Opinion ID: 181032
Heading Depth: 4
Heading Rank: 1

Heading: Warshak

Text: Warshak argues that the government failed to satisfy its burden of proof in several respects. First, he argues that, even if the government proved that a conspiracy existed, the government's proof was insufficient to show that the conspiracy lasted for the entirety of the period alleged in the indictment. Second, Warshak argues that there was simply no proof that he entered into a conspiracy to commit mail, wire, and bank fraud. He argues that all of the practices that the government labeled fraud were simply the missteps of a fledgling business attempting to find its footing while simultaneously experiencing radical growth. Third, he argues that there was no conspiracy to commit bank fraud as the chargeback-manipulation efforts were never intended to harm a bank. All three of these arguments fail. [48] Warshak's first argument is a non-starter. While the indictment did allege a conspiracy lasting from 2001 to 2006, the government was under no obligation to prove that the conspiracy spanned the entirety of that time frame. As the Tenth Circuit explained in United States v. Henderson, the temporal scope of a conspiracy is not an `essential' or `material' element of the charge. 179 Fed.Appx. 535, 538 (10th Cir.2006) (quoting United States v. Cina, 699 F.2d 853, 859 (7th Cir.1983)); see United States v. Davis, 679 F.2d 845, 852 (11th Cir.1982) (Neither is time an essential element so long as the time frame proved was within the period alleged in the indictment.) (citing Russell v. United States, 429 F.2d 237, 238 (5th Cir.1970)). Thus, the evidence was sufficient so long as the government proved a conspiracy within the relevant chronological bounds. And the government did. Though Warshak claims that his company's early practices were the result of his status as a managerial neophyte, and that the company later took corrective measures to ensure that any deceptive practices were remediated, a reasonable juror could nonetheless conclude that Warshak and his associates conspired to defraud both customers and merchant banks. As a number of former Berkeley executives testified, the existence of the auto-ship program was not disclosed to customers for the first year that Berkeley was in business, leading to scores of unauthorized credit-card transactions. Furthermore, though disclosures were eventually made during sales calls, the disclosures were designed to fail. They were made at the end of the calls and came on the heels of information relating to sexually transmitted diseases. A reasonable juror could easily conclude that any supposedly remedial measures were simply undertaken to create plausible deniability. As a result, there was sufficient evidence to support the conclusion that the defendants conspired to commit mail and wire fraud. [49] Under Thomas, that is enough to sustain a conviction on Count 1. See 54 F.3d at 81 (holding that proof of any single illegal aim of the conspiracy is sufficient to sustain a conviction). A reasonable juror could also conclude that the defendants conspired to commit bank fraud. Though Warshak argues that the chargeback-manipulation scheme was not intended to harm any banks, a reasonable juror could nonetheless conclude that the scheme was concocted and implemented with fraudulent intent. According to a number of Berkeley insiders, Warshak and his employees manipulated the chargeback ratio because, if they did not, their merchant accounts would be terminated. Thus, a reasonable juror could find that the intent of the chargeback-manipulation scheme was to deceive merchant banks (and credit-card processors) into continuing to provide a service that they would otherwise have declined to provide. That action would constitute fraud by increasing a risk of loss, even if no actual monetary loss were shown. United States v. Reaume, 338 F.3d 577, 581 (6th Cir.2003). Consequently, there was sufficient evidence to support the conclusion that Warshak and the other named defendants conspired to commit bank fraud. [50]