Opinion ID: 427194
Heading Depth: 1
Heading Rank: 2

Heading: instructions on wire fraud

Text: 14 The defendants contend on appeal that the instructions to the jury incorrectly stated the law on the essential elements of wire fraud. They assert that the instructions erroneously allowed the jury to convict based on a theory that Lemire's and Carver's failures to disclose their conflicts of interest due to their alleged joint venture with Stephens and Achuck, without more, constituted a material non-disclosure evidencing a specific intent to defraud Raytheon. The government responds that the instructions were entirely correct, i.e., that a failure to disclose a conflict of interest, when accompanied by a specific intent to defraud the employer of the undisputed loyalty of his employees, is sufficient to support a wire fraud conviction. Thus, it claims that even under the defendants' version of the facts, the jury could have convicted the defendants for defrauding Raytheon of the loyal and honest services of its employees Lemire and Carver. Although we agree with the defendants that the government's interpretation of the wire fraud statute encompasses too much, we find that a fair reading of the instructions in light of the evidence and arguments the jury heard, does not support an inference that the jury acted pursuant to such an impermissibly broad interpretation of the statute.
15 The elements of wire fraud are (1) formation of a scheme to defraud, 6 and (2) use of interstate wire communication to further that scheme. 7 See United States v. Pollack, 534 F.2d 964, 971 (D.C.Cir.),cert. denied, 429 U.S. 924, 97 S.Ct. 324, 50 L.Ed.2d 292 (1976); cf. Pereira v. United States, 347 U.S. 1, 8, 74 S.Ct. 358, 362, 98 L.Ed. 435 (1954) (elements of mail fraud); United States v. Diggs, 613 F.2d 988, 997 (D.C.Cir.1979) (same); United States v. George, 477 F.2d 508, 511 (7th Cir.) (same), cert. denied, 414 U.S. 827, 94 S.Ct. 155, 38 L.Ed.2d 61 (1973). Congress did not define scheme or artifice to defraud when it first coined that phrase, nor has it since. See United States v. Reid, 533 F.2d 1255, 1264 (D.C.Cir.1976); United States v. Von Barta, 635 F.2d 999, 1005 (2d Cir.1980), cert. denied, 450 U.S. 998, 101 S.Ct. 1703, 68 L.Ed.2d 199 (1981). 8 Instead that expression has taken on its present meaning from 111 years of case law. 9 See Von Barta, 635 F.2d at 1005 (legislative history helpful); United States v. McNeive, 536 F.2d 1245, 1247 n. 3 (8th Cir.1976) (same). 16 At the core of the judicially defined scheme to defraud is the notion of a trust owed to another and a subsequent breach of that trust. But [n]ot every breach of a fiduciary duty works a criminal fraud. George, 477 F.2d at 508. In their attempts to delineate which breaches of duty rise to the level of criminal fraud, courts have used various limiting doctrines. Some, including this court, have required that the fraud be active--that the fiduciary utilize his trusted position to obtain a benefit for himself at the expense of the person whose trust he breaches. See Post v. United States, 407 F.2d 319, 329 (D.C.Cir.1968), cert. denied, 393 U.S. 1092, 89 S.Ct. 863, 21 L.Ed.2d 784 (1969); Epstein v. United States, 174 F.2d 754, 766 (6th Cir.1949). Other courts have required that the breach be accompanied by some material non-disclosure or misrepresentation to the party owed the duty. See, e.g., United States v. Ballard, 663 F.2d 534 (5th Cir. Unit B 1981), modified in part and reh'g denied, 680 F.2d 352 (5th Cir. Unit B 1982); Von Barta, 635 F.2d at 1006. The crux of these requirements is that the wire fraud statute makes criminal only breaches of duty that are accompanied by a misrepresentation or non-disclosure that is intended or is contemplated to deprive the person to whom the duty is owed of some legally significant benefit. See Diggs, 613 F.2d at 997 (proof of fraudulent intent is critical); Ballard, 663 F.2d at 541 n. 17 (relating materiality to active fraud). 17 Although critical ambiguities about the scope of the wire fraud statute remain, there is judicial consensus about certain requisite elements of a scheme to defraud. The duty breached need not arise from state or federal law; in particular, it may stem from an employment relationship of the sort that imposes discretion and consequently obligations of loyalty and fidelity on the employee. See, e.g., Ballard, 663 F.2d at 541; Von Barta, 635 F.2d at 999; United States v. Bohonus, 628 F.2d 1167, 1172 (9th Cir.), cert. denied, 447 U.S. 928, 100 S.Ct. 3026, 65 L.Ed.2d 1122 (1980); United States v. Reece, 614 F.2d 1259, 1261 (10th Cir.1980); United States v. Bryza, 522 F.2d 414, 422 (7th Cir.1975), cert. denied, 426 U.S. 912, 96 S.Ct. 2237, 48 L.Ed.2d 837 (1976). And although the scheme to defraud must threaten some cognizable harm to its target, that harm need not be a deprivation of tangible property or money; criminal fraud encompasses schemes to defraud persons of significant intangibles as well. See, e.g., United States v. Condolon, 600 F.2d 7, 8 (7th Cir.1979) (scheme to obtain sexual favors by false promises of modelling or acting job); United States v. Louderman, 576 F.2d 1383, 1387-88 (9th Cir.) (scheme to invade privacy by obtaining confidential information from telephone company), cert. denied, 439 U.S. 896, 99 S.Ct. 257, 58 L.Ed.2d 243 (1978). With the broadening of the scope of the statute to cover intangible harms, however, has come a certain amount of confusion and controversy over the outer boundaries of wire fraud. In particular, premising a felony solely on a scheme to defraud an employer of the loyal services of his employee has spawned a fierce debate about potential over-criminalization of employer-employee breakdowns, better handled in the civil courts. 10 Carried to its logical extreme, such a theory would criminalize any intentional undisclosed breach of duty to an employer. The government appears to be arguing just such a theory here, but we are not inclined to accept it for the following reasons. 18 An employer values the loyalty of his employees and prohibits conflicts of interest primarily because such conflicts create an incentive for the employee to act in a manner detrimental to the employer's tangible monetary interests. Employee loyalty is not an end in itself, it is a means to obtain and preserve pecuniary benefits for the employer. An employee's undisclosed conflict of interest does not by itself necessarily pose the threat of economic harm to the employer. Therefore it does not alone constitute a sufficient indicium that the employee intended any criminally cognizable harm to the employer. 11 Other surrounding circumstances may of course provide the necessary proof that the employee intended such harm. 12 We hold today, however, that an intentional failure to disclose a conflict of interest, without more, is not sufficient evidence of the intent to defraud an employer necessary under the wire fraud statute. 13 See United States v. Feldman, 711 F.2d 758, 763 (7th Cir.1983). There must be a failure to disclose something which in the knowledge or contemplation of the employee poses an independent business risk to the employer. Other courts have so held. Von Barta, 635 F.2d at 1005 n. 14; United States v. Dixon, 536 F.2d 1388, 1400-01 (2d Cir.1976). 19 At the same time, we are not unaware that undisclosed conflicts of interest create fertile ground for subsequent misuse of the employee's position. The vice against which [courts] seek to guard ... is that the adverse interest of the individuals may overcome [their] duty [as] officials, and induce agreements and transactions detrimental to the [employer] and unduly beneficial to the individuals. Epstein, 174 F.2d at 764, (quoting Wyman v. Bowman, 127 F. 257, 273 (8th Cir.1904)). Accordingly, our holding does not remove from the ambit of wire fraud undisclosed conflicts that, accompanied by activity on the part of the employee, carry a significant risk of identifiable harm to the employer apart from the loss of his employee's loyalty and fidelity. So long as the jury finds the non-disclosure furthers a scheme to abuse the trust of an employer in a manner that makes an identifiable harm to him, apart from the breach itself, reasonably foreseeable, it may convict the employee of wire fraud. The crucial determination must be whether the jury could infer that the defendant might reasonably have contemplated some concrete business harm to his employer stemming from his failure to disclose the conflict along with any other information relevant to the transaction. See Von Barta, 635 F.2d at 1005 n. 14; Dixon, 536 F.2d at 1399 n. 11. 20 Although this formulation may differ in some respects from that of other courts, we believe it only makes more explicit what they meant by a material non-disclosure or misrepresentation. 14 The leading case defining material non-disclosure is Ballard, 663 F.2d 534, which involved a scheme to channel oil through a chain of oil companies in order to generate commissions. The scheme's mastermind, Mr. Granlund, was hired by the Florida Power Company to obtain oil during the 1973 oil shortage. The Florida Power Company paid him for this and also allowed him to receive commissions from the oil companies. By channelling the purchases through five companies, Granlund received five commissions on each sale; channelling in turn was arranged by giving kickbacks to employees of the intermediary companies responsible for purchases and sales of oil. The intermediaries were subject to price controls which limited the profit they could make on sales of oil. The Ballard court held that in light of these price controls the employees of the intermediaries did not intend to defraud their employers because the employers already received the maximum profits on each sale. The court reasoned that the failure of the employees to disclose the scheme to the intermediary employers would therefore not have altered their business conduct, so the non-disclosure was not material. 15 21 In Ballard, the Fifth Circuit stated that a non-disclosure is material only if the employee has reason to believe that the information would lead a reasonable employer to change its business conduct. 663 F.2d at 541; see also Feldman, 711 F.2d at 763 (simple concealment of conflict of interest in customer's accounts immaterial because it would not itself have enabled defendant to trade without advancing sufficient collateral); United States v. Bethea, 672 F.2d 407 (5th Cir. Unit B 1982) (procurement officer's ordering storage for servicemen who did not request it, thereby giving business to cosigner of defendant's loan, not fraud unless activities were not in furtherance of servicemen's best interest). Since an employer presumably would change its business conduct only if, upon disclosure of the conflict and any other relevant information, it saw new opportunities for profit or savings, or dangers of economic harm, the notion of materiality of non-disclosure or misrepresentation in the wire fraud context must logically focus on the reasonable foreseeability by the employee of potential economic harm to his employer stemming from the employer's ignorance of information relevant to the conflict.
22 Under our standard for wire fraud, the jury would have had to find that the defendants' failure to disclose Lemire's and Carver's conflicts of interests were in furtherance of a scheme to defraud Raytheon of a business opportunity or economic benefit. If the jury believed the government's evidence that the defendants schemed to overcharge Raytheon for shipping in order to channel excess profits into their own venture, it could properly convict. The jury could also properly have found them guilty if it believed Lemire or Carver knew of Interconex's plan to charter an entire boat to ship the housing and did not inform Raytheon of this money-saving option, thereby depriving Raytheon of the opportunity to arrange its own shipping--assuming, of course, that Lemire did not sincerely believe Raytheon could not charter a boat itself because of its Waterman commitment. Or, if the jury found that Lemire had solicited bids for modular housing C & F or had otherwise altered the standard procedure for letting the contract in order to enable Interconex to get the shipping contract to the detriment of Raytheon's best interests, then it might justifiably convict the defendants of wire fraud. If the jury, however, found only an undisclosed breach of fiduciary duty on Lemire's and Carver's part due to their interest in a joint venture with Interconex's principals, then it could not properly convict because there was nothing inherent in that failure to disclose that spelled business loss or harm to Raytheon. 23 We turn then to the trial judge's instructions to see if they could reasonably be interpreted by the jury to allow a conviction of wire fraud upon a mere finding of failure to disclose Lemire's and Carver's conflict of interest stemming from the joint venture. If in light of all the circumstances--the language of the instructions, the arguments of counsel, and the evidence itself--we find that the jury may have convicted the defendants solely upon that undisclosed conflict, those convictions must be reversed. See, e.g., Ballard, 663 F.2d at 544 (reversing and remanding because the jury was authorized to find [defendant] guilty if the government made out facts supporting any of the criminal theories embodied in the [district] court's charge to them, including those rejected by the court of appeals). Alternatively, if these factors cumulatively indicate that it is highly improbable that the jury found the defendants guilty under an improper legal theory, technical errors in the instructions are deemed harmless, and we will affirm. See Alexander v. United States, 418 F.2d 1203 (D.C.Cir.1969) (error in instructions harmless if all that happened at trial gave fair assurance that the jury was not substantially swayed by error); United States v. Herbert, 698 F.2d 981, 986-87 (9th Cir.1983) (in light of evidence, no reasonable possibility that error had materially affected verdict); United States v. Brooklier, 685 F.2d 1208 (9th Cir.1982) (insufficient evidence of extortion meant that charge dealing with extortion on RICO count was erroneous, but error harmless beyond reasonable doubt since prosecutor told jury that defendants were not involved in the extortion and not to consider extortion in assessing guilt or innocence under RICO), cert. denied, --- U.S. ----, 103 S.Ct. 1194, 75 L.Ed.2d 439 (1983); United States v. Pine, 609 F.2d 106, 108 (3d Cir.1979) (proper test is to determine improper instructions' effect on jury's understanding of the law). 16 24 The defendants mainly challenge the portions of the charge that address the legal requirements of a scheme or artifice to defraud. In stating those requirements, the judge instructed: 25 the first alleged object was to defraud Raytheon Company of its right to the honest, conscientious, faithful, loyal, disinterested and unbiased services, actions, and performances of duties by its employees Carver and Lemire, free from bribery, corruption, partiality, willful omission, bias, dishonesty, deceit, misconduct and fraud. 26 .... 27 Now the object of the scheme need not be money or any form of tangible property. The government need not prove any actual loss of money by the Raytheon Company. 28 A scheme to defraud an employer of the honest, faithful and unbiased services of its employees can also come within the meaning of scheme or artifice to defraud as set forth in the wire fraud statute. 29 Tr. at 3175-76. By themselves, these words are ambiguous; conceivably they could be interpreted to allow a conviction solely on the basis of a knowing failure to disclose a conflict of interest, such as Lemire's interest in the joint venture with the principals of Interconex. 30 The remainder of the instructions, however, lead us to conclude that the jury was unlikely to have convicted for a mere failure to disclose such a conflict of interest. We must look at the jury instructions as a whole in assessing whether they constituted prejudicial error. United States v. Park, 421 U.S. 658, 674-75, 95 S.Ct. 1903, 1912-13, 44 L.Ed.2d 489 (1975); United States v. Baker, 693 F.2d 183 (D.C.Cir.1982); Pollack, 534 F.2d at 973; United States v. Martin, 475 F.2d 943, 947 (D.C.Cir.1973). 17 The instructions immediately following the troublesome language confirmed the admonition that both a breach of fiduciary duty and material non-disclosure were required by the statute. 18 The instructions were thus technically correct because they prefaced the non-disclosure requirement by the word material, which under our legal standard requires that the employee reasonably contemplate the risk of some lost business opportunity or more direct pecuniary harm to the employer resulting from the non-disclosure. See Bethea, 672 F.2d at 414; Ballard, 663 F.2d at 541. Of course, as we noted at argument, one can hardly expect lay jurors to recognize nice legal concepts embedded in the definition of materiality, 19 especially when, as in this case, the lawyers and the court do not themselves agree on the precise content of that definition. 20 But there was an additional statement in the instructions that, although the government need not show that the alleged victims were in fact defrauded, the government must prove beyond a reasonable doubt that some actual harm or injury was at least contemplated. Tr. at 2876. Although this statement may appear mainly to address the issue of whether the jury could convict even if it found the scheme was unsuccessful, see United States v. Schaeffer, 599 F.2d 678 (5th Cir.1979) (refusing defendant's proposed instruction that the government must show that someone was defrauded since success of scheme was not required); United States v. Reid, 533 F.2d at 1261-62 (not necessary to show victim actually incurred loss), the emphasis on actual harm (emphasis supplied) projects to the layman a requirement that there be a threat of monetary loss. 31 Later instructions on specific intent also helped to cure any defect in the instructions on scheme to defraud. There the district court did focus the jury's attention on the need to find that the defendants contemplated some kind of pecuniary harm to the employer. It defined intent to defraud as follows: 32 Now, to act with intent to defraud means to act wilfully and with specific intent to deceive or cheat, ordinarily for the purpose of either causing some financial loss to another or bringing about some financial gain to one's self. 33 Tr. at 3209-10 (emphasis supplied). Although the emphasis on financial loss and benefit is weakened somewhat by the fact that this instruction appears thirty-two pages after the challenged portion defining scheme to defraud, the district court specifically connected up this definition of intent to defraud with the prior instructions on the wire fraud counts. 21 Thus, a conscientious and attentive juror viewing the instructions as a whole, would have hesitated to convict on the wire fraud counts without finding that the defendants did something to show they intended to take a financial or business advantage of Raytheon. 22 34 Moreover, although the central instruction on scheme to defraud failed to define a legally significant term like material non-disclosure, and the curing instruction on specific intent came much later in the charge, we do not believe the instructions were significantly confusing for another reason. In the context of this trial, and in light of the actual evidence and arguments presented to the jury we think it extremely unlikely that the jury was misled into thinking that the mere failure to disclose Lemire's and Carver's conflicts of interest without any other action on their part against Raytheon's business interests was sufficient to constitute wire fraud. As the defense itself noted, [t]he evidence introduced by the government during the trial focused on ... alleged excessive charges. Brief for Appellants at 27. And the government's closing argument mentioned Lemire's failure to disclose a conflict of interest only as part of a scheme to hurt Raytheon financially either by overcharging or denying Raytheon the opportunity to ship goods more cheaply. 23 In sum, the jurors would have had to shift from consideration of the major thrust of the government's evidence and arguments and dwell on a few ambiguous lines in an eighty-six page charge in order to convict on an improper theory. 35 The verdict itself also suggests that the jury did not in fact base its conviction solely on the existence and non-disclosure of Lemire's and Carver's conflicts of interest. The jury convicted all the defendants of count two, interstate transportation of a security taken by fraud. In order to do so, under the statute and under the instructions, not challenged here, it must have determined that a $775,008 check paid to Generation Holding was stolen, converted or taken by fraud. Tr. 3182. The evidence presented identified no means by which that check could have been taken by fraud other than by the defendants' fraudulent scheme. To have found that the check was taken by fraud, the jury would at least have had to conclude that the shipping contract for which the check was payment would not have been consummated but for the fraud. This conclusion would not follow from a finding of a mere failure to disclose a theoretical conflict of interest; the jury must have found that the fraud affected how Raytheon shipped the modular housing. The conviction on count two thus carries a necessary implication that the jury actually did find that the defendants defrauded Raytheon of at least $775,008. Hence it is reasonable to assume that the conviction on the mail fraud counts was based on the same finding that a scheme existed to defraud Raytheon of that money. 36 Even were we less certain that the offending language of the instructions did not control the verdict, we would still hesitate to reverse. To the extent the instructions were confusing and even misleading, the defense had ample opportunity to make clarifying suggestions. Rule 30 of the Federal Rules of Criminal Procedure states: 37 No party may assign as error any portion of the charge or omission herefrom unless he objects thereto before the jury retires to consider its verdict, stating distinctly the matter to which he objects and the grounds for his objection. 38 (Emphasis supplied.) The rule requires that illegal errors in jury instructions be brought to the attention of the trial judge in order to provide an opportunity for their immediate correction. United States v. Campbell, 684 F.2d 141, 148 (D.C.Cir.1982); United States v. Williams, 521 F.2d 950, 956 (D.C.Cir.1975). At the pre-charge conference, the defendants did object that the instruction on scheme to defraud was confusing, Tr. at 2879, but the trial judge incorporated the bulk of their suggested revisions. 24 Tr. at 2284-87. Following this incorporation, of which the judge notified counsel at the pre-charge conference, the defendants did not apprise the district court of any remaining dissatisfaction with the language of this instruction. We are consequently less receptive to their complaint on appeal that the language they reviewed in detail at trial was incorrect or misleading. 25 39 We emphasize at this point that if we believed there was a substantial possibility that the jury convicted on an improper legal theory, we would be inclined toward a liberal construction of the defendants' obvious dissatisfaction with the instruction on alternative objects of the scheme to defraud, even though their objection was based on grounds of surprise and variance rather than legal insufficiency. But we find no such significant likelihood here. 40
41 The defendants mainly attack the instructions on the ground that they changed the theory of the case from that charged by the indictment. They characterize as a key element of the government's theory in the indictment and at trial, alleged inflated shipping rates that Interconex charged Raytheon. Brief for Appellant at 22. They say the indictment alleged a scheme to defraud with a single object--to obtain $2.1 million in excess profits by using Lemire and Carver as disloyal intermediaries in the contracting process. Id. at 22-23. The defendants thus claim that the instruction allowing the jury to convict solely for fraudulent deprivation of Raytheon's employees' honest and loyal services changed the basic elements of the crime from the indictment. They further support this claim by noting a small, but in their view fundamental, word difference between the government's initial jury instructions, proposed before the trial, and the government's final instructions, proposed after the defense presented its case. The initial instruction on the elements of wire fraud read: 42 The government must prove that ... the defendants devised ... a scheme or artifice to defraud ... with the following objects: (1) ... to defraud the Raytheon Company of its right to the honest, ... loyal ... services ... of its employees ...; (2) ... to obtain money from the Raytheon Company by means of false pretenses. 43 J.A. 374. Over the defense counsel's vehement objection, the final instructions substituted with one or both of the two following objects for with the following objects. Tr. at 2866-76 (emphasis supplied). The defendants argue that the modified jury instructions indicated that the government abandoned its original theory premised on inflating shipping charges midstream for a broader one premised on general disloyalty through undisclosed conflicts. Brief for Appellant at 29, 31-32. 44 We note at the outset that proof at trial need not, indeed cannot, be a precise replica of the charges contained in the indictment. United States v. Heimann, 705 F.2d 662 (2d Cir.1983). Since the instructions tell the jury how the law relates to the facts, they too will deviate somewhat from the indictment. The real issue is not whether the instructions vary from the indictment, but how far they may vary before the variance infringes on the defendant's rights. See Berger v. United States, 295 U.S. 78, 82, 55 S.Ct. 629, 630, 79 L.Ed. 1314 (1935); United States v. Mangieri, 694 F.2d 1270, 1278 (D.C.Cir.1982); United States v. Jordan, 626 F.2d 928, 931 (D.C.Cir.1980) (per curiam). A substantial deviation of instructions from an indictment is impermissible because first it requires a defendant to answer a criminal charge that was not brought by a grand jury, see Russell v. United States, 369 U.S. 749, 82 S.Ct. 1038, 8 L.Ed.2d 240 (1962) (bill of particulars does not preserve defendant's right to be tried on a charge framed by a grand jury); Stirone v. United States, 361 U.S. 212, 80 S.Ct. 270, 4 L.Ed.2d 252 (1960); Gaither v. United States, 413 F.2d 1061, 1066 (D.C.Cir.1969), and second it denies the defendant sufficient notice to prepare and present an adequate defense. 26 See Berger, 295 U.S. at 81-82, 55 S.Ct. at 630; United States v. Goss, 650 F.2d 1336, 1346 n. 11 (5th Cir.1981); United States v. Smolar, 557 F.2d 13, 19 (1st Cir.), cert. denied, 434 U.S. 866, 966, 971, 98 S.Ct. 203, 508, 523, 54 L.Ed.2d 143, 453, 461 (1977); cf. Pollack, 534 F.2d at 970 (indictment sufficient because it outlined mail and wire fraud scheme with sufficient particularity to avoid surprise and permit defendants to prepare a defense). We believe, however, that the defendants here were denied neither right. 45 The defendant is deprived of his right to have all charges screened by the grand jury only if the deviation in proof or instructions from the specifics of the indictment affects an essential element of the offense charged. See Mangieri, 694 F.2d at 1277-78; Gaither, 413 F.2d at 1071; United States v. Gonzales, 661 F.2d 488, 492 (5th Cir.1981). Here the challenged instructions did not deviate from the indictment regarding any element of wire fraud. 27 The indictment alleged that the defendants devised a scheme to defraud Raytheon of its right to Carver's and Lemire's loyal services, and to obtain money from Raytheon by false pretenses. 28 The correct method of pleading alternative means of committing a single crime is to allege the means in the conjunctive. See Joyce v. United States, 454 F.2d 971, 976 (D.C.Cir.1971), cert. denied, 405 U.S. 969, 92 S.Ct. 1188, 31 L.Ed.2d 242 (1972); Morrison v. United States, 365 F.2d 521, 522-23 (D.C.Cir.1966); United States v. Hicks, 619 F.2d 752, 758 (8th Cir.1980). Hence, the opposed instruction merely makes explicit that either object of the scheme was sufficient. 46 A variance that does not alter an essential element of the charge may still deprive the defendant of an opportunity to meet the prosecutor's case. Berger, 295 U.S. at 82, 55 S.Ct. at 630; Mangieri, 694 F.2d at 1277; Gaither, 413 F.2d at 1071. But here the indictment gave warning that the government might argue for a verdict based on deprivation of employee loyalty. In addition, its proposed instructions before the trial repeated that theory. 47 The object of the scheme need not be money or any form of tangible property. A scheme to defraud an employer of the honest, faithful and unbiased services of its employees can come within the meaning of scheme or artifice to defraud as set forth in the wire fraud statute. 48 J.A. at 233. Even if the indictment was ambiguous, this instruction clearly put the defendants on notice that the government did not believe its case hinged solely on proof of inflated shipping charges. 29 49 The defense cites Smolar, 557 F.2d 13, and United States v. San Juan, 545 F.2d 314 (2d Cir.1976) as [t]he applicable cases holding that the government may not change the theory of the case after the evidence has been closed. Reply Brief for Appellants at 10. Smolar, however, involved a change of the theory of the case from outright fraud as charged in the indictment, [to] a breach of fiduciary duty. Smolar, 557 F.2d at 18. In this case, what happened was very different--at the end of trial the government reasserted a legal theory of the case set out in the indictment. San Juan involved a violation for bringing more than $5000 into the country without filing a customs report. The defendant failed to file a report on the bus on which she entered the country, and refused to file the report minutes later in the customs house. The government explicitly and repeatedly assured the court, the jury, and the defense counsel that it was not charging a crime for refusal to file the report in the customs house. 545 F.2d at 319 & n. 13. The government changed its theory of the case on appeal, after it appeared that the jury had convicted the defendant of failing to file a report on the bus without substantial evidence of wilfulness. Furthermore, the government's assurances had precluded the court from considering the defendant's motion to dismiss the charge because she could not have committed the crime in the customs house. Nothing of that sort ensued here. Hence, we do not find Smolar and San Juan dispositive of the issue before us. 50 In sum, the instructions given by the district court did not materially deviate from the indictment. The instructions neither charged the defendants with an offense different from that charged by the grand jury, nor deprived the defendants of an opportunity to present their full defense to the original charges. The more serious question, however, is whether an indictment and instructions based on two alternative theories of guilt, one of which may not correctly reflect our interpretation of the law, can lay a sound basis for a conviction. We have discussed that dilemma, in the context of this case, at length, supra, at 1338-1343, and concluded that the way in which the government tried the case as well as the overall thrust of the instructions, sufficiently diluted the effects of the flawed parts of the indictment and instructions. In short, the core of the defendants' most persuasive challenge, which we have rejected, must be the possibility they were convicted under a wrong theory of law, not the technical defense that they suffered from surprise due to variance of the instructions from the indictment. 51 As we view the case, the government alleged one valid and one possibly invalid theory of guilt, concentrated its proof on the valid theory, and reincarnated the invalid one at the conclusion of the trial in its requests for instructions (unfortunately accepted). The net result was that the jury, sitting through a twenty-nine day trial, heard a snippet of the invalid theory at the beginning, a paragraph or two in an eighty-six page charge at the end, and in between a concentration of proof that there was a scheme to defraud Raytheon through diversion of profits from a specially concocted deal. 52 We suspect that the astute defense counsel knew, or should have known, from the indictment what the government's ultimate legal position was. That ultimate theory has been the subject of much comment and controversy for several years. The defense may have been relieved when the proof and argument focused on actual money loss, rather than mere breach of fiduciary duty. And when the government resurrected its present theory of breach of fiduciary duty at the end of trial, the defense understandably objected, but its objection should have been on legal--not variance--grounds. Accordingly, we reject the defense argument for reversal based on prejudicial surprise and variance.