14‐4208‐cr(L)
United States v. Greenberg
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
August Term 2015
(Argued: January 11, 2016 Decided: August 31, 2016)
Nos. 14‐4208‐cr(L), 14‐4278‐cr(con)
––––––––––––––––––––––––––––––––––––
UNITED STATES OF AMERICA,
Appellee,
‐v.‐
DANIEL GREENBERG,
Defendant‐Appellant.
––––––––––––––––––––––––––––––––––––
Before: STRAUB, LIVINGSTON, and CHIN, Circuit Judges.
Defendant‐Appellant Daniel Greenberg appeals from a corrected
judgment of conviction, entered on November 7, 2014, in the United States
District Court for the Eastern District of New York (Spatt, J.). Following a jury
trial, Greenberg was convicted of all thirteen counts in the Superseding
Indictment, including wire fraud, access device fraud, aggravated identity theft,
and money laundering. A summary order issued concurrently with this
opinion addresses and rejects most of Greenberg’s claims on appeal. This
opinion addresses two of Greenberg’s challenges to his conviction. First, we
consider whether the district court erred in denying Greenberg’s motion to
1
dismiss the Superseding Indictment for spoliation of evidence. We conclude,
relying on Arizona v. Youngblood, 488 U.S. 51 (1988), that Greenberg failed to
show bad faith, so that his motion was properly denied. Second, we consider
whether the district court erred in denying Greenberg’s motion to dismiss the
wire fraud counts because of a “lack of convergence” between the parties injured
and those deceived by Greenberg’s scheme. Here, we join our sister circuits and
decline to find the existence of a convergence requirement for wire fraud.
Accordingly, the judgment of conviction is AFFIRMED.
FOR APPELLEE: CHARLES N. ROSE, David C. James, Walter
M. Norkin, Assistant United States
Attorneys, New York, N.Y., for Robert L.
Capers, United States Attorney for the
Eastern District of New York, for the United
States of America.
FOR DEFENDANT‐APPELLANT: ERIC M. CREIZMAN, Creizman PLLC, New
York, N.Y., for Daniel Greenberg.
DEBRA ANN LIVINGSTON, Circuit Judge:
This appeal arises from Daniel Greenberg’s conviction of wire fraud,
access device fraud, aggravated identity theft, and money laundering in
connection with a scheme to make unauthorized credit card charges to the credit
cards of customers of Greenberg’s digital retail company, Classic Closeouts, LLC
(“CCL”). During the summer of 2008, there were approximately 77,000
unauthorized charges to these customer cards, totaling approximately $5 million,
all supposedly related to a “Frequent Shopper Club” program at CCL.
Following a civil case brought by the Federal Trade Commission (“FTC”) and a
2
criminal investigation, the Government filed a Superseding Indictment, charging
Greenberg with eight counts of wire fraud, in violation of 18 U.S.C. § 1343; one
count of access device fraud, in violation of 18 U.S.C. §§ 1029(a)(5) and
1029(c)(1)(A)(ii); one count of aggravated identity theft, in violation of 18 U.S.C.
§§ 1028A(a)(1), 1028A(b), 1028A(c), and 1028A(c)(5); and three counts of money
laundering through unlawful monetary transactions, in violation of 18 U.S.C.
§ 1957(a). Greenberg was convicted of all counts in January 2014, after a jury
trial.
This opinion addresses two of Greenberg’s arguments on appeal.1 First,
Greenberg contends that the district court erred in denying his motion to dismiss
the Superseding Indictment for spoliation of evidence. Next, he argues that the
wire fraud counts should have been dismissed because of a “lack of
convergence” between the parties injured and those deceived by the “Frequent
Shopper Club” scheme. We reject both arguments and, accordingly, affirm the
judgment of conviction.
Greenberg raises additional arguments that are addressed and rejected in a
1
summary order issued concurrently with this opinion.
3
BACKGROUND
I. Factual Background2
From 2002 until 2009, Greenberg owned and operated CCL, an Internet
retailer of discounted clothing and other merchandise. Greenberg served as
CCL’s president and managing member, and was the sole signatory on CCL’s
accounts. CCL operated from 110 West Graham Avenue in Hempstead, New
York (“the Premises”). CCL maintained a website, classiccloseouts.com, from
which it sold its merchandise. 3 The website was certified by TRUSTe, an
independent organization that certifies the privacy practices of its Internet
licensees.4
2 The factual background regarding the crimes of which Greenberg was
convicted is derived from the testimony and evidence presented at Greenberg’s trial.
Additional background is based upon the record and is undisputed or attributed to a
particular party, as noted.
3 CCL’s goods were also included on aggregator retail websites, including
Shop.com, which compile a searchable digital database of the items offered on, and link
to, multiple merchants’ websites.
4 The TRUSTe certification gives a website the right to post the TRUSTe logo on
its site, as an indication of the reliability of its privacy practices. TRUSTe has a
consumer privacy‐related dispute resolution service, which allows consumers to report
complaints about its licensees so that TRUSTe can then investigate and identify whether
the licensee should be required to take any corrective measures to remain in the
program.
4
In order to process credit or debit card charges for purchased items, CCL
maintained a merchant account with Bank of America Merchant Services
(“BAMS”).5 In 2006, CCL entered into an agreement with Cynergy Data, LLC
(“Cynergy”) to serve as CCL’s payment processor, an intermediary between the
acquiring bank—BAMS—and the merchant—CCL. The agreement established
a fee schedule that included a “rolling reserve,” an amount of money set in
reserve by the payment processor to offset any “chargebacks” incurred by the
merchant. A chargeback occurs when a cardholder contacts his issuing bank to
dispute a charge appearing on his account statement, and the issuing bank
charges that amount back to the acquiring bank. A “reversal” occurs when a
merchant is able to prove the legitimacy of the initial transaction, and the charge
reappears on the cardholder’s account (thus reversing the chargeback).
A. The Scheme
In the first part of 2008, during a period of declining sales volume at CCL,
Greenberg called Jason Mizrahi, a CCL graphic designer, to task him with
creating a template, supposedly for distribution to customers, to promote a CCL
5 This opinion uses two terms to refer to the actors who execute these
transactions. An “issuing bank” is a financial institution that issues credit and debit
cards to customers. An “acquiring bank” is a financial institution that enters into
agreements with merchants enabling them to accept and process credit card charges for
payment. In this case, BAMS served as the acquiring bank.
5
“Frequent Shopper Club.” This was unusual, as Mizrahi generally received
assignments from his direct supervisor, head graphic designer Lisa Chin, and not
Greenberg. Mizrahi designed the promotion template and provided it to
Greenberg, but the designer never saw his work product on the CCL website.
Greenberg did, however, send the template to Venkata Chittabathini, a CCL
computer programmer, and directed him to create a program for charging
customer credit cards in connection with the membership program. Notably,
despite these undertakings by Greenberg, other CCL employees who were
otherwise heavily involved in CCL’s marketing and sales (including CCL’s
customer service manager, Simcha Geller, its warehouse manager, Alejandro
Rubenstein, and Chin) never discussed the Frequent Shopper Club with
Greenberg or were ever directly informed of its existence.6
During the summer of 2008, CCL received an influx of complaints from
customers asserting that their credit cards had been charged even though they
had not placed an order with CCL. Customers making such complaints
6 This was unusual. Chin was normally responsible for creating marketing
materials that were posted on the company’s website and emailed to customers. She
was unaware of the Frequent Shopper Club and never saw any promotion for the club
even though she checked the CCL website daily and reviewed CCL’s promotional
emails. Similarly, Geller maintained an email account specifically to monitor CCL’s
advertisements and promotions, but he never received any email concerning a frequent
shopper club.
6
testified at trial that they had made at least one purchase from CCL in the past,
and they were unaware that CCL had retained their credit card information.
Numerous customers attempted to contact CCL about the charges during this
period, but their calls and voicemails frequently went unanswered. Charged in
amounts ranging from $29.99 to $79.99, various of these customers testified at
trial that they had never joined a frequent shopper club and had never received
promotional emails or any other communication from CCL concerning such a
club.
As complaints mounted, Geller informed Greenberg about the influx
sometime in June 2008.7 Greenberg responded that a computer programmer
was working on the problem, a computer glitch. Even as Geller noted the
questionable transactions continuing to increase—he testified that they
eventually reached tens of thousands of dollars a day—Greenberg never
mentioned the Frequent Shopper Club in his discussions with Geller about the
7 Chin also raised the issue with Greenberg, who suggested to her that these
unauthorized charges were occurring because of fraud by “some other company” or a
“test” conducted by a “credit card company” that “wasn’t supposed to go out
and . . . did by accident.” App’x 509‐11. In fact, an unauthorized CCL charge of
$39.99 appeared on Chin’s own credit card statement, but Greenberg instructed
Chittabathini to remove it after Chin complained.
7
issue. 8 Greenberg, however, did ask Geller whether payment for these
transactions had come into the company’s bank accounts.
During this period, other companies that had a relationship with
CCL—TRUSTe, Cynergy, and Shop.com—noticed increased consumer
complaints regarding unauthorized charges and began to make inquiries.
Greenberg provided inconsistent explanations to each company. Thus,
Greenberg told a TRUSTe compliance officer that the charges were due to a
computer glitch that had occurred over the Fourth of July weekend, affecting “at
most 100 consumers,” all of whom had been or would be given chargebacks.9
App’x 261. In a follow‐up email, Greenberg mentioned the Frequent Shopper
Club, claiming that CCL had been offering it to customers “for years at various
times and in various formats” and that “thousands of previous members [had]
gladly paid and renewed yearly for several years already.” App’x 269. In July,
Greenberg explained to Cynergy that the chargebacks were due to customers
who initially joined the Frequent Shopper Club but were disgruntled because
8 Geller, who testified both that Greenberg was the only person at CCL with the
ability and authorization to charge a customer’s credit card and that he could do so
remotely, recounted that the first time he, Geller, saw a direct reference to the Frequent
Shopper Club was in a bank document related to credit card chargebacks.
9 Greenberg’s explanation was particularly suspicious because TRUSTe had
received complaints before July 4, 2008.
8
they were not able to get through to CCL’s customer service department because
of the flood of interest in the program. Last, when Shop.com inquired as to the
“alarming number of inquiries from customers” about unauthorized charges,
Greenberg explained that the charges resulted from “a promotion offering
consumers a members only shipping benefit.” App’x 411‐12. He specified that
none of CCL’s customers’ personally identifiable information had been
compromised. Ultimately, owing to continuing customer complaints and
Greenberg’s insufficient explanations, TRUSTe, Cynergy, and Shop.com all
terminated their respective relationships with CCL.
Between June and August 2008, CCL customers incurred over 77,000
unauthorized charges, totaling approximately $5 million. 10 Approximately
44,000 chargebacks in the total amount of about $3.3 million resulted from
customers disputing the charges with the issuing banks. Greenberg defended
the validity of the charges, however, causing approximately 19,000 of the
chargebacks to be reversed, so that over $1.3 million of the unauthorized charges
reappeared on customers’ credit card statements. Between July and August
10 There were, in fact, many more attempted CCL charges but many of the credit
card accounts involved had been closed or had expired before the charges were
attempted.
9
2008, Greenberg transferred nearly $1 million from his CCL merchant account to
various other bank accounts which he controlled.
B. The FTC Action
On June 24, 2009, the FTC filed a civil action against both Greenberg and
CCL in the United States District Court for the Eastern District of New York
(Wexler, J.). FTC v. Classic Closeouts, LLC, 09‐cv‐2692 (LDW). The FTC alleged
that Greenberg and CCL had engaged in “unfair or deceptive acts or practices in
or affecting commerce,” 15 U.S.C. § 45(a), in violation of Section 5 of the FTC Act,
by repeatedly charging customers’ credit cards without their authorization. On
June 29, 2009, the district court entered a temporary restraining order (“TRO”)
against CCL, and appointed a temporary receiver (the “Receiver”) to prevent,
among other things, destruction of evidence.
The Receiver interviewed Greenberg at the Premises the very next day.
According to the Receiver’s account of that interview, presented in a report to the
district court later that summer, Greenberg claimed that in January 2009, he sold
CCL to Hazen NY Inc. (“Hazen”), a company owned by CCL’s former
warehouse manager, Jonathan Bruk. Greenberg indicated that after the sale he
10
maintained his office at the Premises and worked as a consultant to Hazen.11
The Receiver also reported that the FTC attempted to preserve evidence that day
by imaging the hard drives of CCL computers, but FTC employees were unable
to image everything owing to power failures. When the FTC’s computer
specialist returned the next day to complete the task, he was denied access to the
premises.
In her report to the district court, dated August 20, 2009, the Receiver
concluded that the sale of CCL to Hazen “may be a sham” and that “CCL’s
operations may be continuing through the [n]ew [d]efendants.”12 Gov’t App’x
14. The report explained that the original defendants had failed to cooperate
with the Receiver, as the TRO required, by “failing to provide repeatedly
requested documentation about the . . . assets and transfers of money and
property.” Id. Next, the report indicated that the Receiver had found “no
evidence of a legitimate transfer of ownership of CCL.” Id. at 15. The report
explained that although CCL was apparently “not operating,” it “may [have
11 Greenberg also indicated that he was the sole owner of 110 West Graham
Avenue Corporation, which leased and retained control over the Premises.
12 The FTC commenced its action against only CCL and Greenberg. In its
Amended Complaint, however, the FTC named several additional defendants: IVAL
Group, LLC, AYC Holdings Corp., 110 West Graham Avenue Corp., Bruk, Hazen,
Stephanie H. Greenberg, and YGC Enterprises, Inc.
11
been] continuing its sales operations through certain of the [n]ew [d]efendants.”
Id. at 17. Last, the report detailed evidence of transfers of CCL’s assets to new
defendants, and the failure to produce documents.
On September 21, 2009, CCL was evicted from the Premises. According
to the Government, in that eviction, representatives of Bennett Moving, Storage
and Evictions (“Bennett”) took possession of all of CCL’s property, including its
computers and servers, and transferred it to United Storage, a storage facility in
West Hempstead, New York.
C. The Criminal Investigation
The criminal investigation began in February 2010, some seven or eight
months after the FTC action commenced. The Government asserts that on April
14, 2010, Inspector Charles Schriver of the United States Postal Inspection Service
contacted Bennett, the company that had taken possession of CCL’s property,
and was informed that Greenberg had retrieved it. Inspector Schriver next
contacted United Storage, which confirmed that the CCL property, including the
computers and servers, had been removed in January 2010. Schriver thereafter
obtained copies of the previously‐imaged CCL hard drives from the FTC. The
FTC indicated to Schriver in an email that some of the data from CCL computers
12
and servers had not been successfully acquired. The FTC retained the originally
imaged computer evidence in Washington, D.C.
Discussions between the United States Attorney’s Office for the Eastern
District of New York (“EDNY”) and Jason Berland, an attorney representing
Greenberg, began months before Greenberg was first indicted in April 2012. On
January 12, 2012, Berland, one of numerous successive attorneys who
represented Greenberg in connection with the criminal case, emailed Inspector
Schriver and the Assistant United States Attorney (“AUSA”) handling the
investigation. The email stated that Greenberg retained “back‐up copies of the
servers that he and some of his employees were able to access at Classic
Closeouts,” and that data that Berland had reviewed with Greenberg and also
“discussed with a forensic analyst,” had been obtained from these back‐ups and
would be provided to the Government. Gov’t App’x 21. Two weeks later, on
January 26, 2012, Berland reported that Greenberg possessed “a few dozen
gigabytes of data to be analyzed” and indicated that he would obtain the
material for the Government to review. Id. at 26. On February 1, 2012, Berland
again emailed, attesting that he would provide “data pertinent to establishing
that an email went out to customers and that there were legitimate customer
13
enrollments” and expressing the hope that this “conclusive proof” would
persuade the Government not to move forward with the case. Id. at 35.
Berland indicated that Greenberg was “finishing the process of copying the data
to a back‐up drive” and that Berland would thereafter provide it. Id.
Berland’s efforts did not ultimately dissuade the Government from seeking
an indictment. More pertinent here, the Government asserts that neither
Greenberg nor his counsel indicated during this period leading up to indictment
“that Greenberg lacked the evidence to prove his innocence or that the CCL
computers and servers were in the possession or control of someone other than
Greenberg.” Gov’t Br. 8. At the conclusion of the negotiations, Berland
thanked the AUSA for “extraordinary” generosity with her time “over the past
couple of months” during which these negotiations occurred. Gov’t App’x 36.
II. Procedural History
On April 26, 2012, the Government filed a three‐count indictment against
Greenberg and about one month later provided him with its initial discovery
letter, which indicated that “[t]he replica of hard drives seized by the Federal
Trade Commission [was] being stored” and was “available for copy.” Letter
Regarding Discovery at 8, United States v. Greenberg, No. 12‐cr‐0301 (ADS)
14
(E.D.N.Y. May 30, 2012), ECF No. 27. After the Government filed the
Superseding Indictment in November 2012, Greenberg’s new lawyer, John
Wallenstein, requested an adjournment of the trial date so that he could obtain
certain records from Greenberg’s former attorneys in the FTC civil proceeding,
and so that he could review the CCL evidence copied by the FTC in June 2009
and the associated chain of custody logs. In May 2013, Wallenstein contacted
the AUSA to inquire about the original CCL computers and servers. The
Government responded that the FTC had left the original computers and servers
on CCL’s premises with Greenberg and Bruk and that it did not know where
they were currently located.
On June 13, 2013, after replacing Wallenstein, Greenberg filed a motion
seeking dismissal of the Superseding Indictment based on the Government’s
alleged spoliation of evidence.13 In a declaration, Greenberg admitted that he
had known, from June 2009, that the FTC had not captured all the CCL computer
and server data. Without discussing what had happened with the computers
and servers after the FTC’s attempt to image the data, he also declared that he
learned from Wallenstein in May 2013 that Wallenstein had inquired and been
Greenberg also filed a motion to dismiss the wire fraud counts of the
13
Superseding Indictment – Counts One through Eight – on May 24, 2013. The district
court denied this motion after hearing argument on November 1, 2013.
15
advised by the Government that the original computers and servers were not in
Washington, D.C., and that their whereabouts were unknown. Greenberg
argued that though he had saved some data to his personal computer, including
evidence of emails sent to customers, he could not introduce this evidence at trial
because he would not be able to establish chain of custody for these materials.
The district court denied the motion without an evidentiary hearing, concluding
that Greenberg had “failed to show bad faith on the part of the government” and
that this showing was “[v]ery important for a spoliation motion.” App’x 101‐02.
Trial commenced a few weeks later and spanned about three weeks. On
January 24, 2014, the jury convicted Greenberg on all thirteen counts of the
Superseding Indictment.14 On October 31, 2014, the district court sentenced
Greenberg principally to 84 months’ incarceration, three years’ supervised
release, and restitution in the sum of $1,125,022.58. On November 7, 2014, the
district court entered a corrected judgment of conviction and order of forfeiture.
This appeal followed.
The only evidence that Greenberg introduced in putting forth his defense at
14
trial was a set of bank records admitted pursuant to a stipulation.
16
DISCUSSION
This opinion addresses two of Greenberg’s claims on appeal: (1) whether
the Superseding Indictment should have been dismissed for spoliation of
material evidence (or, in the alternative, whether the district court should have
held an evidentiary hearing concerning the prosecution’s bad faith); and (2)
whether the Superseding Indictment fails to plead a legally cognizable wire
fraud scheme under 18 U.S.C. § 1343 because there is a lack of convergence
between the intended victims of the scheme and the parties deceived.
I
We first consider Greenberg’s argument that the Superseding Indictment
should have been dismissed based on spoliation of material evidence—CCL’s
computers and servers—or, in the alternative, that an evidentiary hearing should
have been held concerning the prosecution’s bad faith. We review for abuse of
discretion a district court’s decision whether to dismiss a case on the ground that
spoliation of evidence has deprived the defendant of a fair trial. See West v.
Goodyear Tire & Rubber Co., 167 F.3d 776, 779 (2d Cir. 1999). We will reject the
district court’s factual findings in support of its decision only if they are clearly
erroneous. See United States v. Rahman, 189 F.3d 88, 139 (2d Cir. 1999); see also
17
United States v. Morgenstern, 933 F.2d 1108, 1116 (2d Cir. 1991). Discerning no
error, much less an abuse of discretion, in the district court’s decision, we
conclude that Greenberg’s argument is without merit.
A criminal defendant moving for dismissal on the basis of spoliation of the
evidence must make a two‐pronged showing that the evidence possessed
exculpatory value “that was apparent before [it] was destroyed”and that it was
“of such a nature that the defendant would be unable to obtain comparable
evidence by other reasonably available means.” California v. Trombetta, 467 U.S.
479, 489 (1984); see also United States v. Rastelli, 870 F.2d 822, 833 (2d Cir. 1989).
In addition, while Brady v. Maryland, 373 U.S. 83 (1963), teaches that good or bad
faith is irrelevant when the Government suppresses or fails to disclose material
exculpatory evidence, when the Government has, instead, failed to preserve
evidentiary material that is “potentially useful,” such failure “does not violate
due process ‘unless a criminal defendant can show bad faith’” on the part of the
Government. Illinois v. Fisher, 540 U.S. 544, 547‐48 (2004) (quoting Arizona v.
Youngblood, 488 U.S. 51, 58 (1988)). Failure to satisfy any of these requirements,
including a failure to show the Government’s bad faith, is fatal to a defendant’s
spoliation motion. See Rastelli, 870 F.2d at 833; see also United States v. U.S.
18
Currency in the Amount of $228,536.00, 895 F.2d 908, 917 (2d Cir. 1990) (noting that
“unless a defendant can show bad faith . . . destruction of potentially useful
evidence is not a denial of due process”).
At the outset, it is doubtful that Greenberg’s moving papers even raised a
due process issue regarding the failure to preserve evidence. As we have said
in the past, “the record must first show that evidence has been lost and that this
loss is ‘chargeable to the State.’” Rahman, 189 F.3d at 139 (quoting Colon v.
Kuhlmann, 865 F.2d 29, 30 (2d Cir. 1988)). The FTC, in its civil investigation,
sought to image the computer hard drives. These images were deficient and
incomplete in various ways—a fact that Greenberg admits to knowing at the time
and that was also disclosed to the defense during discovery. Greenberg now
complains that the FTC acted negligently in imaging the drives. Even assuming
such negligence, however, at the time of the civil investigation only the FTC was
involved and Greenberg points to no evidence that a criminal indictment was
directly contemplated. See Rahman, 189 F.3d at 139‐40 (holding that the loss of
recordings made without the awareness of the criminal investigators could not
be charged to the prosecution). And while he asserts in his opening brief that
“the prosecution team was equally culpable for failing to take adequate steps to
19
collect the original computers and servers,” Greenberg Br. 42, Greenberg points
to no facts consistent with this assertion and does not provide substantive
support for his argument that the failure to collect evidence could ground a due
process claim in circumstances analogous to those here.
Setting this problem aside, Greenberg’s argument still fails. We may
assume arguendo that the missing computer data satisfied Trombetta’s
two‐pronged test: that the data that the FTC did not image in June 2009 was
potentially useful to the defense and that Greenberg was unable to obtain
comparable evidence by reasonably available means. Greenberg’s argument on
appeal is nevertheless without merit because, as the district court concluded, the
record is devoid of evidence that the Government acted in bad faith in failing to
preserve the data. See United States v. Pirre, 927 F.2d 694, 697 (2d Cir. 1991)
(noting that even assuming unpreserved evidence “might have been potentially
useful” to the defense, “absent bad faith there is no violation”); Rastelli, 870 F.2d
at 833 (noting that where “record is barren of proof that the government lost the
evidence in bad faith,” “[o]n this ground alone, the missing‐evidence claim must
fail”).
20
Greenberg’s arguments to the contrary do not point to ways in which he
can overcome this evidentiary gap. He contends, first, that “‘bad faith’ in the
context of a spoliation motion can be established short of the intentional
destruction of documents” by mere “carelessness in preserving documents of
obvious relevance and importance.” Greenberg Br. 41. But this argument
(even assuming that Greenberg could point to facts in support of it) is foreclosed
by Youngblood, where the Supreme Court held that the loss of semen samples that
were of obvious potential use to the defense did not deprive the defendant of
due process where this loss by police could “at worst be described as negligent.”
488 U.S. at 58; see also Fisher, 540 U.S. at 548 (holding that the mere fact that
destroyed evidence was at the time sought in a pending discovery request did
not “eliminate[] the necessity of showing bad faith on the part of police”).15
Greenberg next attempts, in passing, to bolster his allegation of bad faith
with the claim that the information the FTC was unable to image was materially
15 Greenberg relies on our decision in United States v. Grammatikos to argue that
the appropriateness of sanctions for the failure to preserve evidence depends on a
case‐by‐case assessment of the Government’s “culpability for the loss, together with a
realistic appraisal of its significance when viewed in light of its nature, its bearing upon
critical issues in the case and the strength of the government’s untainted proof.” 633
F.2d 1013, 1020 (2d Cir. 1980). Grammatikos, however, was decided before Youngblood
and must be read in light of this subsequent Supreme Court precedent. Further,
Greenberg fails to articulate how the Grammatikos test would be applied in the present
case or to highlight facts that would support an alternate analysis.
21
exculpatory, not simply of potential use in his defense. Greenberg Reply Br. 16.
The “presence or absence of bad faith,” however, as the Supreme Court noted in
Youngblood, “necessarily turn[s] on the police’s knowledge of the exculpatory
value of the evidence at the time it was lost or destroyed.” 488 U.S. at 56 n.*.
Suffice it to say here, moreover, that Greenberg offers no facts in support of his
conclusion that the evidence was materially exculpatory, much less that the
Government could have known this information. Greenberg relies heavily on
the district court’s observation, before trial, that while Greenberg’s motion to
dismiss the indictment was properly denied for failure to show bad faith,
Greenberg satisfied Trombetta’s two prongs by showing that the missing
computer data had exculpatory value and that he could not obtain comparable
evidence through other reasonably available means. The district court,
however, did not conclude that the missing data was materially exculpatory, as
opposed to potentially useful. After hearing the evidence at trial, moreover, the
court observed, in denying Greenberg’s request for an adverse inference
instruction regarding this missing evidence, that “[t]he evidence in this trial, the
overwhelming evidence, is that the computers and servers would show evidence
22
contrary, against, the interests of the defendant.” App’x 576 (emphasis added).
We see no reason to disagree.
In sum, “the record is barren of proof that the government [failed to
preserve] the evidence in bad faith.” Rastelli, 870 F.2d at 833‐34. As the district
court noted, the record instead reveals, at most, that the FTC in a civil action had
access to computer data that was not successfully imaged on the first attempt
and that a complete image was never thereafter obtained by criminal
investigators. None of this suggests bad faith and thus, as the district court
concluded, there is no merit to Greenberg’s argument that he was denied a fair
trial. We discern no error in this conclusion, nor in the district court’s related
determination not to hold an evidentiary hearing on the issue. See United States
v. Binday, 804 F.3d 558, 593 (2d Cir. 2015) (noting that a district court’s denial of
evidentiary hearing is reviewed for abuse of discretion).
II
Greenberg next contends that the district court erred in denying his
motion to dismiss the wire fraud counts in the Superseding Indictment, Counts
One through Eight, because they failed to articulate a legally cognizable wire
fraud scheme. Specifically, Greenberg advances the “convergence theory” of
23
wire fraud, which, he argues, requires the party defrauded and the party injured
to be one and the same. Here, Greenberg argues that because the Superseding
Indictment alleged that he “lied not to the customers, but to the issuing banks
and credit card processors when they confronted him with disputed charges,”
there was a “lack of convergence between the intended victim of the scheme and
the party deceived.” Greenberg Br. 44. We review de novo a district court’s
denial of a motion to dismiss charges in an indictment. United States v. Yousef,
327 F.3d 56, 137 (2d Cir. 2003).
The federal mail and wire fraud statutes penalize using the mails or a wire
communication to execute “any scheme or artifice to defraud, or for obtaining
money or property by means of false or fraudulent pretenses, representations, or
promises.” 18 U.S.C. §§ 1341, 1343. Thus, the “essential elements” of the crime
are “(1) a scheme to defraud, (2) money or property as the object of the scheme,
and (3) use of the mails or wires to further the scheme.” Binday, 804 F.3d at 569
(quoting Fountain v. United States, 357 F.3d 250, 255 (2d Cir. 2004)); see also United
States v. Autuori, 212 F.3d 105, 115 (2d Cir. 2000). As we have recently reiterated,
“[t]he gravamen of the offense is the scheme to defraud.” United States ex rel.
OʹDonnell v. Countrywide Home Loans, Inc., 822 F.3d 650, 657 (2d Cir. 2016) (quoting
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Bridge v. Phoenix Bond & Indem. Co., 553 U.S. 639, 647 (2008)); cf. Binday, 804 F.3d at
569 (“’Because the mail fraud and the wire fraud statutes use the same relevant
language, we analyze them the same way.’” (quoting United States v. Schwartz, 924
F.2d 410, 416 (2d Cir. 1991))).
To that end, the wire fraud statute requires the Government to show proof
of a “scheme or artifice to defraud,” 18 U.S.C. § 1343, “which itself demands a
showing that the defendant possessed a fraudulent intent,” but the Government
need not prove “that the victims of the fraud were actually injured,” but only “that
defendants contemplated some actual harm or injury to their victims.” United
States v. Novak, 443 F.3d 150, 156 (2d Cir. 2006) (quoting United States v. Starr, 816
F.2d 94, 98 (2d Cir. 1987)); see also Neder v. United States, 527 U.S. 1, 25 (1999)
(noting that these fraud statutes “prohibit[] the ‘scheme to defraud,’ rather than
the completed fraud”). Nothing in these statutory texts, moreover, suggests that
the scheme to defraud must involve the deception of the same person or entity
whose money or property is the object of the scheme. To the contrary, we agree
with the First Circuit that the statutory language in both the mail and wire fraud
statutes “is broad enough to include a wide variety of deceptions intended to
deprive another of money or property” and “[w]e see no reason to read into the
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statutes an invariable requirement that the person deceived be the same person
deprived of the money or property by the fraud.” United States v. Christopher, 142
F.3d 46, 54 (1st Cir. 1998).
We have never read the wire and mail fraud statutes as limited to schemes
in which the party whose money or property is the object of the scheme is the
same party whom a fraudster seeks to deceive. Indeed, we have declined
opportunities to do so. See Ideal Steel Supply Corp. v. Anza, 373 F.3d 251, 263 (2d
Cir. 2004), revʹd in part, vacated in part on other grounds, 547 U.S. 451 (2006); United
States v. Eisen, 974 F.2d 246, 253 (2d Cir. 1992). Greenberg marshals only two
Second Circuit cases in support of his argument: United States v. Evans, 844 F.2d 36
(2d Cir. 1988), and United States v. Covino, 837 F.2d 65 (2d Cir. 1988). In Evans,
however, although we observed that it “seems logical that the deceived party
must lose some money or property,” 844 F.2d at 39, we specifically declined to
adopt that proposition as an element of wire fraud. Id. at 40 (“[T]he case before
us today does not require us to decide this general question.”); see also Anza, 373
F.3d at 262‐63 (discussing, among other cases, Evans, and explaining that
although such cases discussed the convergence theory, “[t]his Court has not held
that the civil‐RICO plaintiff who alleges mail fraud or wire fraud must have been
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the entity that relied on the fraud”); United States v. Novod, 923 F.2d 970, 974 (2d
Cir. 1991), on reh’g, 927 F.2d 726 (2d Cir. 1991) (“Evans contended in part that the
property must belong to the deceived party . . . . We did not reach this
question . . . .”). And Greenberg’s reliance on Covino is likewise inapposite, as
the language he cites was in consideration of a wholly different issue—namely,
whether the withholding of material information concerning breach of a
fiduciary duty amounted to a deprivation of property under the statute. See id.,
837 F.2d at 71‐72.
Thus, in this case we join at least four sister circuits and make clear that we
reject the requirement of convergence urged by Greenberg: wire fraud does not
require convergence between the parties intended to be deceived and those
whose property is sought in a fraudulent scheme. 16 Because the wire fraud
16 We join the First, Fifth, Seventh, and Eighth Circuits. See United States v.
Seidling, 737 F.3d 1155, 1161 (7th Cir. 2013) (“[T]his Court does not interpret the mail
fraud statute as requiring convergence between the misrepresentations and the
defrauded victims.”); United States v. McMillan, 600 F.3d 434, 450 (5th Cir. 2010)
(concluding that “[t]he Government was not required to prove that misrepresentations
were made directly to any of the victims” in pursuing a mail fraud conviction where
defendants filed false financial reports with the state department of insurance resulting
in risk and financial loss to policyholders); Christopher, 142 F.3d at 54 (upholding the
wire fraud conviction of a defendant that deceived state insurance regulators, but that
resulted in financial losses of policyholders, because it could find “no reason to read into
the [mail and wire] statutes an invariable requirement that the person deceived be the
same person deprived of the money or property by the fraud”); United States v. Blumeyer,
114 F.3d 758, 768 (8th Cir. 1997) (concluding that “a defendant who makes false
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statute does not impose a convergence requirement, the district court did not err
in denying Greenberg’s motion to dismiss the wire fraud counts in the
Superseding Indictment for failure to plead a legally cognizable scheme. That
the Superseding Indictment alleges that Greenberg’s misrepresentations were
directed at acquiring banks and others, but that the credit card holders were the
intended victims of the scheme, is irrelevant.17 We reject Greenberg’s argument
to the contrary.
CONCLUSION
For the foregoing reasons, and for those stated in the summary order that
accompanies this decision, we AFFIRM the judgment of conviction.
representations to a regulatory agency in order to forestall regulatory action that
threatens to impede the defendant’s scheme to obtain money or property from others is
guilty [of violating the mail fraud statute]” even though it was the policyholders who
incurred the financial losses).
17 The government also argues that, even if we were to adopt a convergence
requirement, the Superseding Indictment, contrary to Greenberg’s claims, sufficiently
alleged such convergence. However, we have no need to address this contention in
light of our holding today.
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