for "honest services" mail fraud for, according to the indictment, participating in a corrupt scheme to obtain commercial drivers' licenses in the State of Washington by cheating on the associated tests and falsifying residency in exchange for bribes. Milovanovic, a certified Bosnian translator, bribed a co-defendant who worked for a firm the state department employed to administer driving tests. Milovanovic and his co-defendant were not employees of the state and the state was not deprived of any fees associated with the commercial drivers' license testing process or any other funds. Therefore, the district court dismissed the indictment because the federal mail fraud statute required a fiduciary relationship.

The court of appeals reversed, holding that it remained an open question in the circuit whether "honest services" fraud under the mail fraud statute could be committed only by a "fiduciary." The Court determined that court authority on this question was inconclusive and that the inconclusiveness itself made it clear that there was no sense in determining fiduciary status as a step in evaluating a mail fraud indictment. The Court referred to 18 U.S.C. § 1341 and § 1346. The latter states that a "scheme or artifice to defraud" includes those which intend to deprive another of the intangible right of honest services. By combining the statutes, "whoever having devised or intending to devise a scheme or artifice to defraud" by "depriv[ing] another of the intangible right of honest services," using the mails, commits mail fraud. The court determined that the category "whoever" literally meant anyone, whether fiduciary or not. 

Judge Fernandez dissented, writing that he could not say that the indictment sufficiently pled the crime of "honest services" mail fraud because it failed to allege the kind of heightened duty to the government that would suffice to raise Milovanovic from the status of miscreant to the status of federal defendant. 

This case is: United States v. Milovanovic; 9th Cir.; December 3, 2010; 08-30381.

Comments

Post a Comment

Popular posts from this blog

Second Circuit Holds that Personal Benefit is Not Required for Insider Trading

Insider trading, or “ securities fraud ,” is prohibited by 18 U.S.C. § 1348 and 15 U.S.C. § 10(b) As the Supreme Court explained in Dirks v. SEC , someone engages in insider trading under §10(b) if they breach a fiduciary duty by disclosing material, nonpublic information in exchange for a personal benefit. However, the Second Circuit’s recent holding in United States v. Blaszczak rejected this personal benefit requirement, at least as it relates to § 1348. The result? The range of conduct that triggers criminal liability under § 1348 is far bigger than the range of conduct that triggers liability under § 10(b). Stated another way, Blaszczak makes it easier for federal prosecutors to go after Title 18 securities fraud because - unlike Title 15 securities fraud - they do no need to prove the existence of a personal benefit.
Post a Comment
Read more

U.S. Supreme Court Eases Rules for Miranda Warning

Last week, the Supreme Court issued its opinion in Maryland v. Shatzer . Justice Scalia wrote the opinion, which six other Justices joined in full. Justice Thomas concurred in part and concurred in the judgment; Justice Stevens concurred in the judgment. The Court held that a fourteen-day break in custodial interrogation ends the Edwards v. Arizona rule which states that once a suspect invokes his Miranda rights, any subsequent waiver of the right triggered by a police request is deemed involuntary and is the result of coercion. In reversing the decision of the Maryland Court of Appeals, the Court concluded that Shatzer’s return to his normal pre-interrogation life in the general prison population for a period of two-and-one-half years before re-interrogation constituted a sufficient break in custody enable him to voluntarily waive his Miranda rights. Therefore, the Edwards case did not require that Shatzer’s re-interrogation statements be suppressed, and the Court remanded the case ...
Post a Comment
Read more

California Supreme Court Narrows Exception to the Fourth Amendment’s Warrant Requirement

On November 25, 2019, the California Supreme Court overturned a 17-year-old exception to the Fourth Amendment’s warrant requirement. People v. Lopez holds “that the desire to obtain a driver’s identification following a traffic stop does not constitute an independent, categorical exception to the Fourth Amendment’s warrant requirement.” People v. Lopez , No. S238627, 2019 WL 6267367, at *1 (Cal. Nov. 25, 2019). Before Lopez , police were “allowed … to conduct warrantless vehicle searches for personal identification documents at traffic stops when the driver failed to provide … personal identification upon request.” Id . The Court summarized the facts of Lopez as follows: police “responded to an anonymous tip concerning erratic driving.” Police were “(u)nable to locate the vehicle,” so they “asked dispatch to run a computer search of the license plate.” Police “then drove by the address where the car was registered,” but didn’t see a car matching the description. As such, p...
Post a Comment
Read more