property rather than a scheme to deprive another of property but the supreme court has repeatedly explained that the portion of thirteen forty one referring to schemes to obtain money or property from another through false pretenses does not set forth an independent oftens and that it does not fall within the terms of the statute unless there is also an intent to deprive the victim of property the government has th based on all the interactive problems of the statute specifically the government his own heart what would you say what would you say to the argument that that rick holden and formation are providing false information on the applications and which it bore on the part of the insurance company would approve the application or not and they did approve it based on the property and it doesn't have to be that the money immediately went into his pocket or country but they deprived him he got this commission because he made representations on a policy that otherwise would not have been not have been book there are several reasons that that theory of prosecution is not available to the prosecution's case the first one is that is excluded by the charge which says that it is not sufficient to show  that the defendant received any other benefit other than commissions or deprive another of any any money other than commissions the government affirmatively disclaimed on page three hundred any intent to lie on the payment of get benefits as the been the benefit in this case and also want to ninety nine and three ninety three which signal to bait more that you need not  is the same thing here is someone misrepresenting they smoke pot as a nonsmoker the insurance company would have taken the nonsmoker but it was a misrepresentation here they would have taken an older man who was wealthy and could finance his own plans but that would not take someone who is poor and cannot who has been taken advantage of income sell a policy that would not take him at cost what's the difference between the misrepresentation of a smoker nonsmoker and someone who in the same sentence is less insurable than someone and they made the accurate representations that there's two important differences one is that  the misrepresentation as to that the applicant's qualification for insurance misrepresents it poses a danger that the insurance company will pay money out of its own pocket that it's not required to pay and whereas what happened in this case a misrepresentation as to the this suitability on financial basis for insurance doesn't change the risks to the insurance company misrepresentation would only would permit him to acquire commissions but the commissions did not start out as the insurance company's money the insurance company has a right not to be it may well have a right not to act as a pass through for ill gotten gains but that's not a property right there's no deprivation to the insurance company because they are forced to take a portion of the ill gotten premiums and give them over to base more commissions was there no argument made by the government besides the commissions that the property laws the part of the scheme to defraud was the fact that the insurance company had been deprived of higher premiums without argument not made and i know the higher the risk the higher the premium so if there was fraud in misrepresenting these people they would have priced it differently was not never focused on but i don't think that the misrepresented bit first of all i do know the the rep misrepresentations in this case were of the diff of the financial status of the of the individual so those would not evidence supports that they were defrauded into believing that the applicants were wealthy when they really were not lucky so why wouldn't a property loss be the fact that if they knew that these people were not wealthy they would have charged higher premiums and you seem you seem to be focused on the commissions component well the there is not evidence that indicates that they would charge be charged higher premiums if and if the if that wasn't part of the government's case right that day there was some evidence about the kinds of things that insurance companies focus on to set premiums but they were age and health right the way this case was charged and tried to have only to do with his commission decisively so so the the fact that they could have received higher premiums is also not an authorized theory of the theory of the charge in other words this seems to me to be all the questions that i if we are going to allow them to rely on other theories now and it's excluded by the charge which says it's not sufficient to convict to show that the definitive harm to some other party or harmed in terms companies in some other way and the fact that the court's intent was to prevent reference to payments from the investors such as rescission of the policy or for death benefits is clear on pages seven hundred sixty three from which all i think make clear that a reaffirm mcnally's textual holding that is deemed to obtain property by itself is not a sufficient to bring something within the mail fr  premised on either a loss to the victim or again to the defendant but there wasn't even that charge here the charge here on page forty four twelve defines a scheme to defraud a scheme intended to deprive another of money so the charge it doesn't even sustain the the the argument is that the government wants to make and in support of the prosecution the government had to prove some specific defraud right that's right they don't have to prove an actual crime and actually but the the the scheme to defraud alleged in the indictment and then that they're limited to by the factors i just mentioned  was specifically to obtain commissions and obtaining commissions from aig is not a scheme to defraud an insurance company because those commissions are merely the downstream incarnation of the premiums that the insurance companies would have had but for the scheme there might be a very fine we'll find prosecution here alleging a deprivation to that to the banks that are the lenders who are ultimately paying for all of this or ultimately receive the premiums but that's not an authorized the so that could be a problem with with that theory prosecution but but that the limited theory of prosecution here which is that the defendant scheme to receive commissions does not allege of deprivation to the insurance company  now i would like if i can to to answer that the government's last filing which suggests that the cash value of the policies plus the the commissions might be equal to the premiums very premium commission policy proof we can assume yes they were and so we can assume that those actuarial would not have issued the policies on the basis of accurate health information unless they believe they were going to make a profit so that's that strong evidence that that the total expenditures to the insurance companies were greater than all of their expenses but the government focuses as well on on this testimony from mr livingston who is a trans america representative and he says the way i understand universal life products or any additional funds that we receive that's over and above the commissions would go into the policy as an investment in the policy which would then increase the cash value of the policy so it's not necessarily transmitted transamerica it's also benefiting the insured so the government as i understand it last filing  understands this passage to say that all of the money in excess of the commissions becomes the money of the insured and i don't think that's what the passage says what the passage says is that that money is also benefiting the insure in other words there is some cash value to the policy if that at the moment that it's purchased but it doesn't say it doesn't compare that to all the premiums received and say that the expenses to the insurance company are more than the premiums that it's already received and in fact the the very next question to this witness robots that contention the witness then goes on to testify to the question well i guess what i'm getting at sir if trans america gets three hundred forty five thousand in and just in my example it pays two hundred thirty three out then transamerica has more money than it did when it started off with answer right as far as where whether that's trans america's money or partly to the value of the insurance company i couldn't there is that so i think that it's clear that the witness is not saying that all of the money above the commissions belongs to the insured there is still money that goes to the left over that goes to the insurance companies so we cannot say that the commissions represented the money of the insurance company they were the they were probably the money of the bank or the lender so there was no deprivation  and and maybe something else but there has to be some kind of monetary property involved in it to torch statute so yes there needs i think that the language of the case is there needs to be interference there needs to be some effect it has to be something that implicates the property rights of another that he was prosecuted and i think really the core question goes to this idea that these commissions never really belong to these in the first place we fundamentally disagree with that because that if you step up think about think about this argument he's saying premiums go in the door my commissions are paid out of those premiums and therefore because i created the premiums i've never really taken anything from these insurance companies but what are the premiums represent the premiums are nothing more than the realized economic value of the insurance commissions it was something they didn't receive ensures that they expressed and said we don't want to insure these people mr bain was paid for bringing in that business that these insurers said they did not want that is the evidence throughout this trial that deprives these insurers of their i mean they read that the court contrasted the government's flawed theory of intangible right with allegations that the commonweal was deprived of how they spent their money in the court emphasizing these are not allegations in the case there is no evidence of this it strongly suggested that had that evidence been there there would have been a scheme to  did the jury hear about the fact that this misrepresentation on these type of policies that the insurance turned on went to the insurance company witnesses sorry as to why this would affect their economic interests i think with the insurance policies to insurers testified to we would not have entered these policy how do we know why did they say what the damage would be because we don't want to be involved in the business of stole a policy did they say what difference that it impacts their guidelines in terms of how much of a policy there they're willing to issue and that's a page fourteen hundred so it went into the calculus of the level of death benefits they were willing to give but i think i think we're wrong to focus exclusively on the economic issue and looking this in terms of a net monetary loss that is not with the mail fraud statute hires there has to be a material representation effect or does this property interest economic interest i'm just trying to find out what your testimony was explicitly defining that i think with the testimony was it that these insurers have policy remember these policies that it's just like their inventory they don't have  and it's not like these insurers have an unlimited number of policies they can issue because as soon as you issue a policy we need to put the face amount of the policy into reserves that's it record nine sixty nine sixty two so every new policy that  issues brings them one step closer to bumping up against the limits of the reserves one step closer to the point where they're no longer going to be able to issue any policies and i think that that's an important point because this is the policy itself is a tangible economic product to these insurers so i mean your argument is that the statute requires deprivation of property a money yes and that when they paid the commissions under false pretenses that was deprivation of their property absolutely it was deprivation of their property because you got the money that they would not have released except for the misrepresentation that's exactly right and the money is the product of the sale of their policy under fraudulent pretenses it's not like mr bass more just created this money out of thin air he took their property their policy he forced them to sell to somebody he didn't want which created a liquidity in that that misrepresentation was only asked to net worth and the testimony on left home by the insurance companies or the government witnesses who were from the insurance company was that well maybe if they'd been that rich they would have been a much better medical care and they would live longer now if that is not the only basis for depriving property rather than that but there is no question that these representations or material because both insurance company representative said we would not have issued these policies had we known that these people were living on social security instead of the fact that they had twenty million dollar representations about the intentions to what to do with these policies and the testimony was very clear the insurer didn't want to be involved in stall policies that's why they asked the question is there any attention to transfer this but i want to step back to this this property here explain to the jury why that that's clearly material to these insurance companies did they did they express to say we do not deal in stokely problem policies yes it was explicit if we had known that these policies were going to be resold we heart of the farm they gave they gave their property to him on false pretenses that is the fraud decision and mission the object of the scheme is the commissions but the the the means of the fraud is to misrepresent things companies which they unquestionably say are material forced them to sell a policy to somebody that they didn't want and then to keep part of the profits under fraudulent pretenses to think about what the transaction would look like without the fraud is what does it have to do to keep score of the property will the exact same premiums but then the portion of those premiums that they'd always intended to use for commission payments would go for their intended purpose it would be used to find insured that satisfied these in service qualifications and as we or the i mean it's effectively if you go to a used car lot and steal a car because of the and sell it for one hundred dollars and keep ten dollars for yourself and give them back ninety dollars you deprive them of the value of their of their car that's effectively what they did because these insurers had your marked a portion of the incoming premiums for commission payments that's that's what the agreement said we will pay you commissions to go out and find insurance to qualify that satisfy our criteria indy's insurance  were riddled with misrepresentations and maybe you think about this from a breach of contract perspective i mean mr grace moore says well the reason in this case that we can trace the premiums in the manner that he urges the reason that it's relevant that more premiums were coming in the door than commissions were going out the door because they contract required that the commission be paid based on a percent of premiums but the day that he submits these insurance up patients to these companies he materially breaches of the contract which obviously excuses the insurers performance they don't have that obligation whatsoever to pay him commissions but nothing about that prevents them from collecting premiums on a separate contract insurance contract with the insured so if you think about it from that perspective they clearly a legal right to this commission money it was their money it was taken from them under fraudulent clinton says well with the money i mean money of course is fungible and you don't know where the money of the yacht came from but the i mean commission that they receive a premium for i would agree that would be correct if we could say that these premiums were produced completely by mr vane's more sales that  nothing was taken from the insurers to get the premiums but the premiums only exist because he defrauded them into issuing a policy in the policy is effectively their infant tory because they don't have unlimited part i mean this is no this is just how all other businesses operate they sell a product for social good and they make a profit that's what insurers do with insurance policies and they don't have an unlimited number of policies because every time they issue a policy they have to put the face amount of the policy into reserves so at some point they're going to run out of policies to issue so something tangible is taken from these insurance companies and the profits from that were supposed to go to one purpose mr baines more forces them to pay it for something they may express to say we don't want to pay for that if that's nothing then more than depriving somebody of their right to counsel how their money is spent in i can i would be rich to find that there's any case that has rejected that is a valid theory of mail fraud it's not on a service fraud is mr reservation more i think  before run out of time if i if i'm that even if this court assumes that the mail fraud statute requires a strict monetary loss there is evidence in this record that would allow a reasonable jury to conclude that these incoming premiums didn't fully cover moore's make it we don't disagree that most of the evidence here shows more money coming in the door then going out the door but i think the relevant question is what portion of those premiums was available to pay the commissions because that the premiums weren't fully clearly satisfied here because they lost their right to decide how this commission money was spent they were forced to spend it on something they didn't want but but back to the point about the record evidence there's testimony in this record that the way that universal life insurance works is that if the insurance company receives more money in premiums than they only commissions they put that that access into the cash value of the policy for the benefit of the insured not mr bit more raises some disagreement with that but i think any reasonable jury can infer that the cash value whole life insurance policy is for the benefit of the insured it's effectively the investment component of their policy there and that kind of leaves you it at a net net in terms of premiums in commissions out the door of which you need to look at the record as a whole and evidence or sufficiency challenge and there's testimony here that part of that premium in addition to going to the cash value of the policy and paying the commission also had to be used to pay the costs of servicing the policy so much so in fact that principals representative at trial isn't able to say for sure that the incoming premiums fully cover the commissions adjust when he takes into account the amount of premiums that need to go to this this cash value or the human the cost of servicing the policy based on that evidence a reasonable jury could clearly infer that at least one penny is coming out of these insurers own pockets isn't created by mr bass more thought it in that's enough to show a deprivation even in a strict monetary sense in to the extent that we're going to requires the face amount of the policy to be put into reserves by the insurance company that's not going out and it's not money they can spend on anything but the death benefit they still have it they have it but if it's useless to them it surely cannot be used  you it is clear that there are some courts have recognized a right to control one's own spending as a cognizable theory of mail fraud but that is the right to control money or property with which the victim starts out a process where you  sorry where you get that that is that those are the facts in all of the cases cited by the government the hiring fraud cases the employer begins with the money and then is defrauded into paying for an employee that they don't want in the case is the arms cases where the victim is in arms manufacturer and there is a misrepresentation about the end disposition of the of the goods in those cases the victim begins with the property and is defrauded into into giving it away on terms they don't want they don't suffer a monetary loss so that maybe there is an intangible right not to give away your own money or property in terms you don't choose even if it doesn't give you the cuny every harm but in all of those cases the victim begins with the property there is a right to control how you spend your money there is not a right to control how you spend somebody else's money or money that the victim or that the defendant bring around but if if you have a an automobile on ninety automobile it's worth one hundred thousand dollars and somebody comes up and says i'll give you one hundred thousand dollars or one hundred thousand with the car we wouldn't say that you were that that a person has a property right not to act as a pass through for for property that they don't even begin which is what the with the situation is here  policies they wouldn't have paid the commissions without misrepresentations because those commissions didn't start out as their money the i would like to answer the government's argument that they have to put money in reserves on the policies there is no evidence in the record that the insurance companies were bumping up against the reserves in these cases it's such that they had a limited number of policies that they could that they could sell there was some evidence that they put money in reserves but none that indicated that there was any kind of bottleneck there so the idea that that mr baseball was depriving them of a chance to issue other policies is not supported by the record in this case that would just be an inference out of the  but finally i want to address the government's argument that cash value at administrative expenses of the policies might have been equal to the commission  there is no comparative evidence in the case that indicates no affirmative evidence that indicates that they paid more than they received in premiums in all of their expenses put together you can look at twelve twenty seven twelve forty one fourteen thirteen and fourteen twenty seven and none of the none of the times when any anybody has axed about that question do they say that the expenses plus the cash value is equal to the premiums they're simply if that is an element of the of the scheme there simply isn't any evidence any evidence of it and furthermore there isn't any evidence that they paid the administrative expenses before they received the premiums common sense would tell us otherwise which means the commissions that were paid were simply a portion of the premiums and so there is no deprivation in that in that case also there's no evidence that they set aside the cash value such that they couldn't use it on page twelve thirty they were asked do you set that money aside and mr livingston said he wasn't sure about that so just as with the fact that they they have the money