RECOMMENDED FOR PUBLICATION

Pursuant to Sixth Circuit I.O.P. 32.1(b)

File Name: 23a0010p.06

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

UNITED STATES OF AMERICA,

Plaintiff-Appellant,

v.

EMANUELE PALMA,

Defendant-Appellee.

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No. 21-1782

Appeal from the United States District Court for the Eastern District of Michigan at Detroit.

No. 2:19-cr-20626-1—Nancy G. Edmunds, District Judge.

Argued: October 20, 2022

Decided and Filed: January 18, 2023

Before: COLE, GIBBONS, and BUSH, Circuit Judges.

_________________

COUNSEL

ARGUED: Andrew W. Laing, UNITED STATES DEPARTMENT OF JUSTICE, Washington, 

D.C., for Appellant. Greg D. Andres, DAVIS, POLK & WARDWELL LLP, New York, New 

York, for Appellee. ON BRIEF: Andrew W. Laing, UNITED STATES DEPARTMENT OF 

JUSTICE, Washington, D.C., John K. Neal, UNITED STATES ATTORNEY’S OFFICE, 

Detroit, Michigan, for Appellant. Greg D. Andres, Paul J. Nathanson, DAVIS, POLK & 

WARDWELL LLP, New York, New York, Kenneth M. Mogill, MOGILL, POSNER & 

COHEN, Lake Orion, Michigan, for Appellee.

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OPINION

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JOHN K. BUSH, Circuit Judge. Defendant Emanuele Palma was indicted for several 

crimes, including conspiracy to commit wire fraud. The indictment alleges that Palma and others 

>
No. 21-1782 United States v. Palma Page 2

conspired to falsify test results for a new diesel engine and market these engines as 

environmentally friendly, meeting regulatory standards, and “best-in-class” compared with other 

diesel engines. The district court dismissed this count since, in its view, the property loss by 

consumers was too far removed from the falsified test results, which, the court reasoned, were 

meant to deceive regulators. Because Palma is only charged with conspiracy, not wire fraud 

itself, and because the indictment alleges adequate facts tying Palma to a fraudulent scheme, we 

REVERSE.

I

In 2010, Fiat Chrysler Automobiles N.V. (FCA) began developing a new diesel engine 

for several types of vehicles. Defendant Palma worked for FCA starting in 2013. Also named in 

the superseding indictment are Sergio Pasini, a head calibration engineer who supervised Palma, 

and Gianluca Sabbioni, a technical director who supervised Pasini.

Palma led a team of engineers who developed and calibrated diesel engines for use in 

FCA’s vehicles. Diesel-fueled engines use a combination of systems to reduce emissions and 

improve fuel economy and performance. But these systems are a double-edged sword. For one, 

the Exhaust Gas Recirculation system lowers emissions, but it reduces fuel economy. And 

Selective Catalytic Reduction, or the injection of ammonia fluid into the exhaust to reduce 

emissions, consumes diesel exhaust fluid, requiring owners to replenish the fluid more 

frequently.

The indictment alleges that Palma participated in a scheme that manipulated the diesel 

engine’s function during testing to produce artificially impressive results. Using the software 

programs known as “T_eng,” “Standard Dosing,” and “Online Dosing,” Palma and others 

allegedly made the engine appear to offer features that FCA was targeting to customers, 

including a fuel economy of greater than 30 miles per gallon and a frequency of fluid changes 

similar to that of standard oil changes for gasoline-powered cars. The indictment alleges that 

Palma and others achieved these standards by manipulating the engine’s operation during testing. 

When the vehicles were tested for emissions, the program activated Exhaust Gas Recirculation, 

sacrificing fuel economy. When the vehicles were tested for fuel economy or driven under real-
No. 21-1782 United States v. Palma Page 3

world conditions, T_eng lowered Exhaust Gas Recirculation, which improved fuel economy but 

increased emissions. Similarly, for the diesel engine fluid, Palma and co-conspirators allegedly 

used Dosing programs to selectively reduce emissions or ease fluid consumption during the 

respective testing. Palma and co-conspirators allegedly referred to this tactic as “cycle beating,” 

referring to adjusting performance during the regulatory testing cycle.

The indictment alleges the following. Palma and his co-conspirators knew that these 

testing results were critical to marketing the vehicles to consumers, including receiving the “bestin-class” fuel economy ratings and being able to market the vehicles as using “clean” diesel. 

Palma knew that false and misleading claims were being made to consumers and participated in 

making these claims. Emails and documents provided by the government show Palma was 

aware that the marketing of the vehicles was in jeopardy because of failure to meet performance 

standards. In fact, Palma knew that the engine could not meet the standards and the “cycle 

beating” strategy was the only way to pass them. On January 30, 2014, Palma received an email 

indicating EPA confirmed the fuel efficiency label showing 28 miles per gallon on the highway. 

Palma responded, “Best in class, great job.” Because of Palma’s use of cycle beating, he was 

aware that the vehicles did not meet EPA requirements or the requirements for “best-in-class.” 

Yet he was also aware that the vehicles were marketed as having “best-in-class fuel economy” 

and delivering “clean-diesel technology,” claims he knew were false. In addition, a sticker 

affixed to the cars’ windows stated the cars complied with regulations and provided detailed 

emissions information, as influenced by the cycle beating that Palma used. Palma was informed 

by email that EPA approved this label for placement on the vehicle.

According to the indictment, the scheme’s goal was 

for PALMA, PASINI, SABBIONI, and their co-conspirators to obtain money 

and property for FCA through the production and sale of Subject Vehicles that 

they knew did not comply with EPA rules and regulations governing emissions by 

(a) making and causing others to make material misrepresentations to FCA’s 

Regulators, and (b) making and causing others to make material 

misrepresentations to purchasers and potential purchasers of the Subject Vehicles.

FCA sold more than 100,000 of these vehicles (amounting to more than $4 billion in customer 

payments), which purportedly were legal to sell, compliant with federal regulations, and rated 
No. 21-1782 United States v. Palma Page 4

“best-in-class” for fuel efficiency. Per the indictment, customers who purchased the vehicles 

have said that the false and misleading representations were material to their purchase decisions.

In 2019, the grand jury indicted and arrested Palma, charging him with thirteen counts. 

The count appealed here is conspiracy to commit wire fraud in violation of 18 U.S.C. § 1349. 

The district court held that there was an insufficient causal nexus between Palma’s conduct and 

customers being induced to purchase vehicles. Referencing proximate causation, it concluded 

that there were two intervening circumstances. First, Palma was not personally responsible for 

marketing. Second, Palma’s marketing goals were “intertwined” with obtaining regulatory 

approval. Therefore, under Kelly v. United States, 140 S. Ct. 1565 (2020), the district court 

concluded Palma’s conduct was less a deprivation of consumer property and more a deception of 

regulators. The United States timely appealed.

II 

We review de novo the legal question of whether the offense’s elements are adequately 

alleged in the indictment. United States v. Maney, 226 F.3d 660, 663 (6th Cir. 2000) (citing 

United States v. Superior Growers Supply, Inc., 982 F.2d 173, 177 (6th Cir. 1992)). An 

indictment must be a “plain, concise, and definite written statement of the essential facts 

constituting the offense charged.” Fed. R. Crim. P. 7(c)(1). To be legally sufficient, an 

“indictment must assert facts which in law constitute an offense; and which, if proved, would 

establish prima facie the defendant’s commission of the crime.” United States v. Landham, 251 

F.3d 1072, 1079 (6th Cir. 2001) (quoting Superior Growers, 982 F.2d at 177). Although the 

statutory language of the offense may be used, it “must be accompanied with such a statement of 

the facts and circumstances as will inform the accused of the specific offense.” Id. (quoting 

Hamling v. United States, 418 U.S. 87, 117–18 (1974)). Courts reviewing a motion to dismiss 

“do not evaluate the evidence upon which the indictment is based.” Id. at 1080 (citing Costello 

v. United States, 250 U.S. 359, 362–63 (1956)).

III

Wire fraud is the use of interstate or foreign communications for the purpose of executing 

a scheme to defraud others of property. 18 U.S.C. § 1343. Wire fraud consists of three 
No. 21-1782 United States v. Palma Page 5

elements: the defendant (1) devised or willfully participated in a scheme to defraud, (2) used an 

interstate wire communication in furtherance of the scheme, and (3) intended to deprive a victim 

of money or property.” United States v. Rogers, 769 F.3d 372, 377 (6th Cir. 2014). The 

deprivation of property must be an object of the scheme, not merely incidental to it. Kelly, 140 

S. Ct. at 1573. 

Under 18 U.S.C. § 1349, a conspiracy to commit wire fraud is punishable by the same 

penalties as wire fraud itself. A conspiracy to commit wire fraud requires that two or more 

persons conspired, or agreed, to commit wire fraud and the defendant knowingly and voluntarily 

joined the conspiracy. Rogers, 769 F.3d at 377; Sixth Circuit Pattern Criminal Jury Instruction 

3.01B(2). 

The key question on appeal is whether there is a sufficient causal nexus between the 

conduct of Palma and co-conspirators and a deprivation of property. See United States v. 

Berroa, 856 F.3d 141, 152–53 (1st Cir. 2017); see also United States v. Frost, 125 F.3d 346, 354 

(6th Cir. 1997) (citing American Eagle Credit Corp. v. Gaskins, 920 F.2d 352, 353 (6th Cir. 

1990)) (explaining mail fraud requires a deprivation of property). In considering this question, it 

is important to recognize two issues about the disposition of the appeal: first, that it comes at the 

pleading stage, and second, that the count is for conspiracy to commit wire fraud, not for wire 

fraud itself. Therefore, the government need only allege facts showing that the conspiracy as a 

whole had the object of using deception to deprive consumers of property, and Palma joined the 

conspiracy.

Palma relies on the distance between his alleged conduct and the property losses 

consumers suffered. Specifically, he asserts that the indictment does not allege he 

communicated with any of FCA’s customers or was personally involved in marketing strategy. 

Further, as to the stickers affixed to the vehicles’ windows, he asserts there were no allegations 

that the information on the stickers was a communication Palma made or caused to be made to 

customers. Rather, he believes the government is overcoming the lack of connection through 

conclusory allegations about his participation in making misstatements. Any involvement he 

may have had in defrauding FCA’s regulators, he contends, was attenuated from the scheme to 

defraud customers.
No. 21-1782 United States v. Palma Page 6

In particular, Palma relies on Kelly, in which the Supreme Court held that realigning 

traffic lanes for political reasons failed to meet the property requirement for property fraud. 410 

S. Ct. at 1568–69. In that case, the government alleged two theories of property derivation: first, 

the loss of property from the “commandeering” of the bridges; and second, the loss of a public 

employee’s paid time. Id. at 1572. The Court held that the scheme was intended to alter a 

regulatory choice about the use of the bridges, rather than to take the bridges as property. Id.

Further, the minimal loss of public employees’ paid time to execute the scheme was only 

incidental; the scheme, at its core, was political in nature. Id. Therefore, the Supreme Court 

reversed the convictions. Id. at 1569.

Certain differences make Kelly an inapt case for comparison. For one, Kelly took place 

in post-conviction proceedings, whereas Palma challenges an indictment, and therefore we take 

the government’s allegations as true and do not test the evidence behind its claims. Landham, 

251 F.3d at 1079–80. What’s more, FCA sold billions of dollars’ worth of cars, which would 

amount to a serious deprivation of property if the allegations in the indictment are true. This 

property loss is both much more significant than the loss in Kelly and much more connected with 

the alleged scheme. See Kelly, 140 S. Ct. at 1573 (holding defendants regulated, but did not 

commandeer, traffic lanes). The indictment suggests a cooperative effort by many employees, 

including Palma, designing and marketing these vehicles with the clear intent that the vehicles be 

sold to consumers. Indeed, it is unclear what purpose Palma and co-conspirators might have had 

in bringing the vehicles to market other than to sell them. No such alleged deprivation of 

property, directly connected with the purpose of the scheme, can be found in Kelly.

Still, a loss of property does not always stem from alleged illegal conduct, as in the case 

of United States v. Berroa, 856 F.3d 141 (1st Cir. 2017), which Palma relies on. There, the 

government argued that convicted defendants who falsified test scores to obtain medical licenses 

and then practiced medicine perpetrated property fraud on health care benefit programs and 

health care consumers. Id. at 149. The First Circuit reasoned that this theory of fraud would 

greatly expand federal jurisdiction by allowing fraud prosecutions where “the underlying 

fraudulent scheme, and the mailing in furtherance thereof, is far removed from any money or 

property.” Id. at 152; see also United States v. Frost, 125 F.3d 346, 358–60 (6th Cir. 1997) 
No. 21-1782 United States v. Palma Page 7

(“[E]ven the cases which have held that convictions may rest upon the deceit of a person other 

than the ultimate victim contemplated that the deception was causally related to the scheme to 

obtain property from the victim.”). Therefore, the First Circuit reversed the convictions based on 

insufficiency of the evidence. Berroa, 856 F.3d at 154.

Berroa is not persuasive here—and as a First Circuit case, it certainly is not binding. 

First, Berroa left intact the conspiracy convictions, while reversing the fraud convictions. Id. at 

20–21. Also, unlike in Berroa, where the purpose of fraudulently obtaining medical licenses was 

to practice medicine, 856 F.3d at 147, the goal of “cycle beating” and falsely inflating the 

engines’ performance was, the government alleges, to induce customers who otherwise would 

not have bought the vehicles to do so. It is uncontested that the government has alleged that 

Palma engaged in deceptive conduct in conjunction with other employees to deceive regulators. 

Further, it is also uncontested that the government-approved vehicles have been sold for 

revenues running in the billions of dollars. Unlike Berroa, the case at bar is clearly about 

property. And it is plausible that the scheme’s goal was not merely to deceive regulators but also 

to sell the resulting products to consumers.

Palma also zeroes in on marketing, arguing that any allegations of his participation in 

marketing the vehicles to consumers are “conclusory.” Because the count in question is for 

conspiracy, the government need not allege that Palma participated in all aspects of a conspiracy, 

only that he knowingly and voluntarily joined a conspiracy to commit wire fraud. Rogers, 769 

F.3d at 377. “[F]or purposes of the indictment the government has pleaded sufficiently” that 

Palma participated in a deceptive scheme to defraud consumers, regardless of any participation 

in marketing. See United States v. Douglas, 398 F.3d 407, 418 (6th Cir. 2005). Even so, the 

government does allege participation in communications with consumers, which reinforce his 

apparent participation in a conspiracy.

Weighing the issues and considering the relatively lenient standard for pleading charges 

in an indictment as opposed to proving them at trial, the government has met its bar of alleging a 

conspiracy to commit wire fraud. Based on these alleged facts, it is eminently plausible that an 

object of this scheme was to deceive consumers in order to falsely induce them to purchase 

goods. 
No. 21-1782 United States v. Palma Page 8

One last point: Palma alleges there is a fundamental inconsistency in the government’s 

allegations that Palma and others used cycle beating to deceive regulators and consumers but 

also to fix problems with the vehicles, including a misfire issue. Assuming it is true that Palma 

and the alleged co-conspirators found another use for the T_eng protocol to fix a specific vehicle 

issue, that does not bear on whether they used T_eng to artificially inflate the vehicles’ 

performance and participated in a conspiracy to defraud consumers. A consumer driving a 

vehicle with the new diesel engine, whether using the T_eng protocol or not, has suffered the 

same injury—purchasing a vehicle with inferior fuel economy and emissions and that passed 

regulatory muster through deception, at least according to the indictment. 

IV

In sum, the indictment has made out the allegations and facts necessary for conspiracy to 

commit wire fraud. We therefore REVERSE the order of the district court and REMAND for 

further proceedings consistent with this opinion.