Opinion ID: 501814
Heading Depth: 2
Heading Rank: 2

Heading: Substantive Wire Fraud.

Text: 25 Turning to the substantive wire fraud counts under 18 U.S.C. section 1343 (1982), 6 appellants contend first that the trial judge improperly failed to instruct the jury that the appellants must have foreseen not only a wire communication by a third party, but also the interstate character of that communication. The only interstate wire communications involved in this case were two instances in which one of the victims, Peggy St. Lewis, instructed Merrill Lynch to transfer money by wire from Florida to New York. Judge Haight instructed the jury that if you find that the wire communication was reasonably foreseeable and that the interstate wire communication charged in the indictment took place, then this element is satisfied even if it was not foreseeable that the wire communication made would be interstate. Appellants argue that, on the contrary, a person does not cause an interstate wire communication by a third party under section 1343 unless it was foreseeable not only that there would be a wire communication connected with the fraud, but that the wire communication would be interstate. 26 This court has unambiguously held that there is no mens rea requirement as to the purely jurisdictional element of interstate communication under the wire fraud statute. United States v. Blassingame, 427 F.2d 329, 330-31 (2d Cir.1970), cert. denied, 402 U.S. 945, 91 S.Ct. 1629, 29 L.Ed.2d 114 (1971). As the Eighth Circuit has recently observed, the only mens rea requirements are that the defendant be a party to some kind of scheme to defraud, a requirement that includes a high degree of scienter and moral culpability, and that the use of wire communication be reasonably foreseeable. United States v. Bryant, 766 F.2d 370, 375 (8th Cir.1985), cert. denied, 474 U.S. 1054, 106 S.Ct. 790, 88 L.Ed.2d 768 (1986). The element of interstate nexus is not a substantive element of the offense, but arises only from constitutional limitations on congressional power over intrastate activities under the Commerce Clause. Id. See Blassingame, 427 F.2d at 330-31. Cf. United States v. Feola, 420 U.S. 671, 686-87, 95 S.Ct. 1255, 1264-65, 43 L.Ed.2d 541 (1975) (conviction for conspiracy to violate statute prohibiting assault on a federal officer does not require knowledge by defendant that the victim was a federal officer); United States v. Muza, 788 F.2d 1309, 1311-12 (8th Cir.1986) (conviction under federal arson statute does not require knowledge that the building destroyed by arson was used in an activity affecting interstate commerce); United States v. Roglieri, 700 F.2d 883, 885 (2d Cir.1983) (conviction under statute prohibiting possession of material stolen from the mail does not require knowledge that material was stolen from the mail, but only that material was stolen); United States v. LeFaivre, 507 F.2d 1288, 1298 (4th Cir.1974) (use of interstate facilities is a jurisdictional element and does not require an additional mens rea beyond that required for the underlying gambling activity in violation of the Travel Act), cert. denied, 420 U.S. 1004, 95 S.Ct. 1446, 43 L.Ed.2d 762 (1975). 27 Appellants claim, however, that the issue is different when an innocent third party makes the interstate communication, citing United States v. Muni, 668 F.2d 87 (2d Cir.1981). Muni expressly held that a defendant could be criminally liable where the interstate wire communication was made by an innocent third party, so long as that communication was reasonably foreseeable. Id. at 89-90. Muni declined to decide whether the interstate character of the communication must also be foreseeable. Id. at 90 n. 7. 28 We conclude 7 that it is sufficient that appellants could reasonably have foreseen the use of a wire communication by Peggy St. Lewis, whether or not the interstate nature of that communication was reasonably foreseeable. 8 While Blassingame did not involve a defendant who caused a third party to make a wire communication, it did involve a defendant who himself made an interstate wire communication without knowing that it was interstate. Blassingame, 427 F.2d at 330. Since, as the cases clearly establish, the only purpose of the interstate requirement is jurisdictional, we see no basis in principle for distinguishing Blassingame, and therefore apply its rule to the facts presented here. 9 29 Nevertheless, the substantive wire fraud convictions cannot be sustained because of reversible errors elsewhere in the trial court's instructions. First, the court incorrectly stated the law concerning criminal liability for substantive offenses committed by other members of a conspiracy prior to a particular defendant's entry into the conspiracy. In his main instruction, the trial judge stated: 30 It also is not necessary that the defendant participated in the alleged scheme from its inception. A person who comes in at a later point with knowledge of the scheme's general operation, although not necessarily all of its details, and who intentionally acts in a way to further the unlawful goals, becomes a member of the scheme and is legally responsible for all that may have been done in the past in furtherance of the criminal objective and all that is done thereafter. 31 J.App. 51. In response to the jury's request for clarification of this instruction, the trial judge repeated the above language (with minor editing) and added the following instruction: 32 So long as the transaction is within the general scope of the scheme on which all defendants had embarked a defendant not directly connected with a particular fraudulent act is nonetheless responsible therefor if it was of the kind as to which all parties had agreed. It follows that as to all defendants who were members of a single scheme it is your duty to find them guilty of all substantive crimes committed in furtherance of that single scheme whether or not they were directly involved in a particular fraudulent transaction. 33 J.App. 132 (emphasis added). 34 Judge Haight commented on this instruction in his post-trial opinion as follows: 35 [C]ounsel characterizes the supplemental charge as improperly telling the jury that it was their 'duty' to convict a defendant retroactively as to women who were defrauded before he joined the scheme. ... In the first place, under settled law retroactive responsibility attaches to a co-conspirator or co-schemer who knowingly joins a conspiracy or scheme after it began. He ratifies what has gone before. 36 648 F.Supp. at 235-36 n. 8. 37 The confusion here is that, with regard to liability for conspiracy, a defendant may be legally responsible for acts of coconspirators prior to that defendant's entry into the conspiracy, United States v. Guillette, 547 F.2d 743, 751 (2d Cir.1976), cert. denied, 434 U.S. 839, 98 S.Ct. 132, 54 L.Ed.2d 102 (1977), whereas, with regard to substantive offenses, a defendant cannot be retroactively liable for offenses committed prior to his joining the conspiracy. Levine v. United States, 383 U.S. 265, 266, 86 S.Ct. 925, 925, 15 L.Ed.2d 737 (1966) (per curiam); United States v. Harrell, 737 F.2d 971, 981 (11th Cir.1984), cert. denied, 470 U.S. 1027, 105 S.Ct. 1392, 84 L.Ed.2d 781 (1985). See United States v. Carrascal-Olivera, 755 F.2d 1446, 1452 n. 8 (11th Cir.1985) (explaining the distinction). By stating that the jury must convict a member of the conspiracy for substantive offenses committed by coconspirators prior to the member's entry into the conspiracy, the judge clearly instructed the jury contrary to settled law. Therefore, we find the instruction to be reversible error 10 as to defendants whom the jury could have found to have joined the conspiracy after the substantive wire fraud offenses had been committed. 11 38 We find a second, related error in the trial judge's instruction concerning vicarious liability and the Pinkerton doctrine. See Pinkerton v. United States, 328 U.S. 640, 66 S.Ct. 1180, 90 L.Ed. 1489 (1946). See generally United States v. Molina, 581 F.2d 56, 60-61 (2d Cir.1978). In his main instruction, the trial judge charged the jury that if a defendant was found to be a member of the wire fraud conspiracy charged in count one of the indictment, you may also but you are not required to, find him or her guilty of the substantive crime charged against that defendant in Counts Three through Five, provided that the person who actually committed the crime was a member of that conspiracy, that the crime was committed in furtherance of the conspiracy, and that the wire fraud could be foreseen as a consequence of the conspiracy. J.App. 60-61 (emphasis added). Judge Haight then repeated that if the jury found these elements, you may, but you need not, find that defendant guilty of the particular wire fraud count you are considering, even though he did not personally participate in the acts constituting the crime or did not have actual knowledge of it. J.App. 61 (emphasis added). Finally, the judge once more emphasized the discretion of the jury to use the Pinkerton option: The reason for this option--which again, you may or may not use, it is entirely up to you--is simply that a co-conspirator who commits a substantive crime pursuant to a conspiracy is deemed to be the agent of the other conspirators. Id. (emphasis added). 39 This charge properly instructed the jury as to the essential elements of the Pinkerton doctrine. See United States v. Alvarez, 755 F.2d 830, 848 & n. 22 (11th Cir.), cert. denied, 474 U.S. 905, 106 S.Ct. 274, 88 L.Ed.2d 235 (1985). In the same jury note that later requested clarification on retroactivity, however, the jury also asked if application of the Pinkerton theory was mandatory or whether discretion [may] be applied so that only those who are determined to be directly involved in carrying out the scheme with a particular victim is [sic] guilty with respect to that victim? J.App. 116. In response, the judge charged the jury--in the same context as he charged the jury concerning retroactive liability--that as to all defendants who were members of a single scheme it is your duty to find them guilty of all substantive crimes committed in furtherance of that single scheme whether or not they were directly involved in a particular fraudulent transaction. J.App. 132 (emphasis added). 40 It seems to us that Judge Haight's initial Pinkerton charge, indicating that the jury might in its discretion, but need not, find members of a conspiracy guilty of reasonably foreseeable substantive crimes committed during their membership in, and in furtherance of, the conspiracy, correctly stated the law. In Pinkerton itself, the Supreme Court stated that [t]he question was submitted to the jury on the theory that each petitioner could be found guilty of the substantive offenses under the circumstances stated above, Pinkerton v. United States, 328 U.S. 640, 645, 66 S.Ct. 1180, 1183, 90 L.Ed. 1489 (1946) (emphasis added), approving an instruction that the jury had a right ... to convict each of these defendants on all these substantive counts. Id. at 645 n. 6, 66 S.Ct. at 1183 n. 6. And in United States v. Miller, 478 F.2d 1315 (2d Cir.1973), where the trial court oscillated from a discretionary to a mandatory and finally back to a discretionary charge, we concluded that the (discretionary) end result was correct, unobjectionable and unobjected to, id. at 1320, although without specific reference to Pinkerton. 12 41 In any event, it was clearly prejudicial error to give a discretionary Pinkerton instruction at the close of the trial, upon the basis of which defense counsel made their summations, and then switch to a mandatory charge in response to an inquiry by the jury during its deliberations. This error requires that the convictions of all defendants for substantive wire fraud (counts three and four) be vacated. 42