Court Opinion

ID: 9492173
Source: CourtListenerOpinion
Date Created: 2023-08-05 14:34:01.164232+00
Date Added: 2024-06-11T17:55:09.320498
License: Public Domain

KAREN NELSON MOORE, Circuit Judge,
concurring in part and concurring in the judgment.
Unlike the majority, I conclude that the district court erred in instructing the jury that a pyramid scheme, as the court defined the term, necessarily constitutes a scheme to defraud for purposes of the *490federal mail fraud statute. I do not believe that this mistake rises to the level of reversible error in this case, however, and thus I concur in the judgment.
The district court properly instructed the jury that conviction under the mail fraud statute, 18 U.S.C. § 1341, requires proof that the defendant knowingly devised a scheme to defraud, that the defendant did so with intent to defraud, and, of course, that the defendant used the mails in carrying out the scheme. See United States v. Frost, 125 F.3d 346, 354 (6th Cir.1997), cert. denied, — U.S.-, 119 S.Ct. 40, 41, 142 L.Ed.2d 32 (1998). As to the first element, the court instructed the jury as follows:
A pyramid scheme is any plan, program, device, scheme, or other process characterized by the payment by participants of money to the company in return for which they receive the right to sell a product and the right to receive in return for recruiting other participants into the program rewards which are unrelated to the sale of the product to ultimate users. A pyramid scheme constitutes a scheme or artifice to defraud for purposes of this count in the indictment.
Joint Appendix at 573. The problem with this instruction is that a pyramid scheme, as the court defined it, does not necessarily constitute a scheme to defraud. A legitimate program similar to that operated by Amway could fall within the district court’s definition, but could contain sufficient safeguards against saturation to satisfy the FTC and the courts.1 The majority apparently recognizes that a defendant in Gold’s position could show the existence of effective anti-saturation policies, but inexplicably the majority concludes as a matter of law that a pyramid scheme, as defined, constitutes a scheme to defraud.2
It is well settled that a jury instruction that relieves the prosecution of the burden of proving each element of the offense violates the defendant’s due process rights. See Carella v. California, 491 U.S. 263, 265, 109 S.Ct. 2419, 105 L.Ed.2d 218 (1989); Sandstrom v. Montana, 442 U.S. 510, 521-24, 99 S.Ct. 2450, 61 L.Ed.2d 39 (1979). I conclude that the contested instruction here largely eliminated the government’s burden of establishing the existence of a scheme to defraud. Having found certain elements that often constitute a fraudulent pyramid scheme, the jury was instructed to infer that a scheme to defraud existed. The jury should have been required to find from the evidence that this program in fact constituted a scheme to defraud.
Nevertheless, although I perceive error, I conclude that this error does not require reversal. We apply the plain error standard where, as here, the defendant failed to object to the contested instruction at trial. See Fed. R.Crim. P. 52(b); United States v. Alt, 996 F.2d 827, 829 (6th Cir.1993) (reviewing forfeited Sandstrom claim under plain error standard on appeal). In my opinion this error is clear, but I do not *491believe that the error was prejudicial or affected the defendant’s substantial rights. See United States v. Olano, 507 U.S. 725, 734, 113 S.Ct. 1770, 123 L.Ed.2d 508 (1993) (describing the prejudice analysis as a harmless error inquiry with the burden on the defendant). The error affected only one element of the offense — the existence of a scheme to defraud. As the majority correctly notes, even given an erroneous instruction on this point, the jury was still required to find that the defendant acted with the intent to defraud. Moreover, the evidence supporting a finding of a scheme to defraud, as opposed to a non-fraudulent multilevel marketing program, was persuasive. Finally, even if the error affected the defendant’s substantial rights, I would argue that we should not exercise our discretion to reverse in this instance. I would do so because I do not believe that the error “ ‘seriously affect[s] the fairness, integrity, or public reputation of judicial proceedings.’ ” Id. at 736 (quoting United States v. Atkinson, 297 U.S. 157, 160, 56 S.Ct. 391, 80 L.Ed. 555 (1936) (alteration in Olano)). The question, after all, is close, the defendant had ample opportunity to object, and the evidence against the defendant is considerable.
With the exception of Part II, I concur in the majority opinion. Because I reach the same, result through a different path with respect to Part II, however, I respectfully concur only in the judgment of the court.

. In 1979 the FTC determined that the multilevel marketing program operated by Amway was not fraudulent nor illegal. See In re Amway Corp., 93 F.T.C. 618, 709-17 (1979). Although it does not involve the exact elements described above, the Amway program is essentially a pyramid. Nonetheless, the FTC determined that the plan did not constitute an illegal pyramid because certain Amway rules ensured a focus on retailing over pyramiding. It was the effective enforcement of these anti-saturation rules that saved Amway, not the specific structure of the enterprise. While an Amway-like program that happened to pay participants a small fixed fee for bringing in recruits probably would constitute a pyramid scheme under the district court’s definition, such a program would not constitute a scheme to defraud.

. A number of states have criminalized the veiy conduct that the district court defined as a pyramid scheme. However, this criminalization does not imply that such schemes are fraudulent per se. Rather, recognizing that most schemes of this nature are fraudulent and that this specific pyramid structure is not essential for legitimate business operations, these states have justifiably promulgated a broad prophylactic prohibition.