FILED

U.S. COURT OF APPEALS

ELEVENTH CIRCUIT

FEB 02, 2009

THOMAS K. KAHN

CLERK

[PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

________________________

No. 05-13809

________________________

D. C. Docket No. 04-00010-CR-3-001-MCR

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

versus

DAVID W. SVETE,

RON GIRARDOT,

Defendants-Appellants.

________________________

Appeals from the United States District Court

for the Northern District of Florida

_________________________

(February 2, 2009)

Before EDMONDSON, Chief Judge, and TJOFLAT, ANDERSON, BIRCH,

DUBINA, BLACK, CARNES, BARKETT, HULL, MARCUS, WILSON, PRYOR

and KRAVITCH, Circuit Judges.

*

 Senior Circuit Judge Kravitch elected to participate in this decision, pursuant to 28 *

U.S.C. § 46(c).
PRYOR, Circuit Judge:

This appeal presents the question whether the crime of mail fraud, which

prohibits “any scheme or artifice to defraud” by use of the mail, 18 U.S.C. § 1341

(emphasis added), requires proof that the scheme be capable of deceiving a

reasonably prudent person or whether schemes aimed at the gullible or improvident

are also prohibited. David W. Svete and Ron Girardot appeal their convictions for

mail fraud and argue that the district court erred when it refused to instruct the jury

that the government must prove that Svete and Girardot devised a scheme

reasonably calculated to deceive persons of ordinary prudence and comprehension.

The district court instead delivered the pattern jury instructions for mail fraud.

Committee on Pattern Jury Instruction, Judicial Council of the Eleventh Circuit,

Pattern Jury Instructions (Criminal Cases) § 50.1 (West 2003). A panel of this

Court held that the district court erred based on our precedent in United States v.

Brown, 79 F.3d 1550 (11th Cir. 1996), and ordered a new trial as to the counts of

mail fraud. United States v. Svete, 521 F.3d 1302, 1310–11 (11th Cir. 2008),

vacated, 532 F.3d 1133 (11th Cir. 2008). We granted rehearing en banc to

determine whether to overrule our decision in Brown. Because Brown is

inconsistent with both the plain language of the mail fraud statute and precedents

of the Supreme Court, we overrule Brown and hold that the district court did not

2
err when it gave the pattern jury instruction for mail fraud. We affirm the decision

not to deliver the jury instruction about mail fraud requested by Svete and Girardot

and remand to the panel for consideration of any remaining issues.

I. BACKGROUND

Svete, Girardot, and their agents were in the business of selling financial

interests in viatical settlements, which are financial products based on agreements

with persons (known as viators) who have terminal illnesses and sell their life

insurance policies to third parties for less than the mature value of the policies to

benefit from the proceeds while alive. Companies controlled by Svete obtained

more than one hundred million dollars from more than 3000 investors, more than a

third of whom were over the age of 65. Investors who purchased these financial

interests from agents of Svete and Girardot testified at trial that the sales agents

made false statements and provided them with literature that contained false

statements about the life expectancies of viators, the status of the life insurance

contracts, and the risks associated with the investments.

Thirty-five investors testified at the trial that sales agents told them that the

insurance policies were held by terminally ill patients as determined by

independent medical specialists who had access to the viators’ complete medical

records and doctors, but these statements by the sales agents were false. The

3
viators were not terminally ill, and the information that was reviewed by

independent medical professionals was incomplete. The information about many

viators was never reviewed by independent doctors. Svete directed a medical

underwriter who worked for him to create sham opinions of life expectancy and

endorse them with the forged signatures of independent physicians. Some

investors testified that they were told that “nobody lives past the terminally ill

date,” and other investors were told that the viators were supposed to die within

six months and, if the viator did not die in that time, the investors need not worry.

Many of the investments failed to mature when expected, and the investors were

obligated to make additional premium payments when the viator lived longer than

expected.

Investors who purchased interests in the viatical settlements were required to

sign contracts that acknowledged that the investors had not relied on any

representations other than those contained in the contracts. The contracts also

contained acknowledgments that the investors were sophisticated in financial

matters and had sought or had access to professional advice and that the projected

demise dates were only estimates. Several of the investors testified at trial that

they did not read or did not understand the contracts and relied on the statements of

the sales agents. Nanette Zima, who served as president of LifeTime Capital, Inc.,

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which was the brokerage company formed by Svete in 1997, testified that Svete

and Girardot instructed her to alter contracts that had previously been signed by

investors without the knowledge or consent of the investors who had signed them.

As a defense to the charges of mail fraud, Svete and Girardot argued that a

person of ordinary prudence and sophistication would have read the contracts and

ignored the false statements by the sales agents. Svete and Girardot requested the

following jury instruction based on that argument:

To prove a fraud crime, the government must show that the defendant

under consideration intended to devise or participate in a scheme

reasonably calculated to deceive persons of ordinary prudence and

comprehension. The person of ordinary prudence standard is an

objective standard and is not directly related to the gullibility or level

of knowledge and experience of any specific person or persons. For

purposes of this offense, the government must prove that a reasonable

person of average prudence and comprehension would have acted on

the representation made by the defendant under consideration.

The district court rejected the requested jury instruction.

The district court instead gave the pattern jury instruction on mail fraud,

which defines a “scheme to defraud” to include “any plan or course of action

intended to deceive or cheat someone out of money or property by means of false

or fraudulent pretenses, representations, or promises.” Pattern Jury Instructions

(Criminal Cases) § 50.1, at 282 (West 2003). As part of that instruction, the

district court defined materiality: “A material fact is a fact that would be important

5
to a reasonable person in deciding whether to engage or not to engage in a

particular transaction. A fact is material if it has a natural tendency to influence or

is capable of influencing the decision of the person or entity to whom or which it is

addressed.” Id. The jury found the defendants guilty of mail fraud.

II. STANDARDS OF REVIEW

“We review a district court’s refusal to give a requested jury instruction for

abuse of discretion.” United States v. Carrasco, 381 F.3d 1237, 1242 (11th Cir.

2004). “In considering the failure of a district court to give a requested instruction,

the omission is error only if the requested instruction is correct, not adequately

covered by the charge given, and involves a point so important that failure to give

the instruction seriously impaired the party’s ability to present an effective case.”

Wood v. President and Trs. of Spring Hill Coll. in City of Mobile, 978 F.2d 1214,

1222 (11th Cir. 1992). We review de novo whether a jury instruction

mischaracterized the law or misled the jury to the prejudice of the defendant.

United States v. Gray, 367 F.3d 1263, 1271 (11th Cir. 2004). “[T]he district court

is given wide discretion as to the style and wording employed in the instructions,”

Goldsmith v. Bagby Elevator Co., 513 F.3d 1261, 1276 (11th Cir. 2008), and we

will reverse only if we are “‘left with a substantial and ineradicable doubt as to

whether the jury was properly guided in its deliberations.’” Somer v. Johnson, 704

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F.2d 1473, 1478 (11th Cir. 1983) (quoting Miller v. Universal City Studios, Inc.,

650 F.2d 1365, 1372 (5th Cir. 1981)). Questions of statutory construction are

reviewed de novo. United States v. Evans, 478 F.3d 1332, 1341 (11th Cir. 2007).

III. DISCUSSION

The mail fraud statute prohibits use of the mails in furtherance of “any

scheme or artifice to defraud.” 18 U.S.C. § 1341. “[T]he words ‘to defraud’

commonly refer ‘to wronging one in his property rights by dishonest methods or

schemes,’ and ‘usually signify the deprivation of something of value by trick,

deceit, chicane or overreaching.’” McNally v. United States, 483 U.S. 350, 358,

107 S. Ct. 2875, 2881 (1987) (quoting Hammerschmidt v. United States, 265 U.S.

182, 188, 44 S. Ct. 511, 512 (1924)). “Read naturally, the word ‘any’ has an

expansive meaning, that is, ‘one or some indiscriminately of whatever kind.’”

United States v. Gonzales, 520 U.S. 1, 5, 117 S. Ct. 1032, 1035 (1997) (quoting

Webster’s Third New International Dictionary 97 (1976)). Use of the word “any”

without limiting language should be read to mean “all.” See id.

The prohibition of “any scheme or artifice to defraud” derives from the

original statute enacted in 1872 as part of a recodification of the postal laws. Act

of June 8, 1872, ch. 335, § 301, 17 Stat. 323. “Congress intended from the

beginning that the statute be given a very broad application and approved and

7
fostered this broad application at every opportunity.” Jed S. Rakoff, The Federal

Mail Fraud Statute (Part I), 18 Duq. L. Rev. 771, 822 (1980). Congress enacted

the statute to curtail an epidemic of “large-scale swindles, get-rich-quick schemes,

and financial frauds.” Id. at 780. That phenomenon made it “‘apparent that

rudimentary criminal codes, conceived for rural societies and confined by state

lines and local considerations, could not cope with those who saw manifold

opportunities for gain in the new activities.’” Id. (quoting Abraham S. Goldstein,

Conspiracy to Defraud the United States, 68 Yale L.J. 405, 420–21 (1959)).

More than a century ago, in its first interpretation of the statute, the Supreme

Court held that the prohibition of mail fraud “includes everything designed to

defraud by representations as to the past or present, or suggestions and promises as

to the future.” Durland v. United States, 161 U.S. 306, 313, 16 S. Ct. 508, 511

(1896). The defendant, Durland, had been convicted of mail fraud and argued that

the statute reached “only such cases as, at common law, would come within the

definition of ‘false pretenses,’” which would mean that “there must be a

misrepresentation as to some existing fact, and not a mere promise as to the

future.” Id. at 312, 16 S. Ct. at 511. The Supreme Court squarely rejected that

argument: “The statute is broader than is claimed.” Id. at 313, 16 S. Ct. at 511.

The Court relied on the “letter” of the statute, which prohibits “[a]ny scheme or

8
artifice to defraud.” Id. (internal quotation marks omitted). The Supreme Court

explained that the object of the criminal prohibition is the intent of the malefactor,

not the reasonableness of the victim:

We do not wish to be understood as intimating that, in order to

constitute the offense, it must be shown that the letters so mailed were

of a nature calculated to be effective in carrying out the fraudulent

scheme. It is enough if, having devised a scheme to defraud, the

defendant, with a view of executing it, deposits in the post office

letters which he thinks may assist in carrying it into effect, although,

in the judgment of the jury, they may be absolutely ineffective . . . .

Id. at 315, 16 S. Ct. at 512. A fanciful scheme may nonetheless be a scheme to

defraud. See also United States v. Stever, 222 U.S. 167, 174, 32 S. Ct. 51, 53

(1911) (“A scheme to defraud by means of false pretenses is . . . a ‘scheme or

artifice to defraud,’ within the plain meaning and purpose of this section.”).

Although the common law crime of cheat applied only to frauds that would

deceive a person of ordinary prudence, by the time Congress enacted the

prohibition of mail fraud, statutes that prohibited false pretenses had remedied this

deficiency in the common law. 2 Francis Wharton, A Treatise on the Criminal

Law of the United States §§ 2056, 2128 at 514, 560 (7th ed., Philadelphia, Kay &

Brother, 1874). As a commentator explained, “It was in part to meet this difficulty

that the statute of false pretenses was passed, and under this statute it has been

repeatedly held that it matters not how patent the falsity of a pretence may be, if it

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succeeds in defrauding.” Id. § 2128, at 560. The trend of case law in the 1870s

and 1880s was that statutes against false pretenses protected both the gullible and

the savvy. See id. §§ 2128–2132b, at 560–62; 2 Joel Prentiss Bishop,

Commentaries on the Criminal Law § 433, at 239 (6th ed., Boston, Little, Brown,

& Co. 1877) (“[O]lder cases” held that false pretenses must “be such as is

calculated to mislead men of ordinary prudence . . . . But, in reason, and it is

believed according to the better modern authorities, a pretence calculated to

mislead a weak mind, if practised on such a mind, is just as obnoxious to the law . .

. .”).

Congress has never used any language that would limit the coverage of the

mail fraud statute to schemes that would deceive only prudent persons. To the

contrary, the sponsor of the original statute explained that its purpose was “‘to

prevent the frauds which are mostly gotten up in the large cities . . . by thieves,

forgers, and rapscallions generally, for the purpose of deceiving and fleecing the

innocent people in the country.’” McNally, 483 U.S. at 356, 107 S. Ct. at 2879

(quoting Cong. Globe, 41 Cong., 3d Sess. 35 (1870) (remarks of Rep. Farnsworth

during debate in previous Congress)). When the statute was amended in 1889 to

prohibit schemes to sell counterfeit money, the Senate report reiterated a concern

for the ignorant and naive:

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A certain class of persons . . . send out circulars through the United

States mails which appeal to the cupidity of the ignorant and hold out

to the unfortunate the temptation to try to better their fortunes . . . .

Farmers and country merchants and country postmasters are

constantly plied with these circulars, . . . and plain as the fraud is upon

its face, these men reap a golden harvest. The city papers frequently

contain notices of the ignorant victims who venture to the cities and

are relieved of their money; but there is no notice of the many smaller

dupes who send their money through the mails in answer to these

advertisements and pocket their losses . . . . This bill . . . will, if

properly enforced, put an end to this infamous business.

S. Rep. No. 50–2566, at 2 (1889). When the statute was amended in 1909 to

“codify the holding of Durland,” McNally, 483 U.S. at 357, 107 S. Ct. at 2880, by

adding the words “or for obtaining money or property by means of false or

fraudulent pretenses, representations, or promises” after the phrase “any scheme or

artifice to defraud,” a wealth of case law explained that the crime of false pretenses

did not have a reasonable victim requirement and that a contrary rule was against

“the great weight of authority.” State v. Phelps, 84 P. 24, 26 (Wash. 1906) (“[I]t is

the rule in Indiana and perhaps one or two other states that a false pretense, to be

criminal, must be of some fact as would tend to deceive a person of ordinary

prudence and common intelligence[,] but the great weight of authority is to the

opposite effect.”) (citations omitted); State v. Keyes, 93 S.W. 801, 805–08 (Mo.

1906) (The rule that there is no fraud where a victim could easily investigate is

“opposed by the overwhelming weight of authorities in this country.”); State v.

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Jackson, 105 N.W. 51, 53–54 (Iowa 1905); Commonwealth v. Beckett, 84 S.W.

758, 759 (Ky. 1905); State v. Stewart, 83 N.W. 869, 870–71 (N.D. 1900); People

v. Summers, 73 N.W. 818, 821 (Mich. 1898); Oxx v. State, 35 A. 646, 647 (N.J.

1896); Miller v. People, 45 P. 408, 408–09 (Colo. 1896); Thomas v. State, 113 Ill.

531, 537–38 (1885).

In addition to this settled understanding of the broad reach of the prohibition

of mail fraud, the Supreme Court recently held “that materiality of falsehood is an

element of the federal . . . fraud statutes.” Neder v. United States, 527 U.S. 1, 25,

119 S. Ct. 1827, 1841 (1999). The Court invoked “the rule that Congress intends

to incorporate the well-settled meaning of the common-law terms it uses” and

explained that “at the time of the mail fraud statute’s original enactment in 1872,

and later when Congress enacted the wire fraud and bank fraud statutes, actionable

‘fraud’ had a well-settled meaning at common law.” Id. at 22–23, 119 S. Ct. at

1840. The Court also explained that “the fraud statutes did not incorporate all the

elements of common-law fraud. The common-law requirements of ‘justifiable

reliance’ and ‘damages,’ for example, plainly have no place in the federal fraud

statutes” because Congress prohibited the “‘scheme to defraud,’ rather than the

completed fraud.” Id. at 24–25, 119 S. Ct. at 1841. As both the modern and

ancient authorities on the common law cited by the Court explain, materiality was

12
understood to be a component of reasonable reliance at common law. Id. at 22–23,

119 S. Ct at 1840; see Restatement (Second) of Torts §§ 537 cmt. b, 538 & cmt. a,

at 80–81 (1977) (“The rules stated in this Section [about materiality] are concerned

only with whether the recipient’s reliance upon the misrepresentation is

justifiable.”); W. Page Keeton et al., Prosser and Keeton on Torts § 108 (5th ed.

1984); Smith v. Richards, 38 U.S. 26 (1839); Joseph Story, Commentaries on

Equity Jurisprudence § 191, at 115–16 (1st English ed., London, Stevens &

Haynes 1884).

All the sources cited by the Supreme Court support the proposition that

materiality may be proved without establishing that the misrepresentation was

objectively reliable. Section 538 of the Restatement (Second) of Torts defines

materiality, for example, and that definition, in subpart (b), includes

misrepresentations that are aimed at recipients who would regard them as

important even if a reasonable person would not:

The Restatement instructs that a matter is material if:

“(a) a reasonable man would attach importance to its existence or

nonexistence in determining his choice of action in the transaction in

question; or

(b) the maker of the representation knows or has reason to know that

its recipient regards or is likely to regard the matter as important in

determining his choice of action, although a reasonable man would

not so regard it.”

Neder, 527 U.S. at 22 n.5, 119 S. Ct. at 1840 n.5 (quoting Restatement (Second) of

13
Torts § 538, at 80). Under the Second Restatement, a victim of fraud need not

“exercise the care of a reasonable man for his own protection.” Restatement

(Second) of Torts § 545A cmt. a, at 100–01; see also id. § 540, at 88. Prosser and

Keeton similarly explain “the general rule” that “where there is an intent to mislead

. . . mere negligence of the plaintiff is not a defense to an intentional tort.” W.

Page Keeton et al., Prosser and Keeton on Torts § 108 (5th ed. 1984). In Smith v.

Richards, the Supreme Court ruled that a seller’s misrepresentation of the value of

property that he knew the buyer had never seen or investigated was material. 38

U.S. at 39. Justice Story likewise explained that it is “a very old head of equity,

that if a representation is made to another person, going to deal in a matter of

interest, upon the faith of that representation, the former shall make that

representation good, if he knows it to be false.” Joseph Story, Commentaries on

Equity Jurisprudence § 191, at 115–16 (1st English ed., London, Stevens &

Haynes 1884).

The objective reliability of a misrepresentation is sufficient to establish its

materiality, but proof of objective reliability is not necessary to establish

materiality if the defendant knows or should know that the victim is likely to

regard the misrepresented facts as important. In the words of the Restatement,

“[o]ne who practices upon another’s known idiosyncracies cannot complain if he is

14
held liable when he is successful in what he is endeavoring to accomplish.” Id. §

538 cmt. f, at 82. “The focus of the language defining a scheme to defraud is on

the violator, not the victim.” United States v. Drake, 932 F.2d 861, 864 (10th Cir.

1991).

Because the focus of the mail fraud statute, like any criminal statute, is on

the violator, the purpose of the element of materiality is to ensure that a defendant

actually intended to create a scheme to defraud. Proof that a defendant created a

scheme to deceive reasonable people is sufficient evidence that the defendant

intended to deceive, but a defendant who intends to deceive the ignorant or gullible

by preying on their infirmities is no less guilty. Either way, the defendant has

criminal intent.

Neder instructs us to reject the elements of the common law that “would

clearly be inconsistent with the statutes Congress enacted,” 527 U.S. at 25, 119 S.

Ct. at 1841, and whatever role, if any, a victim’s negligence plays as a bar to civil

recovery, it makes little sense as a defense under a criminal statute that embraces

“any scheme or artifice to defraud.” 18 U.S.C. § 1341 (emphasis added). A

perpetrator of fraud is no less guilty of fraud because his victim is also guilty of

negligence. See Keeton et al., supra, § 108, at 751. The leading commentators on

tort law have explained that, in a civil action, a victim’s imprudence is ordinarily

15
no defense for a defendant who knowingly exploits that imprudence:

It is a sufficient indication that the person deceived is not held to the

standard of precaution, or of minimum knowledge, or of intelligent

judgment, of the hypothetical reasonable man, that people who are

exceptionally gullible, superstitious, ignorant, stupid, dim-witted, or

illiterate, have been allowed to recover when the defendant knew it,

and deliberately took advantage of it.

Id. (footnotes omitted).

Despite the plain text of the statute and longstanding precedents of the

Supreme Court, in Brown we held that mail fraud requires proof of a scheme to

defraud that is objectively reliable unless the defendant is a fiduciary of the

intended victim. 79 F.3d at 1558. We reversed convictions of defendants who had

“approved and promoted lies about the investment potential” of real estate in

Florida because the prospective investors in those homes could have discovered the

truth from “readily available external sources.” Id. at 1558–60. We held that

“federal criminal fraud requires proof that a person of ordinary prudence would

rely on a representation or a deception[,]” id. at 1558, and concluded that a person

of ordinary prudence would have investigated the value of Florida real estate

instead of relying on the misrepresentations by the defendants, id. at 1561.

We “thought about whether” the targeting of customers that the defendant

“may have thought to be naive [was] relevant to our analysis[,]” but explained that

“the ‘person of ordinary prudence’ rule is an objective standard, making the

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subjective thoughts and acts of specific people generally irrelevant.” Id. at 1560

n.18. We explained that the defendants in Brown did not target “a group of

persons traditionally provided heightened protection by the law of fraud,” id., but

we did not cite a source or describe a standard for determining who deserves such

heightened protection. We instead recited a narrow list of examples: “the blind,

the deaf, [and] the mentally incapacitated.” Id. That list suggests that the mail

fraud statute protects a class of persons significantly smaller than, for example, the

class protected by the vulnerable-victim enhancement under the sentencing

guidelines, United States Sentencing Guidelines § 3A1.1(b)(1) (Nov. 2007), which

applies to the elderly, id. cmt. n.2(b), and immigrants, see, e.g., United States v.

Caballero, 277 F.3d 1235, 1251 (10th Cir. 2002); United States v. Mendoza, 262

F.3d 957, 961 (9th Cir. 2001); United States v. Bengali, 11 F.3d 1207, 1212 (4th

Cir. 1993), among other frequent targets of fraud.

Brown quoted language from earlier precedents that had explained neither

actual deception nor reliance was necessary to establish mail fraud if the defendant

had the conscious intent to defraud. In Pelletier v. Zweifel, we explained “that the

government can convict a person for mail or wire fraud even if his targeted victim

never encountered the deception—or, if he encountered it, was not deceived.” 921

F.2d 1465, 1498 (11th Cir. 1991). “Instead,” we explained, “the court uses a

17
reasonable person test to determine whether, if the scheme had been executed, the

intended victim would have acted on the misrepresentations: were the

misrepresentations ‘reasonably calculated to deceive persons of ordinary prudence

and comprehension.’” Id. at 1498 (quoting United States v. Bruce, 488 F.2d 1224,

1229 (5th Cir. 1973)). In the absence of actual deception, a scheme “reasonably

calculated to deceive persons of ordinary prudence” is some evidence that the

defendant possessed the necessary mens rea, or “‘a conscious knowing intent to

defraud.’” Id. at 1498–99 (quoting United States v. Kreimer, 609 F.2d 126, 128

(5th Cir. 1980) (internal quotation omitted)). Brown relied on this language

regarding evidence of intent to create a requirement of proof that the scheme be

capable of deceiving an objectively reasonable person.

Because it was bound by Brown, the panel that first reviewed this appeal had

no choice but to reverse the conviction for mail fraud. A defendant is entitled to an

instruction relating to a theory of defense for which there is any foundation in the

evidence, see United States v. Palma, 511 F.3d 1311, 1315 (11th Cir. 2008), and

the evidence at trial supported an inference that ordinary prudence would have

counseled the victims to rely on the documents that they signed, not the

misrepresentations of salesmen. The United States did not prove facts that would

take this appeal outside of the rule of Brown, for example, that the defendants were

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fiduciaries of the victims or that the victims were “blind, . . . deaf[,] . . . mentally

incapacitated” or members of another group of persons traditionally provided

heightened protection by the law of fraud. Brown, 79 F.3d at 1559–60 & n.18.

Because Brown is inconsistent with both the broadly worded text of the mail

fraud statute, 18 U.S.C. § 1341, and the interpretation of that statute by the

Supreme Court, Neder, 527 U.S. at 25, 119 S. Ct. at 1841; Durland, 161 U.S. at

313, 16 S. Ct. at 511, we overrule our holding in Brown that the offense of mail

fraud requires proof of a scheme calculated to deceive a person of ordinary

prudence. When we decided Brown, we acknowledged that our holding was

contrary to the decisions of at least two of our sister circuits, 79 F.3d at 1557

(citing United States v. Brien, 617 F.2d 299, 311 (1st Cir. 1980); United States v.

Maxwell, 920 F.2d 1028, 1036 (D.C. Cir. 1990)), but our decision, in fact, was

contrary to the interpretations of several circuits, including that of the former Fifth

Circuit. Brown still stands alone. It has been rejected by other circuits. It has

been distinguished on debatable grounds within our Circuit. It has been criticized

in legal scholarship.

Our decision in Brown departed from a principle that most circuits had

treated, and continue to treat, as settled: the mail fraud statute does not

“differentiate between schemes that will ensnare the ordinary prudent investor and

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those that attract only those with lesser mental acuity[,]” Brien, 617 F.2d at 311;

accord Maxwell, 920 F.2d at 1036; Lemon v. United States, 278 F.2d 369, 373 (9th

Cir. 1960); United States v. Sylvanus, 192 F.2d 96, 105 (7th Cir. 1951), or that

“[t]he negligence of the victim in failing to discover a fraudulent scheme is not a

defense to criminal conduct.” United States v. Coyle, 63 F.3d 1239, 1244 (3d Cir.

1995). In contrast with Brown, other circuits long ago had recognized that the

subjective unreasonableness of a statement is persuasive evidence that the

statement was criminally fraudulent. See Norman v. United States, 100 F.2d 905,

907 (6th Cir. 1939); Rudd v. United States, 173 F. 912, 913 (8th Cir. 1909). One

circuit, in the several years before we decided Brown, had searched but could “not

find any cases” that supported the “position that a scheme to defraud is a violation

only if it would deceive a reasonably prudent person.” Drake, 932 F.2d at 864.

The former Fifth Circuit, from which the phrase “person[] of ordinary

prudence” originated in the context of mail fraud, see Silverman v. United States,

213 F.2d 405, 407 (5th Cir. 1954), had long ago assumed in dicta that “‘the

monumental credulity of the victim is no shield for the accused[,]’” Blachly v.

United States, 380 F.2d 665, 672 n.13 (5th Cir. 1967) (quoting Deaver v. United

States, 155 F.2d 740, 745 (D.C. Cir. 1946)); see also Whitehead v. United States,

245 F. 385, 389–90 (5th Cir. 1917) (“[F]ew schemes, however transparent, would

20
fail to find some victims.”), and it later expressly held that “[t]he victim’s

negligence is not a defense to criminal conduct[,]” Kreimer, 609 F.2d at 132. The

late Judge Alvin Rubin explained, “The truth about virtually every scheme to

defraud could be obtained if the gull were clever and diligent enough. . . . The

laws protecting against fraud are most needed to protect the careless and the naive

from lupine predators, and they are designed for that purpose.” Id.

Brown distinguished Kreimer as limited to relationships that are “‘fiduciary

in nature,’” Brown, 79 F.3d at 1557, but nothing in Kreimer suggests that its

holding was based on the nature of the relationship. The decisions that Kreimer

cited in support of its holding, Blachly, 380 F.2d at 672, and Lemon, 278 F.2d at

373, did not involve fiduciary relationships, and other circuits, including the Fifth

Circuit, have not read Kreimer as limited to the context of a fiduciary relationship.

See, e.g., United States v. Thomas, 377 F.3d 232, 243 (2d Cir. 2004); United States

v. Davis, 226 F.3d 346, 359 (5th Cir. 2000); Coyle, 63 F.3d at 1244.

Brown remains anomalous. Those circuits that have considered the issue

after Brown have rejected our position, see United States v. Colton, 231 F.3d 890,

903 (4th Cir. 2000); Davis, 226 F.3d at 359, and one circuit has expressly rejected

our decision twice. United States v. Amico, 486 F.3d 764, 780 (2d Cir. 2007);

Thomas, 377 F.3d at 242. After we decided Brown, Judge Posner wrote for the

21
Seventh Circuit that it was “hard to believe” that the language that we used in

Brown was “intended to be understood literally, for if it were it would invite con

men to prey on people of below-average judgment or intelligence, who are anyway

the biggest targets of such criminals and hence the people most needful of the

law’s protection[.]” United States v. Coffman, 94 F.3d 330, 334 (7th Cir. 1996).

According to one treatise, Brown “is the only major criminal case where the court

absolved the defendants by finding unreasonable reliance by the alleged victim of

fraud.” 1 Joel Androphy, White Collar Crime § 8:2.70 (2d ed. 2006).

In the years since we decided Brown, we have been reluctant to apply that

precedent literally. We have not reversed a conviction for mail fraud based on the

objective unreliability of a misrepresentation in a published decision since Brown,

but we have affirmed several convictions based on schemes that were more

fanciful than the scheme that Brown addressed. In United States v. Schlei, we

rejected a Brown defense to a fraud conviction based on a scheme to sell financial

instruments that were purportedly secured by a “‘secret fund to be used for various

purposes not suitable for public view’ [that] was created in Japan by General

MacArthur and Japanese officials approximately fifty years ago,” 122 F.3d 944,

966–67 (11th Cir. 1997), and in United States v. Twitty we rejected the application

of Brown where the misrepresentation was made by a loan applicant to a lender,

22
107 F.3d 1482, 1493 (11th Cir. 1997). Our efforts to distinguish Brown divided

the panel in Gray, which addressed a mail fraud conviction based on a request to a

defendant in a collateral criminal trial for $185,000 to bribe jurors. 367 F.3d at

1267–68. The request was accompanied by a representation that “United States

Senator Jesse Helms, some congressmen, and a five-star general were inclined to

help” the defendant. Id. at 1267. The majority recognized that misrepresentations

used in the scheme “would seem absurd or fanciful to a reasonable person,” id. at

1268, but upheld the conviction. The dissent argued, with some force, that the

majority opinion conflicted with Brown and stated, “Whether or not we agree with

this Court’s decision in Brown, we are bound by it.” Id. at 1274 & n.1 (Barkett, J.,

dissenting). In 2003, we held that Brown had been overruled, see United States v.

Yeager, No. 02-11265, slip op. 8 (11th Cir. Mar. 12, 2003), but we later vacated

that decision, United States v. Yeager, 331 F.3d 1216, 1218 (11th Cir. 2003).

A note in the Columbia Law Review persuasively criticized our reliance in

Brown on “civil-fraud concepts” that “limit the right to rely on representations and

apply the doctrine of caveat emptor.” Mark Zingale, Note, Fashioning a Victim

Standard in Mail and Wire Fraud: Ordinarily Prudent Person or Monumentally

Credulous Gull?, 99 Colum. L. Rev. 795, 817 (1999). “Applying an objective

standard to civil fraud makes more sense because the victim, not the government,

23
makes the complaint in those cases, and the objective standard serves to guard

against opportunistic lawsuits by parties claiming to have been defrauded but really

only seeking restitution or pecuniary gain.” Id. at 817–18. The note argued that

“this motivation [for pecuniary gain] does not . . . corrupt the prosecution of

criminal fraud.” Id. at 818.

Svete and Girardot cite decisions that use the “ordinary prudence” language

as evidence that fraud requires a scheme capable of defrauding the reasonably

prudent, but none of the decisions cited by Svete and Girardot overturned a

conviction on the ground that the scheme was incapable of deceiving persons of

ordinary prudence. The “ordinary prudence” language was invoked instead to

affirm convictions. United States v. Jamieson, 427 F.3d 394, 415 (6th Cir. 2005);

United States v. Shepard, 396 F.3d 1116, 1124 (10th Cir. 2005); United States v.

Hawkey, 148 F.3d 920, 924 (8th Cir. 1998); United States v. Yoon, 128 F.3d 515,

523–24 (7th Cir. 1997); Coyle, 63 F.3d at 1243–44. Two sister circuits have stated

that “ordinary prudence” has a place in the proof of mail fraud, but both held that

the jury instructions about materiality were sufficient to establish that the jury had

found the fraudulent schemes reliable. Jamieson, 427 F.3d at 415; United States v.

Fredette, 315 F.3d 1235, 1240–42 (10th Cir. 2003). The Sixth Circuit had

previously explained that “the lack of guile on the part of those generally solicited

24
may itself point with persuasion to the fraudulent character of the artifice,”

Norman, 100 F.2d at 907, and the Tenth Circuit had previously stated, “We find no

precedent supporting [the] position that a scheme to defraud is a violation only if it

would deceive a reasonably prudent person.” Drake, 932 F.2d at 864. None of

these decisions reversed a conviction of mail fraud for failure to instruct the jury

that the alleged scheme had to be capable of deceiving people of ordinary

prudence, and none reached the perverse result of insulating criminals who target

those least likely to protect themselves.

Svete and Girardot also invoke the rule of lenity as a rule of construction

that requires us to incorporate proof of ordinary prudence when construing the mail

fraud statute. They argue that the language “any scheme or artifice to defraud” is

unclear and that we must construe the statute narrowly. We disagree.

“[T]he canon of strict construction of criminal statutes, or rule of lenity,

ensures fair warning by so resolving ambiguity in a criminal statute as to apply it

only to conduct clearly covered.” United States v. Lanier, 520 U.S. 259, 266, 117

S. Ct. 1219, 1225 (1997). The rule of lenity is applied when a broad construction

of a criminal statute would “criminalize a broad range of apparently innocent

conduct.” Liparota v. United States, 471 U.S. 419, 426, 105 S. Ct. 2084, 2088

(1985). “[I]t is reasonable that a fair warning should be given to the world in

25
language that the common world will understand, of what the law intends to do if a

certain line is passed. To make the warning fair, so far as possible the line should

be clear,” McBoyle v. United States, 283 U.S. 25, 27, 51 S. Ct. 340, 341 (1931),

but “[t]he mere possibility of articulating a narrower construction . . . does not by

itself make the rule of lenity applicable.” Smith v. United States, 508 U.S. 223,

239, 113 S. Ct. 2050, 2059 (1993). “Instead, that venerable rule is reserved for

cases where, ‘after seizing every thing from which aid can be derived,’ the Court is

‘left with an ambiguous statute.’” Id. (quoting United States v. Bass, 404 U.S. 336,

347, 92 S. Ct. 515, 522 (1971) (internal quotation marks omitted)).

The rule of lenity is inapplicable. The language of the mail fraud statute

prohibits “any scheme or artifice to defraud,” 18 U.S.C. § 1341 (emphasis added),

and the word “any” conveys the broad and unambiguous reach of the statute. The

prohibition of schemes that target the improvident also does not “ criminalize a

broad range of apparently innocent conduct.” Liparota, 471 U.S. at 426, 105 S. Ct.

at 2088.

The district court did not err when it delivered the pattern jury instruction.

Mail fraud does not require proof that a scheme to defraud would deceive persons

of ordinary prudence. The district court instructed the jury regarding all the

elements necessary to convict Svete and Girardot of mail fraud. Pattern Jury

26
Instructions (Criminal Cases) § 50.1 (West 2003).

Svete and Girardot also raise issues beyond the scope of our review. They

argue that the evidence was insufficient to support their convictions for mail fraud;

the district court erred in its evidentiary rulings under Brady v. Maryland, 373 U.S.

83, 83 S. Ct. 1194 (1963); the district court erred in calculating the amount of loss;

the restitution order was erroneous; the evidence was insufficient to establish a

conspiracy to commit money laundering; and the sentences for the mail fraud

counts exceeded the statutory maximum. We do not address these arguments, as

they are outside the scope of the issue that we decided to reconsider en banc. We

remand those and any other remaining issues to the panel for further consideration.

IV. CONCLUSION

We AFFIRM the decision not to deliver the jury instruction about mail

fraud requested by Svete and Girardot and REMAND TO THE PANEL for

further consideration of any remaining issues.

27
EDMONDSON, Chief Judge, concurring in the result, in which BIRCH, Circuit

Judge, joins:

This case is a statutory construction case involving an old statute. In

defining the acts that the statute declares to be criminal, we must put aside our

modern perceptions and preoccupations. Our job is to determine what Congress

intended at the time the statute was made law.

Briefly stated, I believe that the pertinent mail-fraud statute requires the

government ordinarily to show that the pertinent scheme or misrepresentation was

1

capable of inducing reliance on the part of a reasonable person exercising ordinary

prudence for the protection of his own interests. Our -- and some other Circuits’--

2

case law has set out this kind of objective standard for decades.

This objective standard was part of the common law of fraud, as I

understand it, when the statute was written (1872) and last amended (1909) on

point. From the words Congress used, read in the context of that time, I believe

Congress intended to incorporate established common law into this then-new,

 The common law recognized exceptions when fiduciary relations were involved or 1

where a fraud targeted persons historically receiving heightened protection, for example,

children, the blind, or the mentally disabled. I suppose that these common law exceptions to the

ordinary-prudence standard also are part of the statute. I will assume that no exceptions are

presented by this case, however.

 Different elements, including materiality, must also be proved. 2

28
criminal statute. (But a few specific elements -- actual reliance by a victim and

3

damages -- of common law fraud were implicitly dropped out because the statute

expressly reaches intended fraud rather than completed fraud: the scheme, not the

result of the scheme, is the crime; no actual victim need exist.) The keynote of the

mail-fraud statute is this language:

Whoever, having devised or intending to devise any scheme or artifice

to defraud, or for obtaining money or property by means of false or

fraudulent pretenses, representations, or promises, . . .

I believe this language meant and means that the mail-fraud statute reaches use of

the mail to advance deceptions of whatever kind that meet the test of common law

fraud when the statute was enacted but excludes acts that would not meet the test

of common law fraud when the statute was enacted.

Especially given the many different jurisdictions in our country, I

acknowledge that capturing the common law in the United States for a given year

can be difficult when we are looking back a hundred years or so. But I submit that,

if the historical view I have restated today is not plainly correct, this previously

 I think the common law fraud Congress intended to take in and to criminalize for the 3

mail-fraud statute was the common law of fraud of 1872 and not the common law of fraud of

1909 (if the common law differed in the later year). In my view, the 1909 amendment added

language only to clarify what had been covered by the statute in 1872; put differently, the

amendment added no new and independent basis for criminal liability.

Moreover, it seems to me still not to have been settled in 1909 that common law fraud

had dropped the requirement of a pertinent scheme or misrepresentation capable of inducing

reliance on the part of a reasonable person exercising ordinary prudence for the protection of his

own interests. 

29
accepted view of the statute’s sweep is reasonable and far from plainly incorrect.

When a criminal statute admits more than one interpretation, the rule of lenity

(among other important things, a kind of restraint on ex post facto laws) applies in

favor of defendants to limit the statute’s scope to the more narrow interpretation

until and unless Congress speaks clearly to expand the statute.

Furthermore, even when I assume that the District Court probably erred in

refusing to give an instruction involving the capable-of-inducing-reliance-on-thepart-of-a-reasonable-person-exercising-ordinary-prudence standard, I believe

(considering the complicated nature of the scheme in this case) the error was

4

harmless. Therefore, on this basis, I agree with today’s Court that the leaving out

5

of the instruction does not justify a new trial in this case.

6

Our panel opinion in this case made (correctly, I think) this observation about the 4

scheme underlying this case: The “scheme was so sophisticated and complex that even the most

intelligent investor would have been defeated in his quest for the truth. There was no

information readily accessible in the public domain that the victims could immediately obtain to

confirm or disprove the representations of the sales agents.”

The government concedes harmful error (if there was error) in this case. But, as a Court, 5

we are under no obligation to accept the concessions of the government about a district court’s

error. It is ultimately this Court’s duty to decide whether an appealed case presents reversible

error and whether the court system will be put to the time, trouble, and expense of further

proceedings.

Beyond today’s result, no doubt the Court can today say that it disapproves of language

6

that appeared in the Brown opinion and in earlier opinions discussing the mail fraud standard:

that is, declare that certain language incorrectly states the law of our Circuit now. No doubt the

courts and judges of this Circuit should take that disapproval seriously and act accordingly as

cases come before the courts and judges to which the language might seem to be applicable. I do

doubt, however, the authority of today’s en banc court to decide whether sets of facts not before

it violate the mail fraud and similar statutes. For example, I question whether today’s Court,

30
even en banc, could decide -- and, in my view, the Court does not purport to decide -- that the

seller of valuable real property (1) who exaggerates the property’s value to a prospective buyer,

(2) but makes no other misrepresentations about the property, and (3) offers the property for sale

in the context of a broad and open real estate market (which offers information about value to

prospective buyers) is guilty of the crime of mail fraud or similar fraud: the case now before us

en banc does not present those facts or anything close to them.

The fewer, specific objective elements required to be proved for a conviction under a

criminal statute, the broader the discretion that the Executive Branch can exercise in deciding

whether to prosecute a person under the statute (sometimes, the discretion comes close to

prosecutional legislation). Nevertheless, I doubt that the Court intends today to say -- or can

properly decide in this case -- that the pertinent statute covers and, thus, authorizes prosecutors

to institute criminal proceedings based on what has traditionally been called “seller’s talk,”

“dealer’s talk,” or “puffing.” 

31
TJOFLAT, Circuit Judge, specially concurring:

I concur in the judgment of the court but write separately because I am

troubled by the court’s reliance on contemporary sources to define materiality,

rather than using the meaning of the word as it was understood in 1872, the year of

the enactment of the mail fraud statute. It is axiomatic that, in interpreting statutes,

we must interpret the words of a statute by taking the common meaning of the

words at the time Congress enacted the statute. Amoco Prod. Co. v. S. Ute Indian

Tribe, 526 U.S. 865, 873– 74, 119 S.Ct. 1719, 1724, 144 L. Ed. 2d 22 (1999)

(“‘Unless otherwise defined, words will be interpreted as taking their ordinary,

contemporary, common meaning’ at the time Congress enacted the statute”)

(quoting Perrin v. United States, 444 U.S. 37, 42, 100 S. Ct. 311, 314, 62 L. Ed. 2d

199 (1979)). Despite this elementary canon of construction, I fear that the court

has given too much significance to modern sources, and, in the process, has unduly

confined district court judges in fashioning proper jury instructions.

In this regard, I believe that the court is misdirected when it defines the

contours of materiality by relying on contemporary sources, such as the

Restatement (Second) of Torts and Prosser and Keeton on Torts. The court

attempts to justify its reliance on modern sources by suggesting that the Supreme

Court relied on modern sources in defining materiality in its opinion in Neder v.

32
United States, 527 U.S. 1, 119 S. Ct. 1827, 144 L. Ed. 2d 35 (1999). I believe that

this is an inaccurate characterization of Neder. As I read Neder, the Court only

cited the Restatement (Second) of Torts because Neder, himself, relied on it to

support his argument that materiality is an element of the mail fraud statute.

Specifically, the Court cited the Restatement (Second) of Torts in a footnote

appended to the following statement: “Neder contends that ‘defraud’ is just such a

term, and that Congress implicitly incorporated its common-law meaning,

including its requirement of materiality, into the statutes at issue.” Neder, 527 U.S.

at 22, 119 S. Ct. at 1840. The Court’s citation to the Restatement (Second) of

1

Torts has limited precedential value because it was merely a regurgitation of

Neder’s argument. Thus, a more straightforward reading of Neder suggests that

the Court did not cite the Restatement (Second) of Torts for the proposition that the

The full text of the footnote in Neder is as follows: 1

The Restatement instructs that a matter is material if:

‘(a) a reasonable man would attach importance to its existence or

nonexistence in determining his choice of action in the transaction in

question; or 

‘(b) the maker of the representation knows or has reason to know that its

recipient regards or is likely to regard the matter as important in

determining his choice of action, although a reasonable man would not so

regard it.’ Restatement (Second) of Torts § 538 (1977).

Neder, 527 U.S. at 22 n.5, 119 S. Ct. at 1840 n.5.

33
meaning of words in a statute enacted in 1872 can be identified by reference to a

modern restatement of the law.

2

Moreover, I find it particularly instructive that the Court in Neder chose not

to fashion a specific jury instruction related to materiality. Rather, the Court left it

to district court judges to determine the proper formulation of jury instructions as

they relate to materiality. Thus, I find it unnecessary (and bad precedent) for us to

use the Restatement (Second) of Torts to define the contours of the mail fraud

statute’s materiality requirement.

Nonetheless, should the court feel compelled to offer guidance to district

court judges regarding the materiality prong, I think it would be preferable to

define materiality as it was understood at common law at the time the statute was

enacted. The Court in Neder recognized as much when it cited Justice Story for

the definition of materiality as it was understood in 1872. See Neder, 527 U.S. at

22–23, 119 S. Ct. at 1840 (citing Joseph Story, Commentaries on Equity

Jurisprudence § 195 (10th ed. 1870), in support of the proposition that the common

law could not have conceived of fraud without proof of materiality: “[i]n the first

I find the prefatory introduction to the Restatement (Second) of Torts illustrative. In the 2

introduction, the Restatement drafters note that the second edition of the Restatement of Torts

incorporates a “reassessment of the principles, rules, and standards governing this important and

dynamic branch of law.” Restatement (Second) of Torts Introduction, at VII (emphasis added). 

Thus, the drafters recognized and acknowledged that the Restatement (Second) of Torts contains

a contemporaneous summary of the changing and evolving standards of tort principles.

34
place, the misrepresentation must be of something material, constituting an

inducement or motive to the act or omission of the other party”).

Reference to Justice Story’s Commentaries on Equity Jurisprudence, as

opposed to the Restatement (Second) of Torts, is preferable in my view not only

because it comports with the Supreme Court’s opinion in Neder, but also because,

as a matter of statutory interpretation, words in a statute must be interpreted as they

were understood at the time of the statute’s enactment. Because the Restatement

(Second) of Torts provides a contemporary understanding of materiality, its

application here in defining the federal mail fraud statute is of little use.

Conversely, because Justice Story’s Commentaries on Equity Jurisprudence was

written at nearly the same time as the enactment of the mail fraud statute, that

source provides a better understanding of the settled meaning of materiality under

the common law as it existed in 1872.

Notwithstanding my disagreement regarding the proper definition of

materiality, I agree with the court that we should overturn our prior holding in

United States v. Brown, 79 F.3d 1550 (11th Cir. 1996). As such, I concur in the

court’s judgment.

35
BIRCH, Circuit Judge, concurring in the result:

I concur in the result only, dubitante. I also join Chief Judge Edmondson’s

concurrence.

36
KRAVITCH, Circuit Judge, specially concurring:

In light of the language in Neder v. United States, 527 U.S. 1 (1999), which

was decided subsequent to our decision in United States v. Brown, 79 F.3d 1550

(11th Cir. 1996), I agree that Brown is no longer a correct interpretation of law.

For this reason, I specially concur in the result of the majority’s opinion overruling

Brown.

37