Opinion ID: 199098
Heading Depth: 2
Heading Rank: 4

Heading: Wire Fraud and Mail Fraud

Text: 46 The remainder of defendant's convictions are based on four counts of wire fraud and two counts of mail fraud pursuant to 18 U.S.C. §§ 2 (aiding and abetting), 1341 (mail fraud), 1343 (wire fraud), and 1346 (honest services fraud). 17 Because of the similarity of the operative language of the wire fraud and mail fraud statutes, we analyze the offenses together. See Carpenter v.United States, 484 U.S. 19, 25 n.6 (1987); United States v. Boots, 80 F.3d 580, 586 n.11 (1st Cir. 1996). To prove wire or mail fraud, the government must show: (1) a scheme to defraud by means of false pretenses; (2) the defendant's knowing and willing participation in the scheme with the intent to defraud; and (3) the use of interstate wire or mail communications in furtherance of the scheme. See Cassiere, 4 F.3d at 1011 (citing United States v.Serrano, 870 F.2d 1, 6 (1st Cir. 1989)) (elements of wire fraud);United States v. Montminy, 936 F.2d 626, 627 (1st Cir. 1991) (elements of mail fraud). 47 Although the mail and wire fraud statutes originally required that the scheme to defraud aim to deprive the victim of property or some other item of economic value, see United States v.Sawyer, 85 F.3d 713, 723 (1st Cir. 1996), congressional legislation aimed at overruling McNally v. United States, 483 U.S. 350 (1987), expanded the definition to include schemes intended to deprive another of the intangible right to honest services. Id. Despite concerns about the overreaching of the wire and mail fraud statutes into the employer-employee relationship, see, e.g., United Statesv. Lemire, 720 F.2d 1327, 1336 (D.C. Cir. 1983), courts have upheld convictions based on employee misconduct, see, e.g., United Statesv. Frost, 125 F.3d 346 (6th Cir. 1997). As a result of this expanded definition, in order to uphold Martin's conviction, sufficient evidence must exist to show his participation in either(1) a scheme to defraud IDEXX of property or other items of economic value by false pretenses, or (2) a scheme to defraud IDEXX of Camp's honest services by false pretenses. Note that Martin's success in the scheme is not relevant. See, e.g., Serrano, 870 F.2d at 6. We conclude that a rational jury could have found that such evidence had been proven under either theory.
48 Confidential information may be considered property for the purposes of §§ 1341 and 1343. See United States v. Czubinski, 106 F.3d 1069, 1074 (1st Cir. 1997). Where such information is obtained - thus depriving the rightful owner of its property rights - through dishonest or deceitful means, the wire and mail fraud statutes may be violated. See id. However, mere access to the confidential information is insufficient; rather, either some articulable harm must befall the holder of the information as a result of the defendant's activities, or some gainful use must be intended by the person accessing the information, whether or not this use is profitable in the economic sense. Id. In other words, for Martin's convictions to stand under this prong of the wire and mail fraud statutes, sufficient evidence must exist for a reasonable jury to find that Martin knowingly and willingly participated in a scheme to defraud IDEXX of confidential information or other property via false pretenses, and in so doing either harmed IDEXX or intended to use the information for his own gain. 49 Martin claims that because, on their face, the e-mails on which counts 7-10 are based contained no misrepresentations, they cannot provide the basis for a scheme to defraud. 18 However, the e-mails themselves need not be fraudulent; rather, it is the schemeitself that must rely on false pretenses. See United States v.Green, 786 F.2d 247, 249 (7th Cir. 1986) (The causal connection between the mailing and the success of the scheme, not the knavery in the mailings, is what matters.). 50 A reasonable jury could first have found that, as of Julya12 (the date after which the four wire fraud and two mail fraud convictions stem), Camp had agreed with Martin to send him confidential information and tangible property. Camp had previously noted that her e-mails contained information that she should not have spread; Martin's repeated questions designed to elicit further information, including his acceptance of Camp as his spy, provide further evidence of the scheme. A reasonable jury could have found that Martin intended to use such confidential information either to compete with IDEXX, thus harming IDEXX, or at the very least for his own pecuniary gain. For example, Martin and Camp engaged in a lengthy discussion of the best manner in which to design a test kit that would surpass IDEXX's in serving demanding customers in the veterinary profession. A reasonable jury could have found that Martin's requests, including to absorb as much information, physically and intellectually as possible, indicate that his participation in the scheme was both willing and knowing. Finally, a reasonable jury could have found that Camp's actions - including requesting information beyond her job description without informing IDEXX of her conflicted interests, sending Martin information and property under the pretense that he was a customer who had a right to receive information and property free, and relaying confidential information in violation of both her fiduciary duty to IDEXX and her signed non-disclosure and non-compete agreements - constituted false pretenses. 19
51 Alternatively, the jury could have found that Martin and Camp's e-mail communications and mail deposits constituted a scheme to deprive IDEXX of Camp's honest services. Although the honest services doctrine has mainly been used to punish fraud against the citizenry perpetrated by government officials, 20 see, e.g.,Czubinski at 1076-77, courts both before McNally v. United States, 483 U.S. 350 (1987), and after the passage of § 1346 have been willing to expand the doctrine to the employer-employee relationship, see id. at 1077; United States v. Sun Diamond Growers of California, 138 F.3d 961, 973 (D.C. Cir. 1998) (§ 1346 has also been used, as here, to prosecute private citizens who defraud private entities). However, courts have been hesitant to impose federal mail and wire fraud liability upon every employee transgression, and have required a failure to disclose something which in the knowledge or contemplation of the employee poses an independent business risk to the employer, or creates reasonably foreseeable economic harm to the employer. Sun Diamond, 138 F.3d at 973 (quoting United States v. Lemire, 720 F.2d 1327, 1337 (D.C. Cir. 1983)). 21 While this Court has held that merely examining confidential information for one's own purposes does not rise to this level, see Czubinski at 1077, use of confidential information for private purposes may rise to the necessary level of self-dealing. See id. 22 52 A jury could reasonably have found that Camp's disclosure of confidential information was in knowing breach of her fiduciary duty to IDEXX. 23 Moreover, the evidence supports a finding that Camp's failure to disclose her communication with Martin posed an independent business risk to IDEXX and created reasonably foreseen economic harm to IDEXX. By July 1998, Camp knew that Martin intended his company to compete with IDEXX - in fact, she was authoring proposals detailing how that competition would be most successful. 53 Under 18 U.S.C. § 2, Martin is guilty of aiding and abetting a crime if he willfully participated in it, that is, wished it to occur and affirmatively participated in its successful outcome. See United States v. Indelicato, 611 F.2d 376, 385 (1st Cir. 1979). The government has offered substantial evidence of Martin's willing participation in (in fact, sponsorship of) Camp's breach of fiduciary duty. A jury could have found that Martin's request for information about IDEXX's competitive stance, his willing receipt of IDEXX materials and inventory, and his request that Camp gather as much information as possible prior to leaving the company both encouraged and aided Camp in breaching her fiduciary duty to IDEXX. Moreover, in Martin's use of spy terminology, in his specific requests for information, and in his apparent willingness to use the information to compete directly with IDEXX, a reasonable jury could have found that his participation in the scheme to defraud IDEXX of Camp's honest services, i.e., to have Camp breach her fiduciary duties for personal gain and harm to IDEXX, was sufficient to maintain liability for aiding and abetting pursuant to 18 U.S.C. § 2. 54
55 The individual counts of wire and mail fraud then only need be communications designed to effect a scheme under either the property theory or the honest services theory. Again, the communications need not be fraudulent on their face. See United States v. Green, 786 F.2d 247, 249 (7th Cir. 1986) (citing United States v. Sampson, 371 U.S. 75 (1962)). We examine each count in turn to determine if a rational jury might have plausibly concluded that they were used to effect one of the two possible schemes to defraud. 56 Martin claims that the e-mails on which counts 7 and 8 are based (Camp's offer to send him x-Chek software and his affirmative response) cannot be communications designed to effect a scheme to defraud because he had no knowledge that the software was not free. As previously pointed out, the record belies this claim. In any event, Camp certainly knew that she was only supposed to send x-Chek to customers; Martin was clearly not a customer. Thus her x-Chek offer could be construed as part of a scheme to defraud IDEXX of her honest services. In other words, a reasonable jury could conclude that Camp's offer to send x-Chek to Martin breached her fiduciary duty to IDEXX and caused IDEXX harm. As a reasonable jury could also find that Martin aided and abetted this breach, see supra, the evidence is sufficient to convict on counts 7 and 8. Furthermore, a jury could reasonably have found that Martin knew that he was not entitled to a free copy of x-Chek. If so, Martin would have obtained the software through false pretenses, and thus satisfied the alternative prong of the wire fraud test with his affirmative response. 57 Martin admits that his e-mail on which count 9 is based, asking Camp to absorb as much physically and intellectually as you can, could be construed as requesting . . . non-confidential public information, Appellant Brief 38, but only if read in isolation. Martin argues that as a non-competitor, he had no use for confidential information, and that the words as you can incorporated previous guidelines of confidentiality. Id. at 39. However, it is not our task to determine if alternate interpretations of the evidence were available to the jury, but rather if the evidence was sufficient for the jury to reach a reasonable interpretation upon which it could convict. See, e.g.,United States v. Batista-Polanco, 927 F.2d 14, 17 (1st Cir. 1991). Certainly the request made by Martin in this particular e-mail is highly suggestive of a request for information which he knew was confidential and would require Camp's spying to unearth. A reasonable jury could have interpreted his request in this manner, and thus found that this communication was made in furtherance of the scheme to defraud. 58 Martin claims that because Camp's July 21 e-mail (on which count 10 is based) denies any use of confidential information, that it could not be part of the scheme to defraud. However, this e-mail alerted Martin to the delivery of seven binders (which included information marked specifically as confidential), provided further information about IDEXX procedures and methods, and noted that Camp had found a jackpot. Despite Camp's denial, we have found above that sufficient evidence existed for the jury to find that a scheme to defraud existed and that Martin received confidential information in connection with this scheme. Given that evidence, this communication - among other things, notifying Martin that she had sent documents to him - clearly furthered the scheme. 59 With respect to the mail fraud counts (11 and 12), Martin claims that, because Camp mailed items to Martin on her own initiative, Martin could not be guilty of aiding and abetting mail fraud on these counts. Again, defense counsel confuses what Martin is guilty of aiding and abetting - the scheme to defraud, not the individual mailing. Again, the jury had sufficient evidence to find Martin guilty of aiding and abetting the scheme to defraud, either through deprivation of property under false pretenses or via honest services fraud. Camp's mailing of the packages to Martin was in furtherance of the scheme: either because it finalized the property removal from IDEXX or provided the final pieces to Martin's future competition with IDEXX. Thus sufficient evidence existed to convict Martin on either count. Moreover, § 1341 itself criminalizes the act of causing another to deposit items in the mails that further a scheme to defraud. Especially with respect to the second mail fraud count, based on the package that included the IDEXX software, a reasonable jury could have found that Martin's request caused Camp to send him those materials, and found him guilty of violating § 1341 without relying on aiding and abetting liability.