Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca2-14-04278/USCOURTS-ca2-14-04278-0/pdf.json

Parties Involved:
Daniel Greenberg
Appellant
United States of America
Appellee USA

Document Text:

1

14‐4208‐cr(L)

United States v. Greenberg

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

August Term 2015

(Argued: January 11, 2016    Decided: August 31, 2016)

Nos. 14‐4208‐cr(L), 14‐4278‐cr(con)

––––––––––––––––––––––––––––––––––––

UNITED STATES OF AMERICA,

Appellee,

‐v.‐ 

DANIEL GREENBERG,

Defendant‐Appellant.

––––––––––––––––––––––––––––––––––––

Before:    STRAUB, LIVINGSTON, and CHIN, Circuit Judges.

Defendant‐Appellant Daniel Greenberg appeals from a corrected

judgment of conviction, entered on November 7, 2014, in the United States

District Court for the Eastern District of New York (Spatt, J.).    Following a jury

trial, Greenberg was convicted of all thirteen counts in the Superseding

Indictment, including wire fraud, access device fraud, aggravated identity theft,

and money laundering.    A summary order issued concurrently with this

opinion addresses and rejects most of Greenberg’s claims on appeal.    This

opinion addresses two of Greenberg’s challenges to his conviction.    First, we

consider whether the district court erred in denying Greenberg’s motion to

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dismiss the Superseding Indictment for spoliation of evidence.    We conclude,

relying on Arizona v. Youngblood, 488 U.S. 51 (1988), that Greenberg failed to

show bad faith, so that his motion was properly denied.    Second, we consider

whether the district court erred in denying Greenberg’s motion to dismiss the

wire fraud counts because of a “lack of convergence” between the parties injured

and those deceived by Greenberg’s scheme.    Here, we join our sister circuits and

decline to find the existence of a convergence requirement for wire fraud.   

Accordingly, the judgment of conviction is AFFIRMED.

FOR APPELLEE: CHARLES N. ROSE, David C. James, Walter

M. Norkin, Assistant United States

Attorneys, New York, N.Y., for Robert L.

Capers, United States Attorney for the

Eastern District of New York, for the United

States of America.

FOR DEFENDANT‐APPELLANT: ERIC M. CREIZMAN, Creizman PLLC, New

York, N.Y., for Daniel Greenberg.

DEBRA ANN LIVINGSTON, Circuit Judge:

This appeal arises from Daniel Greenberg’s conviction of wire fraud,

access device fraud, aggravated identity theft, and money laundering in

connection with a scheme to make unauthorized credit card charges to the credit

cards of customers of Greenberg’s digital retail company, Classic Closeouts, LLC

(“CCL”).    During the summer of 2008, there were approximately 77,000

unauthorized charges to these customer cards, totaling approximately $5 million,

all supposedly related to a “Frequent Shopper Club” program at CCL.   

Following a civil case brought by the Federal Trade Commission (“FTC”) and a

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criminal investigation, the Government filed a Superseding Indictment, charging

Greenberg with eight counts of wire fraud, in violation of 18 U.S.C. § 1343; one

count of access device fraud, in violation of 18 U.S.C. §§ 1029(a)(5) and

1029(c)(1)(A)(ii); one count of aggravated identity theft, in violation of 18 U.S.C.

§§ 1028A(a)(1), 1028A(b), 1028A(c), and 1028A(c)(5); and three counts of money

laundering through unlawful monetary transactions, in violation of 18 U.S.C.

§ 1957(a).    Greenberg was convicted of all counts in January 2014, after a jury

trial.

This opinion addresses two of Greenberg’s arguments on appeal.1    First,

Greenberg contends that the district court erred in denying his motion to dismiss

the Superseding Indictment for spoliation of evidence.    Next, he argues that the

wire fraud counts should have been dismissed because of a “lack of

convergence” between the parties injured and those deceived by the “Frequent

Shopper Club” scheme.    We reject both arguments and, accordingly, affirm the

judgment of conviction.

 1 Greenberg raises additional arguments that are addressed and rejected in a

summary order issued concurrently with this opinion.

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BACKGROUND

I.    Factual Background2

From 2002 until 2009, Greenberg owned and operated CCL, an Internet

retailer of discounted clothing and other merchandise.    Greenberg served as

CCL’s president and managing member, and was the sole signatory on CCL’s

accounts.    CCL operated from 110 West Graham Avenue in Hempstead, New

York (“the Premises”).    CCL maintained a website, classiccloseouts.com, from

which it sold its merchandise.3    The website was certified by TRUSTe, an

independent organization that certifies the privacy practices of its Internet

licensees.4   

 2 The factual background regarding the crimes of which Greenberg was

convicted is derived from the testimony and evidence presented at Greenberg’s trial.   

Additional background is based upon the record and is undisputed or attributed to a

particular party, as noted.    

3 CCL’s goods were also included on aggregator retail websites, including

Shop.com, which compile a searchable digital database of the items offered on, and link

to, multiple merchants’ websites.

4 The TRUSTe certification gives a website the right to post the TRUSTe logo on

its site, as an indication of the reliability of its privacy practices.    TRUSTe has a

consumer privacy‐related dispute resolution service, which allows consumers to report

complaints about its licensees so that TRUSTe can then investigate and identify whether

the licensee should be required to take any corrective measures to remain in the

program.   

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In order to process credit or debit card charges for purchased items, CCL

maintained a merchant account with Bank of America Merchant Services

(“BAMS”).5    In 2006, CCL entered into an agreement with Cynergy Data, LLC

(“Cynergy”) to serve as CCL’s payment processor, an intermediary between the

acquiring bank—BAMS—and the merchant—CCL.    The agreement established

a fee schedule that included a “rolling reserve,” an amount of money set in

reserve by the payment processor to offset any “chargebacks” incurred by the

merchant.    A chargeback occurs when a cardholder contacts his issuing bank to

dispute a charge appearing on his account statement, and the issuing bank

charges that amount back to the acquiring bank.    A “reversal” occurs when a

merchant is able to prove the legitimacy of the initial transaction, and the charge

reappears on the cardholder’s account (thus reversing the chargeback).   

A. The Scheme

In the first part of 2008, during a period of declining sales volume at CCL,

Greenberg called Jason Mizrahi, a CCL graphic designer, to task him with

creating a template, supposedly for distribution to customers, to promote a CCL

 5 This opinion uses two terms to refer to the actors who execute these

transactions.    An “issuing bank” is a financial institution that issues credit and debit

cards to customers.    An “acquiring bank” is a financial institution that enters into

agreements with merchants enabling them to accept and process credit card charges for

payment.    In this case, BAMS served as the acquiring bank.   

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“Frequent Shopper Club.”    This was unusual, as Mizrahi generally received

assignments from his direct supervisor, head graphic designer Lisa Chin, and not

Greenberg.    Mizrahi designed the promotion template and provided it to

Greenberg, but the designer never saw his work product on the CCL website.   

Greenberg did, however, send the template to Venkata Chittabathini, a CCL

computer programmer, and directed him to create a program for charging

customer credit cards in connection with the membership program.    Notably,

despite these undertakings by Greenberg, other CCL employees who were

otherwise heavily involved in CCL’s marketing and sales (including CCL’s

customer service manager, Simcha Geller, its warehouse manager, Alejandro

Rubenstein, and Chin) never discussed the Frequent Shopper Club with

Greenberg or were ever directly informed of its existence.6   

During the summer of 2008, CCL received an influx of complaints from

customers asserting that their credit cards had been charged even though they

had not placed an order with CCL.    Customers making such complaints

 6 This was unusual.    Chin was normally responsible for creating marketing

materials that were posted on the company’s website and emailed to customers.    She

was unaware of the Frequent Shopper Club and never saw any promotion for the club

even though she checked the CCL website daily and reviewed CCL’s promotional

emails.    Similarly, Geller maintained an email account specifically to monitor CCL’s

advertisements and promotions, but he never received any email concerning a frequent

shopper club.   

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testified at trial that they had made at least one purchase from CCL in the past,

and they were unaware that CCL had retained their credit card information.   

Numerous customers attempted to contact CCL about the charges during this

period, but their calls and voicemails frequently went unanswered.    Charged in

amounts ranging from $29.99 to $79.99, various of these customers testified at

trial that they had never joined a frequent shopper club and had never received

promotional emails or any other communication from CCL concerning such a

club.   

As complaints mounted, Geller informed Greenberg about the influx

sometime in June 2008.7    Greenberg responded that a computer programmer

was working on the problem, a computer glitch.    Even as Geller noted the

questionable transactions continuing to increase—he testified that they

eventually reached tens of thousands of dollars a day—Greenberg never

mentioned the Frequent Shopper Club in his discussions with Geller about the

 7 Chin also raised the issue with Greenberg, who suggested to her that these

unauthorized charges were occurring because of fraud by “some other company” or a

“test” conducted by a “credit card company” that “wasn’t supposed to go out

and . . . did by accident.”    App’x 509‐11.    In fact, an unauthorized CCL charge of

$39.99 appeared on Chin’s own credit card statement, but Greenberg instructed

Chittabathini to remove it after Chin complained.   

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issue. 8     Greenberg, however, did ask Geller whether payment for these

transactions had come into the company’s bank accounts.   

During this period, other companies that had a relationship with

CCL—TRUSTe, Cynergy, and Shop.com—noticed increased consumer

complaints regarding unauthorized charges and began to make inquiries.   

Greenberg provided inconsistent explanations to each company.    Thus,

Greenberg told a TRUSTe compliance officer that the charges were due to a

computer glitch that had occurred over the Fourth of July weekend, affecting “at

most 100 consumers,” all of whom had been or would be given chargebacks.9   

App’x 261.    In a follow‐up email, Greenberg mentioned the Frequent Shopper

Club, claiming that CCL had been offering it to customers “for years at various

times and in various formats” and that “thousands of previous members [had]

gladly paid and renewed yearly for several years already.”    App’x 269.    In July,

Greenberg explained to Cynergy that the chargebacks were due to customers

who initially joined the Frequent Shopper Club but were disgruntled because

 8 Geller, who testified both that Greenberg was the only person at CCL with the

ability and authorization to charge a customer’s credit card and that he could do so

remotely, recounted that the first time he, Geller, saw a direct reference to the Frequent

Shopper Club was in a bank document related to credit card chargebacks.   

9 Greenberg’s explanation was particularly suspicious because TRUSTe had

received complaints before July 4, 2008.   

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they were not able to get through to CCL’s customer service department because

of the flood of interest in the program.    Last, when Shop.com inquired as to the

“alarming number of inquiries from customers” about unauthorized charges,

Greenberg explained that the charges resulted from “a promotion offering

consumers a members only shipping benefit.”    App’x 411‐12.    He specified that

none of CCL’s customers’ personally identifiable information had been

compromised.    Ultimately, owing to continuing customer complaints and

Greenberg’s insufficient explanations, TRUSTe, Cynergy, and Shop.com all

terminated their respective relationships with CCL.   

Between June and August 2008, CCL customers incurred over 77,000

unauthorized charges, totaling approximately $5 million. 10     Approximately

44,000 chargebacks in the total amount of about $3.3 million resulted from

customers disputing the charges with the issuing banks.    Greenberg defended

the validity of the charges, however, causing approximately 19,000 of the

chargebacks to be reversed, so that over $1.3 million of the unauthorized charges

reappeared on customers’ credit card statements.    Between July and August

 10 There were, in fact, many more attempted CCL charges but many of the credit

card accounts involved had been closed or had expired before the charges were

attempted.   

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2008, Greenberg transferred nearly $1 million from his CCL merchant account to

various other bank accounts which he controlled.   

B. The FTC Action

On June 24, 2009, the FTC filed a civil action against both Greenberg and

CCL in the United States District Court for the Eastern District of New York

(Wexler, J.).    FTC v. Classic Closeouts, LLC, 09‐cv‐2692 (LDW).    The FTC alleged

that Greenberg and CCL had engaged in “unfair or deceptive acts or practices in

or affecting commerce,” 15 U.S.C. § 45(a), in violation of Section 5 of the FTC Act,

by repeatedly charging customers’ credit cards without their authorization.    On

June 29, 2009, the district court entered a temporary restraining order (“TRO”)

against CCL, and appointed a temporary receiver (the “Receiver”) to prevent,

among other things, destruction of evidence.   

The Receiver interviewed Greenberg at the Premises the very next day.   

According to the Receiver’s account of that interview, presented in a report to the

district court later that summer, Greenberg claimed that in January 2009, he sold

CCL to Hazen NY Inc. (“Hazen”), a company owned by CCL’s former

warehouse manager, Jonathan Bruk.    Greenberg indicated that after the sale he

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maintained his office at the Premises and worked as a consultant to Hazen.11   

The Receiver also reported that the FTC attempted to preserve evidence that day

by imaging the hard drives of CCL computers, but FTC employees were unable

to image everything owing to power failures.    When the FTC’s computer

specialist returned the next day to complete the task, he was denied access to the

premises.   

In her report to the district court, dated August 20, 2009, the Receiver

concluded that the sale of CCL to Hazen “may be a sham” and that “CCL’s

operations may be continuing through the [n]ew [d]efendants.”12    Gov’t App’x

14.    The report explained that the original defendants had failed to cooperate

with the Receiver, as the TRO required, by “failing to provide repeatedly

requested documentation about the . . . assets and transfers of money and

property.” Id.    Next, the report indicated that the Receiver had found “no

evidence of a legitimate transfer of ownership of CCL.”    Id. at 15.    The report

explained that although CCL was apparently “not operating,” it “may [have

 11 Greenberg also indicated that he was the sole owner of 110 West Graham

Avenue Corporation, which leased and retained control over the Premises.   

12 The FTC commenced its action against only CCL and Greenberg.    In its

Amended Complaint, however, the FTC named several additional defendants: IVAL

Group, LLC, AYC Holdings Corp., 110 West Graham Avenue Corp., Bruk, Hazen,

Stephanie H. Greenberg, and YGC Enterprises, Inc.   

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been] continuing its sales operations through certain of the [n]ew [d]efendants.”   

Id. at 17.    Last, the report detailed evidence of transfers of CCL’s assets to new

defendants, and the failure to produce documents.   

On September 21, 2009, CCL was evicted from the Premises.    According

to the Government, in that eviction, representatives of Bennett Moving, Storage

and Evictions (“Bennett”) took possession of all of CCL’s property, including its

computers and servers, and transferred it to United Storage, a storage facility in

West Hempstead, New York.

C. The Criminal Investigation

The criminal investigation began in February 2010, some seven or eight

months after the FTC action commenced.    The Government asserts that on April

14, 2010, Inspector Charles Schriver of the United States Postal Inspection Service

contacted Bennett, the company that had taken possession of CCL’s property,

and was informed that Greenberg had retrieved it.    Inspector Schriver next

contacted United Storage, which confirmed that the CCL property, including the

computers and servers, had been removed in January 2010.    Schriver thereafter

obtained copies of the previously‐imaged CCL hard drives from the FTC.    The

FTC indicated to Schriver in an email that some of the data from CCL computers

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and servers had not been successfully acquired.    The FTC retained the originally

imaged computer evidence in Washington, D.C.   

Discussions between the United States Attorney’s Office for the Eastern

District of New York (“EDNY”) and Jason Berland, an attorney representing

Greenberg, began months before Greenberg was first indicted in April 2012.    On

January 12, 2012, Berland, one of numerous successive attorneys who

represented Greenberg in connection with the criminal case, emailed Inspector

Schriver and the Assistant United States Attorney (“AUSA”) handling the

investigation.    The email stated that Greenberg retained “back‐up copies of the

servers that he and some of his employees were able to access at Classic

Closeouts,” and that data that Berland had reviewed with Greenberg and also

“discussed with a forensic analyst,” had been obtained from these back‐ups and

would be provided to the Government.    Gov’t App’x 21.    Two weeks later, on

January 26, 2012, Berland reported that Greenberg possessed “a few dozen

gigabytes of data to be analyzed” and indicated that he would obtain the

material for the Government to review.    Id. at 26.    On February 1, 2012, Berland

again emailed, attesting that he would provide “data pertinent to establishing

that an email went out to customers and that there were legitimate customer

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enrollments” and expressing the hope that this “conclusive proof” would

persuade the Government not to move forward with the case.    Id. at 35.   

Berland indicated that Greenberg was “finishing the process of copying the data

to a back‐up drive” and that Berland would thereafter provide it.    Id.   

Berland’s efforts did not ultimately dissuade the Government from seeking

an indictment.    More pertinent here, the Government asserts that neither

Greenberg nor his counsel indicated during this period leading up to indictment

“that Greenberg lacked the evidence to prove his innocence or that the CCL

computers and servers were in the possession or control of someone other than

Greenberg.”    Gov’t Br. 8.    At the conclusion of the negotiations, Berland

thanked the AUSA for “extraordinary” generosity with her time “over the past

couple of months” during which these negotiations occurred.    Gov’t App’x 36.

II.    Procedural History

On April 26, 2012, the Government filed a three‐count indictment against

Greenberg and about one month later provided him with its initial discovery

letter, which indicated that “[t]he replica of hard drives seized by the Federal

Trade Commission [was] being stored” and was “available for copy.”    Letter

Regarding Discovery at 8, United States v. Greenberg, No. 12‐cr‐0301 (ADS)

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(E.D.N.Y. May 30, 2012), ECF No. 27.    After the Government filed the

Superseding Indictment in November 2012, Greenberg’s new lawyer, John

Wallenstein, requested an adjournment of the trial date so that he could obtain

certain records from Greenberg’s former attorneys in the FTC civil proceeding,

and so that he could review the CCL evidence copied by the FTC in June 2009

and the associated chain of custody logs.    In May 2013, Wallenstein contacted

the AUSA to inquire about the original CCL computers and servers.    The

Government responded that the FTC had left the original computers and servers

on CCL’s premises with Greenberg and Bruk and that it did not know where

they were currently located.   

On June 13, 2013, after replacing Wallenstein, Greenberg filed a motion

seeking dismissal of the Superseding Indictment based on the Government’s

alleged spoliation of evidence.13    In a declaration, Greenberg admitted that he

had known, from June 2009, that the FTC had not captured all the CCL computer

and server data.    Without discussing what had happened with the computers

and servers after the FTC’s attempt to image the data, he also declared that he

learned from Wallenstein in May 2013 that Wallenstein had inquired and been

 13 Greenberg also filed a motion to dismiss the wire fraud counts of the

Superseding Indictment – Counts One through Eight – on May 24, 2013.    The district

court denied this motion after hearing argument on November 1, 2013.   

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advised by the Government that the original computers and servers were not in

Washington, D.C., and that their whereabouts were unknown.    Greenberg

argued that though he had saved some data to his personal computer, including

evidence of emails sent to customers, he could not introduce this evidence at trial

because he would not be able to establish chain of custody for these materials.   

The district court denied the motion without an evidentiary hearing, concluding

that Greenberg had “failed to show bad faith on the part of the government” and

that this showing was “[v]ery important for a spoliation motion.”    App’x 101‐02.   

Trial commenced a few weeks later and spanned about three weeks.    On

January 24, 2014, the jury convicted Greenberg on all thirteen counts of the

Superseding Indictment.14    On October 31, 2014, the district court sentenced

Greenberg principally to 84 months’ incarceration, three years’ supervised

release, and restitution in the sum of $1,125,022.58. On November 7, 2014, the

district court entered a corrected judgment of conviction and order of forfeiture.   

This appeal followed.   

 14 The only evidence that Greenberg introduced in putting forth his defense at

trial was a set of bank records admitted pursuant to a stipulation.   

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DISCUSSION

This opinion addresses two of Greenberg’s claims on appeal: (1) whether

the Superseding Indictment should have been dismissed for spoliation of

material evidence (or, in the alternative, whether the district court should have

held an evidentiary hearing concerning the prosecution’s bad faith); and (2)

whether the Superseding Indictment fails to plead a legally cognizable wire

fraud scheme under 18 U.S.C. § 1343 because there is a lack of convergence

between the intended victims of the scheme and the parties deceived.

I

We first consider Greenberg’s argument that the Superseding Indictment

should have been dismissed based on spoliation of material evidence—CCL’s

computers and servers—or, in the alternative, that an evidentiary hearing should

have been held concerning the prosecution’s bad faith.    We review for abuse of

discretion a district court’s decision whether to dismiss a case on the ground that

spoliation of evidence has deprived the defendant of a fair trial.    See West v.

Goodyear Tire & Rubber Co., 167 F.3d 776, 779 (2d Cir. 1999).    We will reject the

district court’s factual findings in support of its decision only if they are clearly

erroneous.    See United States v. Rahman, 189 F.3d 88, 139 (2d Cir. 1999); see also

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United States v. Morgenstern, 933 F.2d 1108, 1116 (2d Cir. 1991).    Discerning no

error, much less an abuse of discretion, in the district court’s decision, we

conclude that Greenberg’s argument is without merit.       

A criminal defendant moving for dismissal on the basis of spoliation of the

evidence must make a two‐pronged showing that the evidence possessed

exculpatory value “that was apparent before [it] was destroyed”and that it was

“of such a nature that the defendant would be unable to obtain comparable

evidence by other reasonably available means.”    California v. Trombetta, 467 U.S.

479, 489 (1984); see also United States v. Rastelli, 870 F.2d 822, 833 (2d Cir. 1989).   

In addition, while Brady v. Maryland, 373 U.S. 83 (1963), teaches that good or bad

faith is irrelevant when the Government suppresses or fails to disclose material

exculpatory evidence, when the Government has, instead, failed to preserve

evidentiary material that is “potentially useful,” such failure “does not violate

due process ‘unless a criminal defendant can show bad faith’” on the part of the

Government.    Illinois v. Fisher, 540 U.S. 544, 547‐48 (2004) (quoting Arizona v.

Youngblood, 488 U.S. 51, 58 (1988)).    Failure to satisfy any of these requirements,

including a failure to show the Government’s bad faith, is fatal to a defendant’s

spoliation motion.    See Rastelli, 870 F.2d at 833; see also United States v. U.S.

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Currency in the Amount of $228,536.00, 895 F.2d 908, 917 (2d Cir. 1990) (noting that

“unless a defendant can show bad faith . . . destruction of potentially useful

evidence is not a denial of due process”).   

At the outset, it is doubtful that Greenberg’s moving papers even raised a

due process issue regarding the failure to preserve evidence.    As we have said

in the past, “the record must first show that evidence has been lost and that this

loss is ‘chargeable to the State.’” Rahman, 189 F.3d at 139 (quoting Colon v.

Kuhlmann, 865 F.2d 29, 30 (2d Cir. 1988)).    The FTC, in its civil investigation,

sought to image the computer hard drives.    These images were deficient and

incomplete in various ways—a fact that Greenberg admits to knowing at the time

and that was also disclosed to the defense during discovery.    Greenberg now

complains that the FTC acted negligently in imaging the drives.    Even assuming

such negligence, however, at the time of the civil investigation only the FTC was

involved and Greenberg points to no evidence that a criminal indictment was

directly contemplated.    See Rahman, 189 F.3d at 139‐40 (holding that the loss of

recordings made without the awareness of the criminal investigators could not

be charged to the prosecution).    And while he asserts in his opening brief that

“the prosecution team was equally culpable for failing to take adequate steps to

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collect the original computers and servers,” Greenberg Br. 42, Greenberg points

to no facts consistent with this assertion and does not provide substantive

support for his argument that the failure to collect evidence could ground a due

process claim in circumstances analogous to those here.   

Setting this problem aside, Greenberg’s argument still fails.    We may

assume arguendo that the missing computer data satisfied Trombetta’s

two‐pronged test: that the data that the FTC did not image in June 2009 was

potentially useful to the defense and that Greenberg was unable to obtain

comparable evidence by reasonably available means.    Greenberg’s argument on

appeal is nevertheless without merit because, as the district court concluded, the

record is devoid of evidence that the Government acted in bad faith in failing to

preserve the data.    See United States v. Pirre, 927 F.2d 694, 697 (2d Cir. 1991)

(noting that even assuming unpreserved evidence “might have been potentially

useful” to the defense, “absent bad faith there is no violation”); Rastelli, 870 F.2d

at 833 (noting that where “record is barren of proof that the government lost the

evidence in bad faith,” “[o]n this ground alone, the missing‐evidence claim must

fail”).   

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Greenberg’s arguments to the contrary do not point to ways in which he

can overcome this evidentiary gap.    He contends, first, that “‘bad faith’ in the

context of a spoliation motion can be established short of the intentional

destruction of documents” by mere “carelessness in preserving documents of

obvious relevance and importance.”    Greenberg Br. 41.    But this argument

(even assuming that Greenberg could point to facts in support of it) is foreclosed

by Youngblood, where the Supreme Court held that the loss of semen samples that

were of obvious potential use to the defense did not deprive the defendant of

due process where this loss by police could “at worst be described as negligent.”   

488 U.S. at 58; see also Fisher, 540 U.S. at 548 (holding that the mere fact that

destroyed evidence was at the time sought in a pending discovery request did

not “eliminate[] the necessity of showing bad faith on the part of police”).15

Greenberg next attempts, in passing, to bolster his allegation of bad faith

with the claim that the information the FTC was unable to image was materially

 15 Greenberg relies on our decision in United States v. Grammatikos to argue that

the appropriateness of sanctions for the failure to preserve evidence depends on a

case‐by‐case assessment of the Government’s “culpability for the loss, together with a

realistic appraisal of its significance when viewed in light of its nature, its bearing upon

critical issues in the case and the strength of the government’s untainted proof.”    633

F.2d 1013, 1020 (2d Cir. 1980).    Grammatikos, however, was decided before Youngblood

and must be read in light of this subsequent Supreme Court precedent.    Further,

Greenberg fails to articulate how the Grammatikos test would be applied in the present

case or to highlight facts that would support an alternate analysis.

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exculpatory, not simply of potential use in his defense.    Greenberg Reply Br. 16.   

The “presence or absence of bad faith,” however, as the Supreme Court noted in

Youngblood, “necessarily turn[s] on the police’s knowledge of the exculpatory

value of the evidence at the time it was lost or destroyed.”    488 U.S. at 56 n.*.   

Suffice it to say here, moreover, that Greenberg offers no facts in support of his

conclusion that the evidence was materially exculpatory, much less that the

Government could have known this information.    Greenberg relies heavily on

the district court’s observation, before trial, that while Greenberg’s motion to

dismiss the indictment was properly denied for failure to show bad faith,

Greenberg satisfied Trombetta’s two prongs by showing that the missing

computer data had exculpatory value and that he could not obtain comparable

evidence through other reasonably available means.    The district court,

however, did not conclude that the missing data was materially exculpatory, as

opposed to potentially useful.    After hearing the evidence at trial, moreover, the

court observed, in denying Greenberg’s request for an adverse inference

instruction regarding this missing evidence, that “[t]he evidence in this trial, the

overwhelming evidence, is that the computers and servers would show evidence

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contrary, against, the interests of the defendant.” App’x 576 (emphasis added).   

We see no reason to disagree.   

In sum, “the record is barren of proof that the government [failed to

preserve] the evidence in bad faith.”    Rastelli, 870 F.2d at 833‐34.    As the district

court noted, the record instead reveals, at most, that the FTC in a civil action had

access to computer data that was not successfully imaged on the first attempt

and that a complete image was never thereafter obtained by criminal

investigators.    None of this suggests bad faith and thus, as the district court

concluded, there is no merit to Greenberg’s argument that he was denied a fair

trial.    We discern no error in this conclusion, nor in the district court’s related

determination not to hold an evidentiary hearing on the issue.    See United States

v. Binday, 804 F.3d 558, 593 (2d Cir. 2015) (noting that a district court’s denial of

evidentiary hearing is reviewed for abuse of discretion).   

II

Greenberg next contends that the district court erred in denying his

motion to dismiss the wire fraud counts in the Superseding Indictment, Counts

One through Eight, because they failed to articulate a legally cognizable wire

fraud scheme.    Specifically, Greenberg advances the “convergence theory” of

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wire fraud, which, he argues, requires the party defrauded and the party injured

to be one and the same.    Here, Greenberg argues that because the Superseding

Indictment alleged that he “lied not to the customers, but to the issuing banks

and credit card processors when they confronted him with disputed charges,”

there was a “lack of convergence between the intended victim of the scheme and

the party deceived.”    Greenberg Br. 44.    We review de novo a district court’s

denial of a motion to dismiss charges in an indictment.    United States v. Yousef,

327 F.3d 56, 137 (2d Cir. 2003).

The federal mail and wire fraud statutes penalize using the mails or a wire

communication to execute “any scheme or artifice to defraud, or for obtaining

money or property by means of false or fraudulent pretenses, representations, or

promises.”    18 U.S.C. §§ 1341, 1343.    Thus, the “essential elements” of the crime

are “(1) a scheme to defraud, (2) money or property as the object of the scheme,

and (3) use of the mails or wires to further the scheme.”    Binday, 804 F.3d at 569

(quoting Fountain v. United States, 357 F.3d 250, 255 (2d Cir. 2004)); see also United

States v. Autuori, 212 F.3d 105, 115 (2d Cir. 2000).    As we have recently reiterated,

“[t]he gravamen of the offense is the scheme to defraud.”    United States ex rel.

OʹDonnell v. Countrywide Home Loans, Inc., 822 F.3d 650, 657 (2d Cir. 2016) (quoting

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Bridge v. Phoenix Bond & Indem. Co., 553 U.S. 639, 647 (2008)); cf. Binday, 804 F.3d at

569 (“’Because the mail fraud and the wire fraud statutes use the same relevant

language, we analyze them the same way.’” (quoting United States v. Schwartz, 924

F.2d 410, 416 (2d Cir. 1991))).   

To that end, the wire fraud statute requires the Government to show proof

of a “scheme or artifice to defraud,” 18 U.S.C. § 1343, “which itself demands a

showing that the defendant possessed a fraudulent intent,” but the Government

need not prove “that the victims of the fraud were actually injured,” but only “that

defendants contemplated some actual harm or injury to their victims.”    United

States v. Novak, 443 F.3d 150, 156 (2d Cir. 2006) (quoting United States v. Starr, 816

F.2d 94, 98 (2d Cir. 1987)); see also Neder v. United States, 527 U.S. 1, 25 (1999)

(noting that these fraud statutes “prohibit[] the ‘scheme to defraud,’ rather than

the completed fraud”).    Nothing in these statutory texts, moreover, suggests that

the scheme to defraud must involve the deception of the same person or entity

whose money or property is the object of the scheme.    To the contrary, we agree

with the First Circuit that the statutory language in both the mail and wire fraud

statutes “is broad enough to include a wide variety of deceptions intended to

deprive another of money or property” and “[w]e see no reason to read into the

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statutes an invariable requirement that the person deceived be the same person

deprived of the money or property by the fraud.”    United States v. Christopher, 142

F.3d 46, 54 (1st Cir. 1998).   

We have never read the wire and mail fraud statutes as limited to schemes

in which the party whose money or property is the object of the scheme is the

same party whom a fraudster seeks to deceive.    Indeed, we have declined

opportunities to do so.    See Ideal Steel Supply Corp. v. Anza, 373 F.3d 251, 263 (2d

Cir. 2004), revʹd in part, vacated in part on other grounds, 547 U.S. 451 (2006); United

States v. Eisen, 974 F.2d 246, 253 (2d Cir. 1992).    Greenberg marshals only two

Second Circuit cases in support of his argument: United States v. Evans, 844 F.2d 36

(2d Cir. 1988), and United States v. Covino, 837 F.2d 65 (2d Cir. 1988).    In Evans,

however, although we observed that it “seems logical that the deceived party

must lose some money or property,” 844 F.2d at 39, we specifically declined to

adopt that proposition as an element of wire fraud.    Id. at 40 (“[T]he case before

us today does not require us to decide this general question.”); see also Anza, 373

F.3d at 262‐63 (discussing, among other cases, Evans, and explaining that

although such cases discussed the convergence theory, “[t]his Court has not held

that the civil‐RICO plaintiff who alleges mail fraud or wire fraud must have been

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the entity that relied on the fraud”); United States v. Novod, 923 F.2d 970, 974 (2d

Cir. 1991), on reh’g, 927 F.2d 726 (2d Cir. 1991) (“Evans contended in part that the

property must belong to the deceived party . . . . We did not reach this

question . . . .”).    And Greenberg’s reliance on Covino is likewise inapposite, as

the language he cites was in consideration of a wholly different issue—namely,

whether the withholding of material information concerning breach of a

fiduciary duty amounted to a deprivation of property under the statute.    See id.,

837 F.2d at 71‐72.   

Thus, in this case we join at least four sister circuits and make clear that we

reject the requirement of convergence urged by Greenberg: wire fraud does not

require convergence between the parties intended to be deceived and those

whose property is sought in a fraudulent scheme.16    Because the wire fraud

 16 We join the First, Fifth, Seventh, and Eighth Circuits. See United States v.

Seidling, 737 F.3d 1155, 1161 (7th Cir. 2013) (“[T]his Court does not interpret the mail

fraud statute as requiring convergence between the misrepresentations and the

defrauded victims.”); United States v. McMillan, 600 F.3d 434, 450 (5th Cir. 2010)

(concluding that “[t]he Government was not required to prove that misrepresentations

were made directly to any of the victims” in pursuing a mail fraud conviction where

defendants filed false financial reports with the state department of insurance resulting

in risk and financial loss to policyholders); Christopher, 142 F.3d at 54 (upholding the

wire fraud conviction of a defendant that deceived state insurance regulators, but that

resulted in financial losses of policyholders, because it could find “no reason to read into

the [mail and wire] statutes an invariable requirement that the person deceived be the

same person deprived of the money or property by the fraud”); United States v. Blumeyer,

114 F.3d 758, 768 (8th Cir. 1997) (concluding that “a defendant who makes false

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statute does not impose a convergence requirement, the district court did not err

in denying Greenberg’s motion to dismiss the wire fraud counts in the

Superseding Indictment for failure to plead a legally cognizable scheme.    That

the Superseding Indictment alleges that Greenberg’s misrepresentations were

directed at acquiring banks and others, but that the credit card holders were the

intended victims of the scheme, is irrelevant.17    We reject Greenberg’s argument

to the contrary.

CONCLUSION

For the foregoing reasons, and for those stated in the summary order that

accompanies this decision, we AFFIRM the judgment of conviction.

 

representations to a regulatory agency in order to forestall regulatory action that

threatens to impede the defendant’s scheme to obtain money or property from others is

guilty [of violating the mail fraud statute]” even though it was the policyholders who

incurred the financial losses).   

17 The government also argues that, even if we were to adopt a convergence

requirement, the Superseding Indictment, contrary to Greenberg’s claims, sufficiently

alleged such convergence.    However, we have no need to address this contention in

light of our holding today.   

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