Opinion ID: 797173
Heading Depth: 2
Heading Rank: 1

Heading: Richardson and Ghilarducci's Sufficiency of the Evidence Challenge Fails.

Text: 18 Both Richardson and Ghilarducci challenge the sufficiency of the evidence in support of their convictions for wire fraud, racketeering, and money laundering, claiming that the prosecution failed to show that any of their alleged misrepresentations to WFA clients were material. To prevail, they must show that when viewing all the evidence in the light most favorable to the government, no rational jury could have found the essential elements of the offenses beyond a reasonable doubt. United States v. Humphreys, 468 F.3d 1051, 1054 (7th Cir.2006). 19 We agree with the defendants' basic premise that a material misrepresentation must have been made to sustain their convictions, because materiality (i.e., a tendency to influence) is an essential element of a wire fraud prosecution. See Neder v. United States, 527 U.S. 1, 20-25, 119 S.Ct. 1827, 144 L.Ed.2d 35 (1999); United States v. Rosby, 454 F.3d 670, 673 (7th Cir.2006). Because several episodes of wire fraud form the predicate for the defendants' racketeering and money laundering charges, their convictions of those crimes likewise depend on a finding of materiality. See United States v. Anderson, 809 F.2d 1281, 1283 (7th Cir.1987) (to convict a defendant of racketeering, a jury must find that the defendant committed at least two predicate acts); 18 U.S.C. § 1957(a) (to convict a defendant of money laundering, a jury must find that the funds were derived from unlawful activity, such as wire fraud). 20 However, we cannot agree with the manner in which the defendants define materiality. The defendants contend that any oral misrepresentations they might have made were immaterial because investors signed contracts stating that no oral promises had been made. For their argument, the defendants rely in large part on a civil fraud case, Rissman v. Rissman, 213 F.3d 381 (7th Cir.2000), which held that a written anti-reliance clause precludes any claim of deceit by prior representations. Id. at 384. That holding stems from the principle that a person who has received written disclosure of the truth may not claim to rely on contrary oral falsehoods. Id. 21 Rissman and the reliance concept, however, have no application in the criminal fraud context. Whether or not a victim in fact relied upon a defendant's false representations is irrelevant in criminal fraud cases. See Neder, 527 U.S. at 24-25, 119 S.Ct. 1827 (`justifiable reliance' and `damages' ... plainly have no place in the federal fraud statutes); see also Rosby, 454 F.3d at 674. 22 Indeed, we reached that exact conclusion in Rosby. In that case, the defendants contended that false representations made to lenders were not material because the lenders continued to conduct business with the defendants although the lenders could have learned of a bill-ahead scheme through investigation. Rosby, 454 F.3d at 673. In rejecting the defendants' argument, we noted that under some federal statutes a representation may be material even though the hearer strongly suspects that it is false. A witness commits the crime of perjury, for example, if he lies under oath about a subject important to the proceeding, even though the grand jury believes that it knows the truth. Id. Further, we explained that the defendants had confused materiality with reliance. 23 At common law, both materiality (in the sense of tendency to influence) and reliance (in the sense of actual influence) are essential in private civil suits for damages. That's why, if the issuer of securities furnishes an investor with the truth in writing, the investor cannot claim to have been defrauded by an oral misrepresentation: whether the writing actually conveys the truth or just calls the oral statement into question, the investor is on notice. It is also why an investor's disclaimer of reliance on certain representations, as part of a declaration that the investor has done and is relying on his own investigation, defeats a private damages action for securities fraud. 24 Id. at 674. But, we noted, [r] eliance is not . . . an ordinary element of federal criminal statutes dealing with fraud. Id. 25 That the contracts should have placed the COF-scheme victims on notice of the fact that no oral representation would be honored, does not mean the oral representations were immaterial or without tendency to influence. Many investors testified that various oral representations, particularly representations that the defendants had engaged in successful COF deals in the past and would keep fees in an escrow account until the COF letters issued, influenced their decision to invest. Additionally, the very fact that the defendants made the misrepresentations suggests that the defendants expected the statements to have a tendency to influence prospective investors. See id. The defendants' sufficiency challenge therefore fails. 26