Opinion ID: 194928
Heading Depth: 3
Heading Rank: 1

Heading: Failure-to-Disclose Instruction

Text: 133 Cassiere and Pezzullo argue that the court's failure-to-disclose instruction impermissibly allowed the jury to predicate a finding of guilt on a failure to disclose that was rooted in the defendant's contractual or professional status or relationship with other parties. The court told the jury: 134 A failure to disclose a material fact may also constitute a false or fraudulent misrepresentation if, one, the person was under a general professional or a specific contractual duty to make such a disclosure; and, two, the person actually knew such disclosure ought to be made; and three, the person failed to make such disclosure with the specific intent to defraud. The court continued: 135 The government has to prove as to each count considered separately, that the alleged misrepresentation as charged in the indictment was made with the intent to defraud, that is, to advance the scheme or artifice to defraud. Such a scheme in each case has to be reasonably calculated to deceive a lender of ordinary prudence, ordinary care and comprehension. The court also instructed: 136 [I]t is not a crime simply to be careless or sloppy in discharging your duties as an attorney or a[s] an appraiser. That may be malpractice, but it's not a crime. 137 It is well settled that breach of a fiduciary duty, standing alone, does not constitute mail fraud. United States v. Greenleaf, 692 F.2d 182, 188 (1st Cir.1982), cert. denied, 460 U.S. 1069, 103 S.Ct. 1523, 75 L.Ed.2d 946 (1983). However, one of the elements that transform[s] a fiduciary breach into mail fraud ... is where there is a recognizable scheme formed with specific intent to defraud. Id. This is equally true for wire fraud. Cassiere admits as much when he writes in his brief: There may be circumstances in which a violation of a non-criminal standard such as the canons of ethics could conceivably be probative on the issue of whether or not there was fraud. 138 Cassiere states both that the record is unclear as to who his client was, and somewhat inconsistently that [h]is ostensible client was the bank writing the mortgage for each piece of property. The latter statement is correct. Cassiere, assisted by his law partner Pezzullo, was the closing attorney and represented the lenders, which he acknowledged at trial. As attorneys representing the lenders, Cassiere and Pezzullo had a fiduciary duty toward them, which Cassiere also admitted at trial. 139 In United States v. Silvano, 812 F.2d 754, 759 (1st Cir.1987), we held that the affirmative duty to disclose material information arises out of a government official's fiduciary relationship to his or her employer. Id. Concealment of material information by an employee under a duty to disclose to his or her employer 'under circumstances where the non-disclosure could or does result in harm to [the employer] is a violation of the [mail fraud] statute.'  Id. (quoting United States v. Bronston, 658 F.2d 920, 926 (2d Cir.1981), cert. denied, 456 U.S. 915, 102 S.Ct. 1769, 72 L.Ed.2d 174 (1982)). 140 That reasoning is equally applicable here, where the lenders, the clients of the Cassiere & Pezzullo firm, viewed the closing attorney as their eyes and ears, and expect[ed] fundamental honesty from them. In its written instructions to the closing attorneys, one lender stated: While we have tried to cover our procedures in these closing transactions, we are relying on your judgment and experience as a closing agent to properly handle and complete our loan closing. However, when you are in doubt of a situation, please confer with us prior to closing. 141 The court's failure-to-disclose instruction correctly stated the law as it applied to Cassiere and Pezzullo in view of their fiduciary duty to the lenders.