United States Court of Appeals
For the First Circuit
Nos. 12-1857
12-1865
12-1890
12-2029
13-1385
UNITED STATES OF AMERICA,
Appellee,
v.
CESAR BERROA; JULIO CASTRO; GERALDO CASTRO;
RAYSA PACHECO-MEDINA; and GLENDA DAVILA,
Defendants, Appellants.
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Carmen Consuelo Cerezo, U.S. District Judge]
Before
Howard, Chief Judge,
Selya and Lipez, Circuit Judges.
Raymond L. Sanchez Maceira for appellant Cesar Berroa.
Rosa I. Bonini-Laracuente for appellant Julio Castro.
Robert C. Andrews, with whom James M. Mason, Kathleen L.
Taylor, and Robert C. Andrews Esquire P.C. were on brief, for
appellant Geraldo Castro.
Raul S. Mariani Franco for appellant Raysa Pacheco-Medina.
David Shaughnessy for appellant Glenda Davila.
Tiffany V. Monrose, Assistant United States Attorney, with
whom Rosa Emilia Rodríguez-Vélez, United States Attorney, and
Nelson Pérez-Sosa, Assistant United States Attorney, Chief,
Appellate Division, were on brief, for appellee.
May 5, 2017
HOWARD, Chief Judge. These appeals arise out of a
widespread corruption scandal at the Puerto Rico Board of Medical
Examiners (the "Board"), the former licensing authority for
doctors seeking to practice in Puerto Rico. Cesar Berroa, Julio
Castro, Geraldo Castro, Raysa Pacheco-Medina, and Glenda Davila
all sought medical licenses but failed to pass the required exams.
Undeterred, they attempted to gain certification by obtaining
falsified scores. A federal indictment and subsequent jury trial
led to convictions on various charges against each defendant.
The appeals raise a litany of claims, and "[a]fter
carefully considering each of the defendants' contentions and
extensively reviewing the record," we address only those claims
that are "worthy of discussion; the remainder lack arguable merit."
United States v. Rose, 802 F.3d 114, 117 (1st Cir. 2015).1
We affirm the defendants' convictions for honest-
services mail fraud conspiracy, but reverse the convictions for
money or property mail fraud and aggravated identity theft, finding
the government's theories of prosecution on those counts to be
legally deficient.
1 We reject as meritless (1) Davila's argument that she was
entitled to receive daily transcripts under the Criminal Justice
Act because, even assuming such an entitlement, she fails to
develop any claim of prejudice, see United States v. Bari, 750
F.2d 1169, 1182 (2d Cir. 1984); and (2) Julio Castro's contention
that a mistrial was required because the court accidentally read
a sidebar conversation to the jury reflecting the date of the exam
he failed (a fact which was already in evidence).
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I. Facts
All five defendants sought admission to practice
medicine in Puerto Rico. The admissions process required
applicants to pass a pair of gatekeeping tests: a basic exam and
a clinical written exam. Applicants who achieved a minimum score
of 700 on each of the two tests would then move on to a practical
skills exam. Upon passage of the practical skills exam and
completion of the remaining requirements, the Board would issue a
regular medical license.
The government presented evidence that each of the
defendants failed to achieve the required 700 score on at least
one of the gatekeeping exams. As a result, they turned to Yolanda
Rodríguez, an employee at the Board who had access to applicant
files and the ability to create fraudulent score results. The
process was decidedly low-tech: Rodríguez used a photocopier to
superimpose passing scores of other applicants onto the failing
students' exam sheets. She then placed the falsified exam sheets
back into the applicants' files. The trial evidence supported a
finding that each of the defendants' files contained a passing
score sheet falsified by Rodríguez. Armed with passing scores,
the previously unsuccessful applicants completed the remaining
requirements and entered practice as medical doctors in Puerto
Rico.
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On April 20, 2010, a federal grand jury handed up an
omnibus 138-count superseding indictment against the five
defendants who have brought these appeals and a myriad of other
applicants.2 All five defendants were indicted for conspiracy to
commit honest-services mail fraud, money or property mail fraud,
and aggravated identity theft. The government proceeded on
consistent underlying theories for all of the defendants: (1)
that they joined in a conspiracy to commit honest-services mail
fraud in obtaining their medical licenses; (2) that they committed
mail fraud by using the resulting licenses to practice medicine
for financial gain; and (3) that they committed aggravated identity
theft by issuing prescriptions to patients.
After trial, the jury convicted3 the defendants as
follows:
Berroa: mail fraud, honest-services mail
fraud conspiracy, and aggravated identity
theft;
Julio Castro: mail fraud and honest-services
mail fraud conspiracy;
Geraldo Castro: mail fraud and aggravated
identity theft;
Pacheco: honest-services mail fraud
conspiracy; and
2The district court separated the applicants into various
groupings for trial.
3 The jury acquitted a sixth defendant of all charges.
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Davila: honest-services mail fraud
conspiracy.
II. Sufficiency of the Evidence
The defendants now attack the sufficiency of the
evidence supporting their various convictions. These preserved
challenges garner de novo review. United States v. Ridolfi, 768
F.3d 57, 61 (1st Cir. 2014). "Applying a familiar standard, we
consider whether any rational factfinder could have found that the
evidence presented at trial, together with all reasonable
inferences, viewed in the light most favorable to the government,
established each element of the particular offense beyond a
reasonable doubt." Id. (citation omitted).
A. Money or Property Mail Fraud
Berroa, Julio Castro, and Geraldo Castro appeal their
convictions for mail fraud in violation of 18 U.S.C. § 1341. This
provision proscribes use of the mails in furtherance of "any scheme
or artifice to defraud, or for obtaining money or property by means
of false or fraudulent pretenses." Because we find insufficient
evidence to support the conclusion that the defendants obtained
money or property "by means of" their alleged fraud, we reverse
these convictions.
The Supreme Court has squarely held that the mail fraud
statute is "limited in scope to the protection of property rights."
McNally v. United States, 483 U.S. 350, 360 (1987). Before this
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ruling, the statute had been used to prosecute "various forms of
corruption that deprived victims of 'intangible rights' unrelated
to money or property." Cleveland v. United States, 531 U.S. 12,
18 (2000). McNally expressly curtailed this use of § 1341.
Congress later passed a new statute, 18 U.S.C. § 1346, designed to
cover one of the intangible rights recognized in the pre-McNally
caselaw, namely, "the intangible right of honest services."
Cleveland, 531 U.S. at 19-20 (quoting 18 U.S.C. § 1346). Here,
the relevant counts of the indictment allege a scheme to deprive
the victims of money or property. Accordingly, we restrict our
inquiry to § 1341 for the time being.
The Supreme Court has broadly and unequivocally
instructed that "[s]tate and municipal licenses" generally "do not
rank as 'property,'" sufficient to support a conviction under
§ 1341. Id. at 15. In Cleveland, the defendants were alleged to
have made false statements in applications for state gaming
licenses. The Court began its analysis by explaining that any
interest the state had in the licenses was "regulatory," as opposed
to proprietary, in nature. Id. at 20. It noted the government's
concession that many other state licenses, including "medical
licenses," are "purely regulatory." Id. at 22. But the Court did
not rest solely on the fact that the government's theory of
prosecution "stray[ed] from traditional concepts of property."
Id. at 24. Rather, it went on to note that the government's
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preferred reading of the statute would result in "a sweeping
expansion of federal criminal jurisdiction in the absence of a
clear statement by Congress." Id. Indeed, "[e]quating issuance
of licenses . . . with deprivation of property would subject to
federal mail fraud prosecution a wide range of conduct
traditionally regulated by state and local authorities." Id. In
short, Cleveland squarely precluded the government from seeking
mail fraud convictions on the theory that the defendants defrauded
the Board out of some property interest in the medical licenses.
Presumably cognizant of this restriction, the government
charged a scheme to "depriv[e] unsuspecting consumers of health
care services, health care benefit programs and health care
providers, of property and money through the defendant[s']
knowing[] use of [their] fraudulently obtained medical
license[s]." More specifically, the defendants allegedly used
their fraudulent licenses to obtain payment for medical services
and issue prescriptions. They continued to write prescriptions at
least until about two to three years after receiving their
licenses.
In its effort to circumvent Cleveland, the government
runs headlong into another Supreme Court precedent. Loughrin v.
United States, 134 S. Ct. 2384 (2014), involved a prosecution under
the bank fraud statute, which prohibits schemes to obtain bank
property "by means of false or fraudulent pretenses." 18 U.S.C.
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§ 1344(2). The Court described the statute's "by means of"
language, also present in § 1341, as a "textual limitation" on its
scope. Loughrin, 134 S. Ct. at 2393. This limitation assuaged
federalism concerns about infringing on state criminal
jurisdiction. Id. at 2392-93. The Court explained that "by means
of" "typically indicates that the given result (the 'end') is
achieved, at least in part, through the specified action,
instrument, or method (the 'means'), such that the connection
between the two is something more than oblique, indirect, and
incidental." Id. at 2393 (citing Webster's Third New International
Dictionary 1399 (2002); 9 Oxford English Dictionary 516 (2d ed.
1989)). Accordingly, "not every but-for cause will do." Id.
Rather, the "by means of" language requires that the defendant's
fraud be "the mechanism naturally inducing a bank . . . to part
with money."4 Id. Here, the defendants' alleged fraud in obtaining
4 We are puzzled by the dissent's intimation that this
requirement does not relate to causation. See Merriam-Webster's
Collegiate Dictionary (10th ed. 2001) (defining "induce" as
"effect, cause"). Indeed, as the Loughrin Court explained, "[t]he
'by means of' phrase calls for an inquiry into the directness of
the relationship between means and ends." 134 S. Ct. at 2394 n.8.
We are confident in courts' ability to engage in this
analysis, which evokes the familiar concept of proximate
causation. See Holmes v. Sec. Investor Prot. Corp., 503 U.S. 258,
268 (1992) (explaining that this doctrine has traditionally
required "some direct relation between the injury asserted and the
injurious conduct alleged"). Of course, Loughrin's "naturally
inducing" test, much like proximate causation, is "flexible" and
"does not lend itself to a black-letter rule that will dictate the
result in every case." Bridge v. Phoenix Bond & Indem. Co., 553
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their medical licenses cannot be said to have "naturally induc[ed]"
healthcare consumers to part with their money years later.
The government correctly points out that Loughrin
interpreted the bank fraud statute, while this case involves the
separate prohibition on mail fraud. But, for aught that appears,
this is a distinction without a difference. To be sure, these two
provisions are not identical. See id. at 2391 (holding that the
bank fraud statute, unlike the mail fraud statute, may be violated
in two distinct ways). The government, however, offers no
explanation at all for why the same "by means of" language should
be read differently in these two contexts. See Smith v. City of
Jackson, 544 U.S. 228, 233 (2005) ("[W]hen Congress uses the same
language in two statutes having similar purposes, . . . it is
appropriate to presume that Congress intended that text to have
the same meaning in both statutes."). In fact, to the contrary,
the very same federalism concerns underlying this "textual
limitation" in the bank fraud statute are equally applicable to
mail fraud. See Cleveland, 531 U.S. at 24 (noting resistance to
reading which would effect "a sweeping expansion of federal
criminal jurisdiction in the absence of a clear statement by
Congress"). Indeed, the issuance of licenses and permits is
"traditionally regulated by state and local authorities." Id.
U.S. 639, 654 (2008) (citation omitted). For this reason, we limit
our holding to the facts of the present appeals.
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And medical licenses, much like the gaming licenses at issue in
Cleveland, almost invariably are sought and obtained in an effort
to realize some monetary profit. Accordingly, under the
government's theory, virtually any false statement in an
application for a medical license could constitute a federal crime.
Such a broad reading of the statute would impermissibly infringe
on the states' "distinctively sovereign authority to impose
criminal penalties for violations of" licensing schemes,
"including making false statements in a license application." Id.
at 23. Just as in Loughrin, the phrase "by means of" serves as a
textual limitation preventing such a usurpation of state criminal
jurisdiction.
Our dissenting colleague disagrees, suggesting that
Loughrin's reading of "by means of" in the context of the bank
fraud statute should not inform our interpretation of the identical
language in § 1341. But, as the dissent readily concedes, the
bank fraud statute was expressly "modeled on" the pre-existing
prohibition on mail fraud. S. Rep. No. 98-225, at 378 (1983),
reprinted in 1984 U.S.C.C.A.N. 3182, 3519. Both provisions
"proscribe[] the conduct of executing or attempting to execute 'a
scheme or artifice to defraud' or to take the property of another
'by means of false or fraudulent pretenses, representations, or
promises.'" Id. (emphasis added). Perhaps unsurprisingly in light
of this legislative history, other circuits have consistently
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applied precedents construing § 1341 to the bank fraud statute.
See, e.g., United States v. Saks, 964 F.2d 1514, 1520 (5th Cir.
1992) ("It is well settled that Congress modelled § 1344 on the
mail and wire fraud statutes, and that the usual practice is to
look to precedents under those statutes to determine its scope and
proper interpretation."); United States v. Young, 952 F.2d 1252,
1255 (10th Cir. 1991) (noting that the two statutes contain
"virtually the same language"); United States v. Mason, 902 F.2d
1434, 1441 (9th Cir. 1990) ("[T]he bank fraud statute directly
tracks or is parallel to the mail and wire fraud statutes."),
abrogated on other grounds by Dixon v. United States, 548 U.S. 1
(2006).
The dissent rejects this longstanding consensus,
reasoning that, while the mail fraud and bank fraud statutes employ
"equivalent language," the lack of "contemporaneous drafting"
undermines any presumption that Congress intended the phrase "by
means of" to have a similar meaning in both contexts. But we have
never imposed any requirement of "contemporaneous drafting" to
give rise to a presumption of similar meaning where two statutes
employ identical language and one is expressly modeled on the
other. We have, for example, held that the wire fraud statute
should be construed according to our mail fraud precedents. See
United States v. Fermin Castillo, 829 F.2d 1194, 1198 (1st Cir.
1987). We reached this result despite recognizing that the mail
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fraud statute was significantly "older" than its wire fraud
counterpart. Id. Indeed, the substance of the federal prohibition
on mail fraud has been in place since 1909. See Act of Mar. 4,
1909, ch. 321, § 215, 35 Stat. 1088, 1130-31; see also Jed S.
Rakoff, The Federal Mail Fraud Statute (Part I), 18 Duq. L. Rev.
771, 821 n.225 (1980) (characterizing post-1909 amendments as
"chiefly designed to remove 'surplus' language from the statute").
The wire fraud statute was not enacted until more than four decades
later. See Communications Act Amendments, 1952, ch. 879, § 18(a),
66 Stat. 711, 722. In Fermin Castillo, rather than treating
chronology as dispositive, we noted that the wire fraud statute
"tracks" the language of § 1341. 829 F.2d at 1198. We also cited
legislative history indicating that the former provision was
"patterned on" the latter. Id. Each of these considerations
applies equally to the bank fraud statute.5
5
Of course, we do not mean to imply that courts have always
interpreted the mail fraud and bank fraud statutes identically.
In Loughrin, for example, the Supreme Court was not swayed by the
defendant's "counterintuitive argument" that the two separate
subsections of the bank fraud statute, set apart by a disjunctive
"or," did not have any "independent meaning." 134 S. Ct. at 2390.
The defendant's contention on this point was based on McNally's
construction of the mail fraud statute. The Court rejected this
argument, citing several relevant "textual differences" between
the mail fraud and bank fraud prohibitions. Id. at 2391. "The
mail fraud law contains two phrases strung together in a single,
unbroken sentence. By contrast, § 1344's two clauses have separate
numbers, line breaks before, between, and after them, and
equivalent indentation—thus placing the clauses visually on an
equal footing and indicating that they have separate meanings."
Id. Here, unlike in Loughrin, the defendants' argument that "by
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The dissent next takes the position that the federalism
concerns underlying Loughrin are not transferrable to the mail
fraud context. We disagree. Of course, the mail fraud and bank
fraud statutes are predicated on different jurisdictional bases,
but that does not mean that the scope of the former provision is
unlimited. Indeed, the Supreme Court has expressly recognized
that § 1341 "does not purport to reach all frauds." Schmuck v.
United States, 489 U.S. 705, 710 (1989) (citation omitted).
Rather, it targets "only those limited instances in which the use
of the mails is a part of the execution of the fraud." Id.
(citation omitted). The mail fraud statute also requires that the
fraudulent scheme seek to obtain money or property. See Cleveland,
531 U.S. at 18; McNally, 483 U.S. at 360.
means of" requires a direct causal connection is far from
counterintuitive. And the relevant language is identical in both
statutes.
We are similarly unmoved by the dissent's invocation of the
"chronological problem" that the Loughrin Court identified in the
defendant's reliance on McNally. Id. The Court did not reject
the McNally argument merely because that case was decided after
Congress's passage of the bank fraud statute. Indeed, by that
logic, we would be unable to rely on mail fraud precedents decided
after 1952 to interpret the wire fraud statute. See Fermin
Castillo, 829 F.2d at 1198-99. Rather, the chronological problem
in Loughrin was unique: not only had McNally not yet been decided
when the bank fraud statute was enacted, but, "at that time, every
Court of Appeals to have addressed the issue" had reached the
opposite result. Loughrin, 134 S. Ct. at 2391. In these unique
circumstances, Congress "could hardly have predicted that McNally
would overturn the lower courts' uniform reading." Id.
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Adoption of the dissent's preferred construction of "by
means of" would work "a sweeping expansion of federal criminal
jurisdiction." Loughrin, 134 S. Ct. at 2392 (quoting Cleveland,
531 U.S. at 24). The present appeals provide a case in point.
The government's mail fraud allegations are entirely predicated
upon the falsification of test scores. With these falsified scores
in hand, and after completing certain other requirements, the
defendants received medical licenses. The Board mailed letters
indicating that the licenses were ready for pick-up. Under
Cleveland, the defendants had not yet committed mail fraud. The
government, however, contends that the mail fraud charges are
salvaged by evidence that, in the ensuing years after becoming
licensed, the defendants practiced medicine for profit. The
government points to no additional instances of fraudulent
conduct, instead falling back on the defendants' "use of [their]
fraudulently obtained medical license[s]." Endorsing such a
prosecution theory would extend the scope of federal jurisdiction
to cover cases where the underlying fraudulent scheme, and the
mailing in furtherance thereof, is far removed from any money or
property. The Loughrin Court's citation to Cleveland in discussing
these federalism concerns makes clear that they remain relevant in
the mail fraud context.
The dissent relies in large part on a string of cases
refusing to read a so-called "convergence" requirement into the
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mail fraud statute. But this is a distinct issue from the causal
nexus required under Loughrin. Our decision in United States v.
Christopher, 142 F.3d 46 (1st Cir. 1998), illustrates the point.
In that case, the defendant argued that, in order to constitute
wire fraud, the alleged scheme had to "deceive the same person
whom it deprive[d] of money or property." Id. at 52-53. We
rejected this reading of the statute in Christopher, and we impose
no such requirement in these appeals. Rather, our reversal of the
money or property mail fraud convictions is based on the lack of
a sufficiently direct causal nexus to satisfy Loughrin. In
Christopher, after disposing of the convergence argument, we
proceeded to address the separate issue of causation. See id. at
54; see also United States v. Frost, 125 F.3d 346, 360 (6th Cir.
1997) ("[E]ven the cases which have held that convictions may rest
upon the deceit of a person other than the ultimate victim
contemplated that the deception was causally related to the scheme
to obtain property from the victim."). In that case, we found
"the causal connection between the deception and the loss of
property" to be "obvious." Christopher, 142 F.3d at 54. This
characterization was justified by the facts of the case at hand,
which were very different from those at issue here. The defendant
was convicted for making misrepresentations to insurance
regulators in connection with his acquisition of two companies.
More specifically, he assured regulators "that the collateral
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liens would be paid off by the time of closing, and that assets of
the acquired companies would not be used for the purchase." Id.
at 49. But, after closing, the acquired companies "loaned" money
to satisfy the liens. Id. Similarly, cash belonging to one
company was used to pay its purchaser. Id. The wire fraud charges
were predicated on these two categories of payments. See id. at
50-51. Thus, the transfers through which the defendant realized
the required monetary benefit directly contradicted his prior
statements to regulators. In the parlance of Loughrin, the
defendant's lies "naturally induc[ed]" the resulting benefit. 134
S. Ct. at 2393. As discussed above, the causal connection is much
more attenuated in the present case. The other precedents cited
by the dissent on this point, like Christopher, deal primarily
with the convergence issue, not the required causal connection
between the fraud and the obtainment of money or property. In any
event, to the extent that these out-of-circuit decisions could be
read to be inconsistent with Loughrin, we are bound to follow the
standard imposed by the Supreme Court.6
Contrary to the dissent's suggestion, Loughrin's
interpretation of "by means of" did not impose a convergence
6 Only one of the cases relied upon by the dissent was decided
after Loughrin. See United States v. Greenberg, 835 F.3d 295 (2d
Cir. 2016). Greenberg, citing Christopher, simply held that "the
wire fraud statute does not impose a convergence requirement."
Id. at 307. It did not purport to interpret the phrase "by means
of," nor did it so much as mention Loughrin.
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requirement like the one we rejected in Christopher. Indeed, the
Court expressly recognized the possibility of bank fraud
convictions in cases where the fraud never actually reaches a bank.
It explained that "the clause covers property 'owned by' the bank
but in someone else's custody and control . . . ; thus, a person
violates § 1344(2)'s plain text by deceiving a non-bank custodian
into giving up bank property that it holds." Loughrin, 134 S. Ct.
at 2389. To be sure, the Loughrin Court ultimately held that, in
the specific context of bank fraud, "by means of" requires a "false
statement [that] will naturally reach [a federally insured] bank
(or a custodian of the bank's property)." Id. at 2394 n.8. But,
in contending that our application of Loughrin to § 1341 imposes
a convergence requirement, the dissent overlooks its own warning
that "what relationships count as close enough to satisfy the
phrase 'by means of' will depend almost entirely on context." Id.
Generally speaking, "by means of" requires "an inquiry into the
directness of the relationship between means and ends." Id. In
its initial discussion of the phrase, the Loughrin Court relied
upon dictionary definitions. After citing these generally
applicable sources of meaning, the Court concluded that, in order
to satisfy the bank fraud statute, the false statement must be
"the mechanism naturally inducing a bank (or custodian of bank
property) to part with money in its control." Id. at 2393. It is
the specification that the fraud target bank property, not the
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widely applicable "naturally inducing" standard, that makes
context relevant. The Court's rejection of the "Little Bobby"
hypothetical posited by Justice Scalia illustrates the point. In
the hypothetical, "Bobbly falsely tells his mother that he got an
A on his weekly spelling test and so deserves an extra cookie after
dinner." Id. at 2396 (Scalia, J., concurring). Bobby's mother,
who will not be home for dinner, leaves a note for Bobby's father
indicating that Bobby should get an extra cookie. According to
Justice Scalia, when Bobby receives his cookie, he has done so "by
means of the fib to his mother." Id. We agree that, in these
circumstances, Bobby's false statement "naturally induc[ed]" his
father to give him an extra cookie. And the Loughrin majority did
not dispute the point. Rather, it responded by citing the
importance of context and concluded that, in the bank fraud
statute, "by means of" is "best read" to include only those frauds
in which the false statement will reach a bank, either directly or
indirectly. Id. at 2394 n.8. Of course, this specific application
could not possibly apply to all uses of the phrase "by means of."
In light of the above analysis, there was insufficient
evidence to support the defendants' convictions for money or
property mail fraud. Because we find the government's theory
legally deficient, we must reverse these convictions.
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B. Honest-Services Mail Fraud Conspiracy
The government also charged the defendants with
conspiracy to commit honest-services mail fraud. See 18 U.S.C. §§
371, 1341, 1346. The four defendants convicted on these counts
now appeal. Because we find sufficient evidence to support the
convictions, we affirm.
At its core, a conspiracy is "an agreement between two
or more persons to accomplish an unlawful purpose." United States
v. Dellosantos, 649 F.3d 109, 115 (1st Cir. 2011). A conviction
for general conspiracy, 18 U.S.C. § 371, "requires proof that the
defendant agreed to commit an unlawful act and voluntarily
participated in the conspiracy, and that an overt act was committed
in furtherance of the conspiracy." United States v. McDonough,
727 F.3d 143, 156 (1st Cir. 2013). While we have described the
presence of an agreement as the "sine qua non of a conspiracy,"
Dellosantos, 649 F.3d at 115, "[t]he agreement itself need not be
express, but may consist of no more than a tacit understanding,"
United States v. Echeverri, 982 F.2d 675, 679 (1st Cir. 1993)
(citation omitted). And to meet its burden, "[t]he government
need not show that each conspirator knew of or had contact with
all other members. Nor need it show that the conspirators knew
all of the details of the conspiracy or participated in every act
in furtherance of the conspiracy." United States v. Soto-Beníquez,
356 F.3d 1, 19 (1st Cir. 2003).
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Here, the government charged a conspiracy to commit
honest-services mail fraud, a specific type of mail fraud involving
a scheme "to deprive another of the intangible right of honest
services." 18 U.S.C. § 1346. The Supreme Court has held that
this statute only criminalizes schemes involving bribes or
kickbacks. Skilling v. United States, 561 U.S. 358, 412 (2010);
see also United States v. Urciuoli, 613 F.3d 11, 17 (1st Cir. 2010)
("[T]hose who bribe public officials take part in a scheme to
deprive the public of the honest services of those they attempt to
influence."). In the case at hand, the government specifically
alleged that the defendants conspired to deprive the Board of
Rodríguez's honest services.
The defendants' sufficiency of the evidence challenges
to the honest-services fraud convictions need not detain us long.
The trial evidence was sufficient for the jury to find the
following facts. Julio Castro, Pacheco, and Davila all failed at
least one of the required admissions exams. They later knowingly
provided something of value to Rodríguez (through an intermediary)
in exchange for falsified passing scores. Finally, use of the
mails (e.g., mailing of letters indicating that the licenses were
ready for pick-up) was a foreseeable element of the scheme. See,
e.g., United States v. Pimental, 380 F.3d 575, 589 (1st Cir. 2004)
(holding that a defendant need not personally mail anything, so
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long as the "'use of the mails' in the course of the scheme" is
"reasonably foreseeable" (collecting cases)).7
Pacheco argues that the alleged overt act, namely, the
act of physically receiving medical licenses from the Board, fell
outside the scope of the conspiracy. This argument fails because
"[a] conspiracy endures as long as the co-conspirators endeavor to
attain the 'central criminal purposes' of the conspiracy." United
States v. Upton, 559 F.3d 3, 10 (1st Cir. 2009) (quoting Grunewald
v. United States, 353 U.S. 391, 401 (1957)). The government
maintained throughout trial that the conspiratorial object of each
defendant was fraudulently to gain a medical license, not merely
to obtain a passing exam score. This is hardly a stretch, as a
passing score on the threshold tests alone has only incremental
value. We decline to overturn the jury's finding that Pacheco's
receipt of her medical license was an act within the scope and
timeframe of the conspiracy. See id. at 11 ("Determining the
contours of the conspiracy ordinarily is a factual matter entrusted
largely to the jury.").
7 Unlike the other defendants, Berroa was acquitted of the
conspiracy count related to his own exam but was convicted of
assisting another applicant, Evelyn Rodríguez ("Evelyn"), to
falsify her score. Evelyn testified that Berroa told her that he
knew someone who would be able to help her get a passing score and
went on to facilitate the introduction. Evelyn subsequently made
two payments totaling $1,300 in return for her passing score. This
evidence permitted the jury to conclude that Berroa was an active
participant in the conspiracy, not a mere passive bystander.
- 22 -
C. Aggravated Identity Theft
Berroa and Geraldo Castro also challenge their
convictions for aggravated identity theft. In order to meet its
burden on this charge, the government was required to show that
each defendant "knowingly transfer[red], possesse[d], or use[d],
without lawful authority, a means of identification of another
person" and did so "in relation" to one or more specified crimes,
including mail fraud. 18 U.S.C. § 1028A(a)(1), (c). The term
"means of identification" is defined broadly to include names.
Id. § 1028(d)(7). Where the necessary showing is made, "a term of
imprisonment of 2 years" is added to the punishment for the
underlying offense. Id. § 1028A(a)(1). In the present case,
because we find insufficient evidence that the defendants "used"
a means of identification within the meaning of the statute, we
reverse the identity theft convictions.
During the course of their medical practices (utilizing
fraudulently obtained licenses), both defendants issued
prescriptions that their patients would then fill at various
pharmacies in Puerto Rico. The government alleges that the use of
patient names and addresses on the prescriptions constituted use
without lawful authority of the identification of another person.
In support of this argument, the government focuses on
the absence of "lawful authority." We have held that this
statutory element does not "require that the means of
- 23 -
identification be stolen, or otherwise taken without permission of
the owner." United States v. Ozuna-Cabrera, 663 F.3d 496, 498
(1st Cir. 2011). In reaching this result, we drew a distinction
between the terms "authorized" and "lawful" to conclude that
"regardless of how the means of identification is actually
obtained, if its subsequent use breaks the law . . . it is violative
of § 1028A(a)(1)." Id. at 499. Here, the government reasons, the
patients' consent to the inclusion of their names in the
prescriptions is not dispositive. Such use was rendered unlawful
by the fact that the defendants' medical licenses were obtained by
fraud. Moreover, the patients could not provide knowing consent
because they were unaware of the underlying fraud. Ultimately, we
need not resolve these issues. The government's proof was
insufficient to satisfy the separate requirement that the
defendants knowingly "used" the patient information.
The Supreme Court has recognized that the word "use" is
fraught with "interpretational difficulties because of the
different meanings attributable to it." Bailey v. United States,
516 U.S. 137, 143 (1995), superseded by statute on other grounds,
18 U.S.C. § 924(c)(1). "Use" has been "variously defined as '[t]o
convert to one's service,' 'to employ,' 'to avail oneself of,' and
'to carry out a purpose or action by means of.'" Id. at 145
(alteration in original). The statute at issue here fails to
provide a specific definition. And, in context, "use" cannot be
- 24 -
given its broadest possible meaning, which would subsume the
separate statutory terms "transfer[]" and "possess[]." See United
States v. Miller, 734 F.3d 530, 541 (6th Cir. 2013). Accordingly,
we find the statutory language ambiguous. The Sixth Circuit has
reached the same conclusion. See id. at 540-41.
We turn next to legislative history. The relevant House
Report makes clear that the legislation was intended to address
"the growing problem of identity theft." See H.R. Rep. No. 108-
528, at 3, reprinted in 2004 U.S.C.C.A.N. 779. The report goes on
to provide several examples of identity theft. Notably, each of
these examples involved the defendant's use of personal
information to pass him or herself off as another person, or the
transfer of such information to a third party for use in a similar
manner. See id. at 5-6, 2004 U.S.C.C.A.N. at 781-82 (e.g.,
submission of "bogus Federal income tax returns" in others' names;
use of "stolen identity to apply for and receive Social Security
benefits" and "establish credit"). The facts of Ozuna-Cabrera,
where the defendant presented another person's expired passport in
an attempt to obtain a valid passport under that person's name,
falls comfortably within this understanding of identity theft.
See 663 F.3d at 497. By contrast, the purported "use" of patient
information alleged here strays far afield from the conduct
targeted by Congress. While, in a colloquial sense, Berroa and
Castro could be said to have "used" their patients' names in
- 25 -
writing prescriptions, they certainly did not attempt to pass
themselves off as the patients.
The government's reading of the statute is virtually
unlimited in scope. Indeed, if, as the government implies, "use"
of a "means of identification" is to be given its broadest possible
meaning, it could encompass every instance of specified criminal
misconduct in which the defendant speaks or writes a third party's
name. See United States v. Spears, 729 F.3d 753, 756 (7th Cir.
2013) (warning, in interpreting the statutory language "another
person," that the government's reading would "require a mandatory
two-year consecutive sentence every time a tax-return preparer
claims an improper deduction"). We will not lightly presume that
Congress intended this extreme result.
In light of § 1028A's legislative history, as well as
the limitless nature of the government's alternative construction,
we read the term "use" to require that the defendant attempt to
pass him or herself off as another person or purport to take some
other action on another person's behalf.8 Our holding on this
point is consistent with that of the only other circuit to have
addressed the issue. See Miller, 734 F.3d at 541 (reversing
8
To the extent more is needed, the rule of lenity "requires
ambiguous criminal laws to be interpreted in favor of the
defendants subjected to them." United States v. Gray, 780 F.3d
458, 468 (1st Cir. 2015) (citation omitted). At the very least,
the statutory provision is ambiguous and, accordingly, we must
read it narrowly.
- 26 -
convictions where the defendant "did not steal or possess [others']
identities, impersonate them or pass himself off as one of them,
act on their behalf, or obtain anything of value in one of their
names" (footnote omitted)); United States v. Medlock, 792 F.3d
700, 705 (6th Cir. 2015) (rejecting the government's argument that
the defendants "'used' the name and Medicare Identification
Numbers of Medicare beneficiaries" when they submitted claims
containing false statements).
III. Other Claims of Error
A. Indictment
Pacheco raises two challenges to her indictment: (1)
that the district court erred by refusing to strike surplusage;
and (2) that the court erred by amending the indictment.
Prior to trial, Pacheco moved, pursuant to Fed. R. Crim.
P. 7(d), to strike surplusage from her indictment. Rule 7(d)
serves to "protect the defendant 'against immaterial or irrelevant
allegations in an indictment, . . . which may . . . be
prejudicial.'" United States v. Lewis, 40 F.3d 1325, 1346 (1st
Cir. 1994) (alteration in original) (quoting Fed. R. Crim. P. 7(d),
advisory committee note). Pacheco sought to strike any language
related to her prior failures of Board exams and information about
where and when she graduated from medical school.
The contested language was "neither irrelevant nor
unfairly prejudicial." Id. The prosecution had the burden of
- 27 -
showing that Pacheco acted knowingly and intentionally in order to
secure a conviction for conspiracy to commit honest-services mail
fraud. And to that end, Pacheco's prior exam failures and
graduation date were relevant to her motive. See United States v.
Pires, 642 F.3d 1, 11 (1st Cir. 2011) ("[E]vidence that bears on
the question of motive ordinarily has some probative value in a
criminal case."). Pacheco's difficulty in gaining a medical
license on her own merit was appropriate information for the jury
to consider in finding that she turned to illicit means.
Accordingly, any prejudice resulting from the inclusion of this
information in the indictment was not unfair.9
Pacheco next claims that the district court improperly
allowed an amendment to her indictment. At issue is the date that
the government alleged that Pacheco committed an overt act, namely,
receipt of her regular medical license. The indictment initially
identified the overt act as occurring on March 18, 2005, the date
that Pacheco received her acupuncture license. The correct date
should have been January 13, 2004. Over Pacheco's objection, the
district court amended the date on the indictment. We review her
preserved challenge de novo. See United States v. Hernández, 490
F.3d 81, 83 (1st Cir. 2007).
9Pacheco raises a parallel challenge to the admission of this
evidence under Fed. R. Evid. 401 and 403. These arguments fail
for the same reasons outlined above, namely, the probative value
of the information in question and absence of any unfair prejudice.
- 28 -
As an initial matter, the error that Pacheco complains
of is not a constructive amendment, but rather a direct amendment.
See United States v. Dowdell, 595 F.3d 50, 66-67 (1st Cir. 2010).
While an amendment that broadens the charges in an indictment runs
afoul of a defendant's rights and is, accordingly, prohibited,
"this prohibition does not extend to alterations that are 'merely
a matter of form.'" Id. at 67 (quoting Russell v. United States,
369 U.S. 749, 770 (1962)). Pursuant to this exception, courts may
"allow[] ministerial corrections of clerical errors in names,
dates, and citations, so long as the change [will] not deprive the
defendant of notice of the charges against him." Id. at 68.
Here, there can be no argument that Pacheco was deprived
of such notice. When identifying the overt act necessary for the
conspiracy charge, the indictment explicitly stated that Pacheco
"received a regular license to practice medicine in Puerto Rico."
Further, the evidence and theory throughout trial consistently
maintained that the overt act was receipt of a regular medical
license, not a specialized acupuncture license. In discovery, the
government turned over Pacheco's entire Board file, including her
medical license dated January 13, 2004. In light of these facts,
the amendment was a proper clerical change.
B. Other Evidentiary Claims
As part of its case, the government introduced evidence
about non-defendant applicants who obtained false passing scores
- 29 -
identical to the defendants'. On appeal, Pacheco and Davila
challenge the admissibility of this evidence. Our review is for
abuse of discretion. See United States v. Anthony, 545 F.3d 60,
66 (1st Cir. 2008).
The fact that the defendants obtained exactly the same
scores as other applicants bore directly on the existence of a
scheme to defraud. It also served to connect Rodríguez to those
falsified scores that she did not specifically remember creating.
Moreover, the evidence presented was less prejudicial than that in
other cases where we have found no abuse of discretion. See, e.g.,
United States v. McGauley, 279 F.3d 62, 72 (1st Cir. 2002)
(upholding admission of 217 fraudulently obtained refund checks
not charged in indictment). Given the probative value of the
evidence, the defendants fall well short of establishing
"extraordinarily compelling circumstances" such that we will,
"from the vista of a cold appellate record, reverse a district
court's on-the-spot judgment concerning the relative weighing of
probative value and unfair effect." United States v. Williams,
717 F.3d 35, 41 (1st Cir. 2013) (citation omitted).10
10Along similar lines, Pacheco argues that the testimony of
non-defendant conspirators created a spillover effect such that
her conviction must be vacated. Her claim is meritless because
"defendants cannot complain of an improper spillover effect where
evidence is independently admissible against them." Soto-
Beníquez, 356 F.3d at 29. In any event, Pacheco fails to make the
required showing of prejudice. See United States v. Trainor, 477
F.3d 24, 36 (1st Cir. 2007).
- 30 -
C. Alleged Judicial Bias
The defendants next contend that the district court
exhibited bias in favor of the prosecution. "Under the usual
framework for judicial bias claims, a party must . . . show (1)
that the [judge's] comments were improper and (2) that there was
serious prejudice." United States v. Lanza-Vázquez, 799 F.3d 134,
143 (1st Cir. 2015) (second alteration in original) (citation
omitted). In controlling the courtroom, "[i]t is well-established
that a judge 'is not a mere moderator, but is the governor of the
trial for the purpose of assuring its proper conduct.'" Id.
(quoting Quercia v. United States, 289 U.S. 466, 469 (1933)).
Accordingly, "'remarks during the course of trial that are critical
or disapproving of, or even hostile to, counsel, the parties, or
their cases' are usually insufficient to prove bias." United
States v. Caramadre, 807 F.3d 359, 375 (1st Cir. 2015) (quoting
Liteky v. United States, 510 U.S. 540, 555 (1994)).
Here, Davila points to a number of instances during the
cross-examination of three government witnesses where the judge
sustained objections and commented in open court on the nature of
the defense questions.11 Berroa separately takes issue with the
11 We note that many of Davila's claims appear to challenge
the judge's evidentiary rulings on relevance. See Fed. R. Evid.
401. Pacheco similarly contests the district court's refusal to
allow evidence of irregularities at the Board as violative of her
Fifth and Sixth Amendment rights. We discern no abuse of
discretion in the trial judge's disposition of these issues. See
- 31 -
court's admonishing his counsel not to interrupt the prosecutor's
closing argument and its indication that counsel was "misstating"
the law. We conclude that, at most, the district court indicated
moderate displeasure with defense counsel. This conduct was more
benign than that found insufficient to warrant reversal in previous
cases. See, e.g., Lanza-Vázquez, 799 F.3d at 143-45. The
statements identified by the defendants represent "the few
instances of the trial court's frustration, cherry-picked from the
voluminous record" and, as a result, "do not reveal judicial bias,
let alone the serious prejudice" required for reversal. United
States v. Ofray-Campos, 534 F.3d 1, 34 (1st Cir. 2008).
D. Defense Witness Immunity
Berroa, Davila, and Pacheco assert that the district
court erred by refusing to grant use immunity to former Board
employee Dr. Rafael Jiménez-Méndez. The defendants claim that
Jiménez's testimony was necessary to contradict the government's
case and attack the credibility of the government's witnesses.
The power and discretion to immunize witnesses lies
primarily with the prosecution. Trial courts have the ability to
grant immunity to a witness upon a showing that the government's
refusal to provide said immunity violated the defendant's due
process rights. See United States v. Angiulo, 897 F.2d 1169, 1190
United States v. Jimenez, 507 F.3d 13, 16 (1st Cir. 2007); United
States v. Perez-Ruiz, 353 F.3d 1, 11 (1st Cir. 2003).
- 32 -
(1st Cir. 1990). In order to prevail on such a claim, a defendant
must establish that the government intentionally attempted to
present a distorted version of the facts at trial. See Curtis v.
Duval, 124 F.3d 1, 9 (1st Cir. 1997). "This type of deliberate
distortion can occur in two ways: if the government attempts to
intimidate or harass a potential witness, or if the prosecutor
purposefully withholds use immunity to hide exculpatory evidence
from the jury." United States v. Castro, 129 F.3d 226, 232 (1st
Cir. 1997).
Jiménez entered into a pre-trial diversion agreement
containing a promise by the government not to bring any federal
charges against him in relation to the scandal at the Board. Upon
being called to testify, Jiménez invoked his Fifth Amendment right
not to incriminate himself. See U.S. Const. amend. V. The defense
objected, citing the pre-trial diversion agreement. Rejecting
this argument, the district court found that Jiménez was only
protected from federal charges and, thus, there was a cognizable
risk that his testimony could be used against him in a Puerto Rico
court. See United States v. Jiménez–Bencevi, 788 F.3d 7, 15 (1st
Cir. 2015) ("Informal immunity agreements . . . are shaped . . .
by the language of the contract conferring the immunity." (citation
omitted)).
In her brief, Pacheco points to Jiménez's presence on a
witness list for an upcoming trial as proof that the government
- 33 -
planned to offer immunity to him. When asked at a status
conference in the subsequent case about potential trial witnesses,
the prosecutor responded that Jiménez could potentially testify
but no final decision had been made at that time. While this
response may have been ambiguous, it is not the type of
"affirmative government misconduct" required to show a due process
violation and compel the government to grant immunity. United
States v. Mackey, 117 F.3d 24, 27 (1st Cir. 1997).12
Moreover, the purported value of Jiménez's testimony was
minimal at best and cumulative of other witnesses. The bulk of
Jiménez's purported value was to respond to Rodríguez's testimony
that she was unaware of any score-fixing schemes at the Board other
than her own. Pacheco avers that Jiménez would testify otherwise
and would offer further evidence about misconduct and sloppy
record-keeping at the Board. Assuming that such information would
have been admissible, Pacheco had other witnesses available (as
noted by the district court) who could offer similar testimony.
This fact further undercuts any assertion that the government
12 Pacheco contends, for the first time on appeal, that two
other witnesses faced the same situation as Jiménez. These claims
fare no better under the more exacting plain error standard. See
United States v. Savarese, 686 F.3d 1, 12 (1st Cir. 2012).
- 34 -
sought to "withhold[] use immunity to hide exculpatory evidence
from the jury." Castro, 129 F.3d at 232.13
E. Jury Instructions
Pacheco and Davila argue that the district court erred
by not including certain jury instructions in its charge for
conspiracy to commit honest-services mail fraud. Both defendants
assert that they were entitled to a gifts instruction, and Davila
argues that the district court also should have issued a good faith
instruction.
We assess a district court's refusal to give a requested
instruction in two steps. First, we look de novo to see whether
the evidence, taken in a light most favorable to the defendant,
supports the instruction. United States v. Baird, 712 F.3d 623,
627 (1st Cir. 2013). If the defendant makes this showing, we
proceed to the second step where "refusal to give a requested
instruction is reversible error only if the instruction was (1)
substantively correct; (2) not substantially covered elsewhere in
the charge; and (3) concerned a sufficiently important point that
13 Berroa and Pacheco also challenge the district court's
exclusion of certain government memoranda reflecting interviews
with Jiménez and others. Even assuming that the interviewees'
statements contained in the memoranda fell within a hearsay
exception, see Fed. R. Evid. 804(b)(3), the agents' reports
themselves constituted a second layer of inadmissible hearsay.
See, e.g., United States v. Ortiz, 125 F.3d 630, 632 (8th Cir.
1997) (holding that report prepared by government agent and
reflecting statements by an informant did not fall within the
public records exception).
- 35 -
the failure to give it seriously impaired the defendant's ability
to present his or her defense." United States v. Callipari, 368
F.3d 22, 32 (1st Cir. 2004) (citation omitted), vacated on other
grounds, 543 U.S. 1098 (2005).
First, relying upon our decision in United States v.
Sawyer, 85 F.3d 713, 741 (1st Cir. 1996), the defendants argue
that the jury was required to consider whether the payments to
Rodríguez were gifts (and not bribes). We need not move beyond
the first stage of our inquiry because the facts — even in a light
most favorable to the defendants — fail to sufficiently support a
gifts instruction. In Sawyer, we advised that a cautionary
instruction is needed "where . . . the line between the merely
unattractive and actually criminal conduct is blurred." Id. Such
blurring occurs when the conduct in question (e.g., "payments for
entertainment, lodging, golf, sports events, and the like") could
colorably be an attempt to "cultivate a business or political
'friendship.'" Id. Here, there was no evidence to suggest that
the payments by the defendants were designed to cultivate such a
friendship. Rather, they were made in exchange for fraudulent
scores.
With respect to the second requested instruction, "we
have held that [a] separate instruction on good faith is not
required . . . where the court adequately instructs on intent to
defraud." Christopher, 142 F.3d at 55 (first alteration in
- 36 -
original) (citation omitted). This is because intent to defraud
is "essentially the opposite of good faith." United States v.
Dockray, 943 F.2d 152, 155 (1st Cir. 1991). Here, a review of the
transcript makes clear that the district court provided adequate
instructions. The court told the jury that "[t]o establish
specific intent, the Government must prove that the defendant
knowingly did an act which the law forbids, purposely intending to
violate the law." Accordingly, no separate good faith instruction
was required.14
F. Purported Prosecutorial Misconduct
Davila identifies several instances of purported
prosecutorial misconduct during opening, closing, and rebuttal
arguments. Her admittedly unpreserved claims that the prosecutor
misstated certain evidence fail because, even assuming that the
relevant statements were improper, they did not "so poison[] the
well" as to require a new trial. See United States v. Henderson,
320 F.3d 92, 107 (1st Cir. 2003) (citation omitted). Davila's
preserved argument that the prosecutor improperly shifted the
burden of proof, however, merits further discussion.
14 Davila also seeks reversal based on the cumulative error
doctrine. "Since we rejected all of [Davila's] claims of error,
it necessarily follows that [her] trial was not tainted by
cumulative error and reversal is not warranted." United States v.
Rivera-Donate, 682 F.3d 120, 132 n.11 (1st Cir. 2012) (citation
omitted).
- 37 -
We review the propriety of the prosecutor's comments de
novo. United States v. Glover, 558 F.3d 71, 76 (1st Cir. 2009).
If we find that the statements were improper, we must determine
whether the error was harmless. Id. With respect to the first
step in the analysis, "a prosecutor may cross the line [into
impermissibility] by arguing to the jury that the defendant is
obligated to present evidence of his innocence." Id. at 77
(alternation in original) (citation omitted). With that said, the
government is afforded some latitude "to discuss competing
inferences from the evidence on the record" and "to comment on the
plausibility of the defendant's theory." Id. at 77-78. In doing
so, prosecutors must focus "on the evidence itself and what the
evidence shows or does not show, rather than on the defendant and
what he or she has shown or failed to show." Id. at 78.
Here, Davila takes issue with excerpts of the
prosecutor's rebuttal argument referring to defense counsel's
failure to provide "innocent explanations" for or otherwise
address (1) evidence that the defendants' false test results were
identical to those of other applicants and (2) Davila's request
for a certification of her score. At trial, the defendants sought
to use evidence of Board irregularities to suggest that they might
not have been complicit in the falsification of their own test
scores. Accordingly, the prosecutor was entitled to respond by
contesting the plausibility of that defense theory.
- 38 -
It is at least arguable, however, that the prosecutor
exceeded the bounds of propriety by specifically referring to
defense counsel's failure to address aspects of the prosecution's
case. See United States v. Wihbey, 75 F.3d 761, 770 (1st Cir.
1996) (referring to "how-does-counsel-explain" argument as "an
impermissible shift of [the] burden of proof" (citation omitted)).
Assuming (without deciding) that the specific invocation of
defense counsel's omissions was improper, we turn to the issue of
prejudice.
Reversal is warranted only if the possibly improper
statements were "harmful." Glover, 558 F.3d at 78. In making
this assessment, "we consider the totality of the circumstances,
including the severity of the misconduct, the prosecutor's purpose
in making the statement . . . , the weight of the evidence
supporting the verdict, jury instructions, and curative
instructions." Id. (citation omitted). Here, Davila points to
three isolated passages from the government's rebuttal argument.
Moreover, the prosecutor appears to have acted with the permissible
goal of rebutting the defense theory, rather than intentionally
shifting the burden to the defendants. To cinch the matter, the
court clearly instructed the jury:
[I]t is a cardinal principle of our system of
justice that every person accused of a crime
is presumed to be innocent unless and until
his or her guilt is established beyond a
reasonable doubt. The presumption is not a
- 39 -
mere formality, it is a matter of the most
important substance. The Defendants do not
have to prove their innocence at any time or
to produce any evidence. . . . The burden of
proof never shifts to a defendant. It is
always the Government's burden to prove each
of the elements of the crimes charged beyond
a reasonable doubt . . . .
In light of the significant evidence against the defendants, the
context of the prosecutor's statements, and the court's strong and
unequivocal instruction on the presumption of innocence, any
impropriety in the prosecutor's rebuttal argument was harmless.
G. Sentencing
Finally, Pacheco challenges the district court's
application of a twelve-level sentencing enhancement pursuant to
United States Sentencing Guidelines §2C1.1(b)(2)(A) and
§2B1.1(b)(1)(G).15 We review the district court's fact-finding for
clear error and its interpretation of the Guidelines de novo.
United States v. Souza, 749 F.3d 74, 85 (1st Cir. 2014). Relying
on the pre-sentence investigation report, the court calculated the
benefit Pacheco received in return for her bribe to be more than
$200,000 but less than $400,000. Pacheco now seeks to vacate her
sentence, arguing that the phrase "benefit . . . to be received in
15 In accordance with U.S.S.G. §1B1.11(b)(1), the district
court applied the Guidelines as effective on the date the offense
was committed. Accordingly, all references herein are to the
Guidelines as effective on November 1, 2002.
- 40 -
return for the payment" in §2C1.1(b)(2)(A) does not include her
medical license or earnings realized therefrom.
Contrary to Pacheco's contention, the sentencing court
may apply the §2C1.1(b)(2)(A) enhancement so long as the defendant
actually received or expected to receive the requisite benefit.
See, e.g., United States v. Vázquez-Botet, 532 F.3d 37, 67 (1st
Cir. 2008). Here, the district court relied on the actual benefit
Pacheco received from practicing under the aegis of her fraudulent
license. To the extent the court also considered expected benefit,
we see no error (let alone clear error) in its finding that Pacheco
intended to receive a financial benefit from obtaining her medical
license.16
IV. Conclusion
For the foregoing reasons, we affirm the convictions and
sentences of Pacheco and Davila (both of whom were convicted only
of honest-services mail fraud conspiracy). By contrast, we reverse
the convictions and vacate the sentence of Geraldo Castro (who was
convicted only of mail fraud and aggravated identity theft).
With respect to the remaining two defendants, Berroa and
Julio Castro, we reverse their convictions for money or property
16 While the medical license did not constitute "'property'
in the government regulator's hands" for purposes of the mail fraud
statute, see Cleveland, 531 U.S. at 20, it certainly held an
expected benefit for Pacheco. That was, after all, the point of
the fraud.
- 41 -
mail fraud and affirm their convictions for honest-services mail
fraud conspiracy. Finally, we reverse Berroa's convictions for
aggravated identity theft. Under our caselaw, the partial reversal
of Berroa's and Julio Castro's convictions may "alter the
dimensions of the sentencing 'package.'" United States v. Genao-
Sánchez, 525 F.3d 67, 71 (1st Cir. 2008). We therefore vacate the
sentences of these defendants and remand for resentencing. We
take no view as to whether the new sentences should be equal to or
less than the sentences previously imposed. That is a matter
committed, in the first instance, to the sound discretion of the
sentencing court.
- Concurring and Dissenting Opinion Follows -
- 42 -
LIPEZ, Circuit Judge, concurring in part and dissenting
in part. I join the majority's thoughtful opinion, with the
exception of its novel interpretation of the mail fraud statute.
On that issue I respectfully dissent.
Three terms ago, in Loughrin v. United States, the
Supreme Court interpreted the phrase "by means of" in the bank
fraud statute, 18 U.S.C. § 1344. 134 S. Ct. 2384 (2014). Bank
property, the Court held, is obtained "by means of" a false or
fraudulent statement only when that statement "is the mechanism
naturally inducing a bank (or custodian of bank property) to part
with money in its control." Id. at 2393. With federalism concerns
in mind, the Loughrin Court sought to prevent the bank fraud
statute from being used to prosecute conduct beyond the scope of
the specific problem addressed by that statute's enactment in 1984.
Citing those federalism concerns, the majority applies the
"naturally inducing" limitation to the mail fraud statute, 18
U.S.C. § 1341, a measure originally enacted in 1872 to address a
much broader problem. We are the first court of appeals to extend
Loughrin in this manner. Because this ruling ignores the Supreme
Court's own cautionary language in Loughrin, as well as differences
in the text and purpose of the two statutes, I would not
incorporate the Loughrin limitation into the mail fraud statute.
The majority bolsters its reliance on federalism
concerns by citing Cleveland v. United States, 531 U.S. 12 (2000),
- 43 -
a case interpreting the term "property" in the mail fraud statute.
Although Cleveland addresses the same statute at issue here, the
concerns raised by the government's use of the mail fraud statute
in that case are inapplicable to this case. Consequently, I find
the majority's reliance on that precedent inapt.
I.
The majority insists that the Supreme Court's limiting
interpretation of the bank fraud statute must be applied to the
mail fraud statute because the words interpreted by the Court in
Loughrin -- "by means of" -- also appear in the mail fraud statute.
In so concluding, the majority relies heavily on a presumption
that the same federalism concerns which drove the Loughrin Court
to interpret that phrase narrowly in the bank fraud statute also
apply to the mail fraud statute. To reach these conclusions,
however, one must ignore both significant differences between the
two statutes and critical parts of the Loughrin opinion.
To be sure, the threshold argument that the same words
should be construed the same way is intuitively appealing. Indeed,
the Supreme Court has noted that such a presumption can be a fair
starting point for a statutory analysis "when Congress uses the
same language in two statutes having similar purposes,
particularly when one is enacted shortly after the other." Smith
v. City of Jackson, 544 U.S. 228, 233 (2005). Importantly,
however, the equivalent language here is not the product of
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contemporaneous drafting. The bank fraud statute was enacted more
than a century after the original version of the mail fraud
statute, and more than thirty years after the "by means of"
language was added to the mail fraud statute. See Jed Rakoff, The
Federal Mail Fraud Statute, 18 Duq. L. Rev. 771, 772 (1980)
(original mail fraud statute enacted in 1872); 62 Stat. 763 (1948)
(modern mail fraud statute); Pub. L. No. 98-473, Title II, §
1108(a), 98 Stat. 2147 (1984) (bank fraud statute). While not
dispositive, this substantial gap in time raises a threshold doubt
as to the applicability of this presumption. See Smith, 544 U.S.
at 233.
Here, however, we have more than mere doubts about the
applicability of the presumption. The Supreme Court in Loughrin
explicitly instructed that applying such a presumption to the words
at issue would be inappropriate:
[W]hat relationships count as close enough to satisfy
the phrase "by means of" will depend almost entirely on
context. . . . Language like "by means of" is inherently
elastic: It does not mean one thing as to all fact
patterns -- and certainly not in all statutes, given
differences in context and purpose.
134 S. Ct. at 2394 n.8. Hence, in determining whether the
"naturally inducing" formulation articulated in Loughrin applies
to the mail fraud statute, we must compare the contexts, purposes,
and language of the two statutes.
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A. The Bank Fraud Statute
1. Context and Scope
The bank fraud statute was enacted in 1984 "to provide
an effective vehicle for the prosecution of frauds in which the
victims are financial institutions that are federally created,
controlled or insured." S. Rep. No. 98-225, at 377 (1983).
According to the Senate Report, the need for such a law became
apparent when the Supreme Court vacated the mail fraud conviction
of a defendant who used a stolen credit card to purchase food and
lodging. See id. (citing United States v. Maze, 414 U.S. 395,
396, 398 (1974)). To satisfy the mailing element, the government
in Maze relied on the post-purchase mailing of sales slips from
the merchants to the bank that had issued the credit card. 414
U.S. at 397. The Court held that those mailings were not related
closely enough to the fraudulent scheme to sustain a conviction
for mail fraud. Id. at 405. Because the federal mail and wire
fraud statutes require the use of either the mail or an interstate
wire, federal prosecutors were unable to pursue charges when one
of those forms of communication was not used "for the purpose of"
committing a fraud against a bank. See id. at 404. In the wake
of the Maze holding, Congress recognized that a "serious gap[] now
exist[s] in federal jurisdiction over frauds against banks." S.
Rep. No. 98-225, at 377. Accordingly, it enacted a new statute to
fill this gap.
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Rather than focusing on mail or interstate wire
communications, the bank fraud statute bases its jurisdiction "on
the fact that the victim of the offense is a federally controlled
or insured [banking] institution."17 Id. at 378. Therefore, while
the text of the bank fraud statute is "modeled on the present wire
and mail fraud statutes," id., it differs in a key respect. Unlike
those statutes, it specifies a victim that the fraud must harm, a
bank. Rather than requiring only a "scheme or artifice to
defraud," 18 U.S.C. § 1341, the first prong of the statute requires
a "scheme or artifice . . . to defraud a financial institution,"
id. § 1344(1). Likewise, in the second prong of the statute, the
scheme is not simply "for obtaining money or property," id. § 1341,
but "to obtain any of the money[] . . . or other property owned
17 The bank fraud statute states:
Whoever knowingly executes, or attempts to execute, a
scheme or artifice --
(1) to defraud a financial institution; or
(2) to obtain any of the moneys, funds, credits, assets,
securities, or other property owned by, or under the
custody or control of, a financial institution, by means
of false or fraudulent pretenses, representations, or
promises;
shall be fined not more than $1,000,000 or imprisoned
not more than 30 years, or both.
18 U.S.C. § 1344.
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by, or under the custody or control of, a financial institution,"
id. § 1344(2).
In multiple respects, therefore, the bank fraud statute
was written narrowly, reflecting its limited purpose -- protecting
banks.
2. The Loughrin Decision
Loughrin involved "a scheme to convert altered or forged
checks into cash." 134 S. Ct. at 2387. The defendant went door-
to-door in Salt Lake City, pretending to be a Mormon missionary,
and stole checks from residents' mailboxes. Id. He altered those
checks or, if he happened to find blank checks, completed them,
and used them to purchase items at a Target store. Id. He then
immediately returned the purchased items for cash. Id. Loughrin
challenged his bank fraud conviction for this scheme, arguing that
the provision of the statute under which he was convicted,
§ 1344(2), requires a specific intent to deceive a bank, which he
did not possess. Id. at 2389. He posited that such an element
must be read into § 1344(2) to prevent it from being applied to
mundane frauds that did not target a bank, but happened to involve
a check. Id. at 2392.
Acknowledging the legitimacy of Loughrin's point about
federalizing ordinary frauds, the Court gave the example of a
common fraudster who "passes off a cheap knock-off as a Louis
Vuitton handbag." Id. According to Loughrin's theory, if the
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victim who purchases the handbag happens to pay with a check rather
than with cash, this fortuity would make the crime bank fraud
because the fraudster has made "false or fraudulent . . .
representations" and has carried out a scheme to obtain money
"'under the custody or control of' [a] bank (the money in the
victim's checking account)." Id. (quoting 18 U.S.C. § 1344(2)).
That approach would turn the statute into "a plenary ban on fraud,
contingent only on the use of a check (rather than cash)." Id.
Aware of the ubiquity of checks in our financial system, the Court
was wary of interpreting the statute in a manner that would
"approve a sweeping expansion of federal criminal jurisdiction in
the absence of a clear statement by Congress," id. (quoting
Cleveland, 531 U.S. at 24), by "federalizing frauds that are only
tangentially related to the banking system," id. at 2393 (quotation
omitted).
The Court disagreed with Loughrin, however, that to
foreclose such an application of the bank fraud statute it had to
read a specific intent requirement into § 1344(2).18 Instead, the
Court explained, Loughrin's argument "fail[ed] to take account of
a significant textual limitation on § 1344(2)'s reach." Id. at
2393. Under that provision, "it is not enough that a fraudster
18
The Supreme Court has acknowledged that the text of the
bank fraud statute's other provision, 18 U.S.C. § 1344(1), does
require a specific intent to defraud a bank. Loughrin, 134 S. Ct.
at 2389-90.
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scheme to obtain money from a bank and that he make a false
statement." Id. The clause also includes "a relational
component," id., a requirement that the criminal obtain the bank
property "by means of" the false statement, id. (quoting 18 U.S.C.
§ 1344(2)). That language "typically indicates that the given
result (the 'end') is achieved, at least in part, through the
specified action, instrument, or method (the 'means'), such that
the connection between the two is something more than oblique,
indirect, and incidental." Id.
The Court explained that the "relational component" is
satisfied when "the defendant's false statement is the mechanism
naturally inducing a bank (or custodian of bank property) to part
with money in its control."19 Id. Accordingly, the fraud must
reach the bank or the custodian of the bank's property, either
directly or indirectly. Id. The standard is most clearly met
when the misrepresentation or false statement is made to the bank
itself, for example when a fraudster attempts to cash a forged
check at a teller's window. Id. But a counterfeit check can also
be the "means" by which a fraud is accomplished when it is
19As the Loughrin Court noted, § 1344(2) covers not only bank
property in the bank's possession, but also "property 'owned by'
the bank but in someone else's custody and control" -- that is,
bank property under the control of a non-bank custodian. 134 S.
Ct. at 2389. As I discuss further below, the Loughrin Court
appears to have considered a custodian who possesses a bank's
property to be acting as the surrogate of the bank, and therefore
to be essentially interchangeable with the bank itself.
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presented to a third party, as Loughrin presented his forged checks
to Target. Id. Predictably, the merchant will forward the check
to the bank in an attempt to receive reimbursement in the form of
bank funds. Id. In either scenario, the check itself is a
fraudulent representation, and it "naturally induc[es]" the bank
to part with money.
What the "naturally inducing" standard precludes, the
Court explained, is the prosecution of cases like that of the
handbag fraudster. Id. 2394. In that scenario, the fraudster's
misrepresentation never reaches the bank, either directly or
indirectly. Id. Unlike in Loughrin's scheme, the check itself
does not convey the misrepresentation because it is a "perfectly
valid" check. Id. Nor does the purchaser pass the
misrepresentation about the quality of the handbag on to the bank
or any custodian of the bank's property. Id. The bank fraud
statute, the Court explained, "draw[s] a line at frauds that have
some real connection to a federally insured bank -- namely, frauds
in which a false statement will naturally reach such a bank (or a
custodian of the bank's property)." Id. at 2394 n.8. Because the
handbag fraudster's misrepresentation never reaches the bank (or
a custodian), the bank fraud statute does not encompass that kind
of fraud.
The Loughrin Court thus viewed the "by means of" language
through the lens of its federalism concerns about the scope of the
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bank fraud statute. Construing those words to require that the
misrepresentation or false statement reach the bank or its
custodian, either directly or indirectly, ensures that the
"deceptions . . . have some real connection to a federally insured
bank, and thus implicate the pertinent federal interest." Id. at
2394-95.
B. The Mail Fraud Statute
With respect to every concern prompting the Loughrin
Court's interpretation of the bank fraud statute, the mail fraud
statute is distinguishable. The text of the statute, its purpose,
and the federalism concerns implicated by its application are all
manifestly different. Consequently, the majority has done exactly
what the Loughrin Court cautioned against -- transferred the
Court's construction of the phrase "by means of" to an inapt
context.
1. The Text
At the heart of the majority's argument is the contention
that the same language should be construed the same way in related
statutes. They emphasize that "other circuits have consistently
applied precedents construing [the mail fraud statute] to the bank
fraud statute." This assertion of consistency, however, is flawed
in two respects. First, the majority's contention that courts
treat the mail and bank fraud statutes uniformly is belied by the
Loughrin decision itself. Second, even if it were true that mail
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fraud precedents generally have been applied in bank fraud cases,
it does not follow that every bank fraud precedent should apply in
the mail fraud context.
Loughrin attempted to support his argument for reading
the specific intent requirement of § 1344(1) of the bank fraud
statute into § 1344(2) of the statute by citing McNally v. United
States, 483 U.S. 350 (1987), a case that analyzed the mail fraud
statute.20 Id. at 2390-91. As noted above, the mail fraud statute
criminalizes schemes "to defraud, or for obtaining money or
property." 18 U.S.C. § 1341. McNally held that Congress did not
use the word "or" to convey a disjunctive meaning. 483 U.S. at
358-59. Rather than describing a separate type of scheme, the
Court held, the phrase "or for obtaining money or property" simply
clarifies that the criminalized scheme "to defraud" must involve
money or property. Id.
Loughrin argued that, accordingly, the comparable
provision in the bank fraud statute ("to obtain any of the money[]
. . . or other property" of a bank) may not be read as a separate
prong, but must be understood as a clarification of the statute's
first provision, which prohibits schemes "to defraud a financial
institution." 134 S. Ct. at 2390-92. Hence, like the first
20As mentioned in footnote 2, the Supreme Court has held that
§ 1344(1) requires a specific intent to defraud a bank. Loughrin,
134 S. Ct. at 2389-90.
- 53 -
provision, it would include a specific intent requirement. The
Supreme Court rejected this argument and held that "or" in the
bank fraud statute, unlike "or" in the mail fraud statute, is
disjunctive. Id. The Court thus demonstrated, in the very
opinion relied upon by the majority for much of its argument, that
a construction of one of the statutes does not always apply to the
other.
The Loughrin Court, of course, based its decision in
part on differences in language and structure between the two
statutes. The Court pointed out that, unlike the mail fraud
provision, the clauses before and after "or" in the bank fraud
statute were arranged so as to "indicat[e] that they have separate
meanings." Id. at 2391. Here, the majority argues that the "by
means of" language is identical in both statutes, and, hence, the
phrase should be construed consistently. Yet, in this instance,
too, a significant difference between the two provisions counsels
against a common interpretation.
The text of the mail fraud statute does not include any
reference to the person or entity harmed by the alleged fraud; the
provision criminalizes frauds that use the mails without regard to
the victim. Although the bank fraud statute was "modeled on" the
mail fraud statute, see S. Rep. No. 98-225, at 378, its most
distinctive feature is the inclusion of a specific victim -- i.e.,
a bank. That difference was at the core of the Loughrin Court's
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interpretation of the "by means of" language. Emphasizing that
the crime of bank fraud requires a connection between the
fraudulent statement and the victim bank, the Court concluded that
Congress must have intended "by means of" to provide that
"relational component." 134 S. Ct. at 2393. Because no similar
link between the misrepresentation and the victim is part of the
crime of mail fraud, it does not inevitably follow that "by means
of" must be construed in the same way.21
Admittedly, when Congress incorporated language from the
mail fraud statute into the bank fraud statute (and likely the
wire fraud statute as well), it anticipated some commonality in
interpretation. See H.R. Rep. No. 901, 98th Cong., 2nd Sess., at
4 (1984) (endorsing the courts' "current interpretations of the
language" taken from 18 U.S.C. §§ 1341 & 1343); United States v.
Bonallo, 858 F.2d 1427, 1432 (9th Cir. 1988) ("[T]he House
Judiciary Committee, in considering the proposed bank fraud
statute, expressly endorsed the broad reading courts have given
the mail and wire fraud provisions."). We cannot assume, however,
that Congress intended to incorporate mail fraud precedents that
21Contrary to the majority's suggestion, our court's
consistent treatment of the wire and mail fraud statutes does not
advance their view. The wire fraud statute is simply a modern
incarnation of the mail fraud statute, covering a "new" method of
interstate communication. See Rakoff, supra, at 772 n.6. Like
the mail fraud statute, it is worded broadly and does not protect
a particular type of victim.
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had not yet been decided. See Loughrin, 134 S. Ct. at 2391
("Loughrin's reliance on McNally encounters a serious
chronological problem. Congress passed the bank fraud statute in
1984, three years before we decided that case."); United States v.
Saks, 964 F.2d 1514, 1520-21 (5th Cir. 1992) (questioning the
applicability of McNally to the bank fraud statute because it was
decided after the statute's enactment). Nor can we expect that
Congress, in enacting the mail fraud statute a century and a half
ago, would have anticipated the Loughrin Court's recent
interpretation of the "by means of" language in the context of a
different statute that did not yet exist. Contrary to the
majority's assertion, the chronology of the statutes' enactment
matters.
2. Purpose
As my textual comparison has intimated, the purpose of
the mail fraud statute also does not support the imposition of
Loughrin's limiting interpretation. The Loughrin Court's
interpretation of the "by means of" language was premised on the
narrow objective of the bank fraud statute to protect banks from
fraud. Unlike the bank fraud statute, the mail fraud statute was
not enacted to protect a narrow class of victims. Rather, its
purpose was to protect the public at large from a wide range of
fraudulent schemes. See Cong. Globe, 41st Cong., 3d Sess. 35
(1870) (remarks of Rep. Farnsworth) ("[A]ll through this country
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thousands of innocent and unsophisticated people[] . . . are
continually fleeced and robbed, and the mails are made use of for
the purpose of aiding them in their nefarious designs.").
The broad purpose of the statute has led our circuit to
hold that the mail fraud statute encompasses many different kinds
of frauds, including those where the false statement does not reach
the victim:
Nothing in the mail and wire fraud statutes requires
that the party deprived of money or property be the same
party who is actually deceived. The phrase "scheme or
artifice . . . for obtaining money or property by means
of false or fraudulent pretenses, representations, or
promises," 18 U.S.C. § 1341, is broad enough to include
a wide variety of deceptions intended to deprive another
of money or property. . . . We see no reason to read
into the statutes an invariable requirement that the
person deceived be the same person deprived of the money
or property by the fraud. If, for example, the role of
a government regulator is to protect the monetary
interests of others, a scheme to mislead the regulator
in order to get at the protected funds will affect
"property rights" . . . .
United States v. Christopher, 142 F.3d 46, 54 (1st Cir. 1998)
(involving scheme to obtain assets of insurance companies by
deceiving state insurance regulators).
Strikingly, this convergence requirement that we
rejected in Christopher for the mail fraud statute ("an invariable
requirement that the person deceived be the same person deprived
of the money or property by the fraud") is the essence of the
"naturally inducing" standard adopted by the Supreme Court for the
bank fraud statute in Loughrin. The Loughrin Court required that
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the false statement reach the victim bank, directly or indirectly.
See 134 S. Ct. at 2394 n.8 ("drawing a line at . . . frauds in
which a false statement will naturally reach . . . a bank (or a
custodian of the bank's property)"). In other words, the Loughrin
standard requires that the bank or a custodian of its property be
deceived, and that the bank or the custodian lose the bank's money
or property. That requirement was met in Loughrin because checks
altered by the fraudster -- i.e., the misrepresentations -- reached
the bank when Target submitted them for payment.
The majority argues that Loughrin's standard does not
require convergence because it specifically contemplates that bank
property covered by the statute may be held (and thus lost) by a
non-bank custodian as well as by a bank. See id. at 2389 ("[A]
person violates § 1344(2)'s plain text by deceiving a non-bank
custodian into giving up bank property that it holds."); 18 U.S.C.
§ 1344(2) (stating that property "owned by" a bank, as well as
property "under the custody or control of" a bank, is within the
statute's scope). Therefore, an entity other than the bank itself
may be deceived and may relinquish the bank's property as a result
of a covered fraudulent scheme. In such cases, however, the
custodian that holds the bank's property acts as a surrogate for
the bank, standing in the bank's place. Indeed, the Loughrin court
referred to such custodians interchangeably with the bank itself.
See id. at 2393 ("Section 1344(2)'s "by means of" language is
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satisfied when, as here, the defendant's false statement is the
mechanism naturally inducing a bank (or custodian of bank property)
to part with money in its control."). Whether the property is
under the custody or control of the bank or of a non-bank
custodian, it is still the bank's property. The custodian is
effectively acting as the bank, and the bank is victimized by the
fraud. Hence, even if the surrogate custodian is the deceived
party and/or the party relinquishing bank money, "the party
deprived of money or property" is still "the same party who is
actually deceived." Christopher, 142 F.3d at 54.
In another attempt to avoid the convergence reading of
the Loughrin standard, the majority invokes Justice Scalia's
hypothetical about Little Bobby's attempt to obtain an extra
cookie. Contrary to the majority's suggestion, Justice Scalia
used the example to explain that, under Loughrin's "naturally
inducing" standard, Little Bobby would not have obtained the cookie
"by means of" his fib because "the lie did not make its way to the
father." Id. at 2396 (Scalia, J., concurring). So, although he
deceived his mother, and his deception worked, Little Bobby could
not be charged with cookie fraud. The Loughrin majority responded
without indicating whether they agreed with this depiction of their
holding. Id. at 2394 n.8. Instead, they reemphasized that their
interpretation of "by means of," as it is used in the bank fraud
statute, requires convergence. Id. ("All we say here is that the
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phrase, as used in § 1344(2), is best read, for the federalism-
related reasons we have given . . . as drawing a line at frauds
. . . in which a false statement will naturally reach such a bank
(or a custodian of the bank's property)."). With respect to other
contexts, however, the majority refused to decide whether
convergence is required. Id. ("Language like 'by means of' is
inherently elastic: It does not mean one thing as to all fact
patterns -- and certainly not in all statutes, given differences
in context and purpose."). Thus, the majority explicitly
acknowledged, as we have already noted, that it may not be
appropriate to apply the convergence standard to other statutes.
Having rejected the convergence reading of Loughrin's
"naturally inducing" standard, the majority must try to explain
what that standard means. To this end, it says that Loughrin
requires a "causal nexus" between the deception and the loss of
property. Oddly, this phrase appears nowhere in the Loughrin
decision. Instead, the majority seems to have invented the phrase
by drawing on our own Christopher decision, where, having rejected
the convergence requirement for the mail fraud statute, we
acknowledged that, in both the mail and wire fraud statutes, "the
deception must in fact cause the loss."22 Christopher, 142 F.3d
22
Indeed, the requirement of the mail and wire fraud statutes
that the defendant "obtain[] money or property by means of false
or fraudulent pretenses," 18 U.S.C. §§ 1341, 1343, compels the
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at 53. The critical question, then, is what does the causal nexus
standard imputed by the majority to Loughrin, and now incorporated
by the majority into the mail fraud statute, mean if it does not
signify convergence?
The majority says that the causal nexus standard is
something "like proximate causation." But they never define this
standard, stating instead that it is "flexible." Indeed, the
standard is so flexible that we cannot predict what it will mean
in any future case. We know that in Loughrin it meant that the
false statement had to "reach the bank," 134 S. Ct. at 2394 n.8;
in Christopher, the majority says, it was met because the
defendant's actions "directly contradicted" his prior statements.
Here, the majority suggests critically that the standard was not
met because only "in the ensuing years" after receiving their
fraudulent medical licenses did the doctors obtain funds from
consumers and medical insurers. Is the majority imposing some
temporal requirement on the causal connection between the
deception and the loss of property? Would it have mattered in
this case if the doctors had only used their fraudulent licenses
to obtain money from consumers and insurers immediately after
receiving those licenses? Does the passage of time somehow mean
conclusion that "the deception must in fact cause the loss,"
Christopher, 142 F.3d at 53.
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in this case that the fraud of the defendants did not "naturally
induce" healthcare consumers to part with their money?
These unanswered questions, and the resulting
uncertainty for the future application of the mail fraud statute,
highlight the majority's threefold mistake in its reading of
Loughrin. First, without justification, they have incorporated
Loughrin's standard for bank fraud into the mail fraud statute.
In an effort to minimize the consequences of that mistake, they
deny that the "naturally inducing" standard of Loughrin is a
convergence requirement -- the party deceived must lose the
property. Then, in place of that convergence standard, the
majority offers a vague "causal nexus" standard that apparently
means something more than the present causation requirement of the
mail fraud statute. In so doing, the majority has unwisely
circumscribed the broad protective purpose of the mail fraud
statute.
3. Federalism Concerns
The Loughrin Court's federalism concerns about the bank
fraud statute also do not apply to the mail fraud statute.
Underlying the mail fraud statute is a federal interest in ensuring
that the national mail system is not used to further fraudulent
schemes. The bank fraud statute, by contrast, is based upon an
interest in preventing federally regulated and insured banks from
being victimized by fraud. The Loughrin Court's federalism
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concerns focused on the defendant's contention that the bank fraud
statute could be expanded beyond its narrow focus to be used as "a
plenary ban on fraud, contingent only on the use of a check (rather
than cash)." Loughrin, 134 S. Ct. at 2392.
The Court resolved this concern by finding a textual
limitation in the "by means of" language. By requiring that the
fraudulent statement reach the bank that relinquishes money, the
Court excluded from the scope of the bank fraud statute those
frauds that are "only tangentially related" to the underlying
federal interest in protecting banks. Id. at 2393. To be sure,
the "naturally inducing" standard of Loughrin could function the
same way in the mail fraud statute as it does in the bank fraud
statute. But imposing that restriction on the mail fraud statute
would not exclude from prosecution those frauds that are "only
tangentially related" to the federal interest in preventing the
mails from being used in fraudulent schemes. The Loughrin standard
has nothing to do with the mailing element. Hence, the federalism
concerns of the Loughrin Court do not justify the narrowing
interpretation adopted by the majority here.
Indeed, the mail fraud statute has been used for decades
to prosecute frauds similar to the case at hand, where the
fraudulent representations did not reach the entity whose property
the scheme sought to obtain (or the custodian of that property).
See, e.g., United States v. Greenberg, 835 F.3d 295 (2d Cir. 2016)
- 63 -
(scheme to obtain money from credit card holders by deceiving
payment processor and other intermediaries); United States v.
Seidling, 737 F.3d 1155 (7th Cir. 2013) (scheme to obtain money
from opposing parties by deceiving state small claims court);
United States v. McMillan, 600 F.3d 434 (5th Cir. 2010) (scheme to
obtain money from insureds by deceiving state health insurance
regulators); United States v. Blumeyer, 114 F.3d 758 (8th Cir.
1997) (scheme to defraud insurance policyholders and brokers by
deceiving state insurance regulator); United States v. Granberry,
908 F.2d 278 (8th Cir. 1990) (scheme to obtain job as a school bus
driver by deceiving state driver's licensing authority); United
States v. Brownlee, 890 F.2d 1036 (8th Cir. 1989) (scheme to obtain
proceeds of automobile theft insurance policies by deceiving state
authority certifying automobile titles). Permitting the mail
fraud statute to continue covering such frauds would not,
therefore, effect "a sweeping expansion of federal criminal
jurisdiction" as the majority suggests. Loughrin, 134 S. Ct. at
2392 (quoting Cleveland, 531 U.S. at 24).
II.
The majority also finds support for its federalism
concerns in Cleveland v. United States, 531 U.S. 12 (2000). Just
as the federalism concerns expressed in Loughrin are not applicable
here, however, neither are those raised by the Cleveland Court.
In Cleveland, the government asked the Court to adopt an expansive
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and unsupported definition of the term "property" in the mail fraud
statute so that federal authorities could prosecute the defendant
for a scheme to obtain a license issued by a state. Here, the
government does not request such a textual expansion, nor has it
charged a scheme directed against a state.
Cleveland involved a scheme to fraudulently obtain a
video poker operating license by making false statements on an
application to the state licensing authority. Id. at 15. Noting
that the mail fraud statute is "limited in scope to the protection
of property rights," id. at 18 (quoting McNally, 483 U.S. at 360),
the Supreme Court held that licenses do not constitute property
when they are in the hands of the licensing agency, id. at 20.
The idea of licenses as government property, the Court noted,
"stray[s] from traditional concepts of property." Id. at 24.
Regardless of any fees that the state may obtain during the
licensing process, "the [s]tate's core concern is regulatory," id.
at 20, "implicat[ing] the [g]overnment's role as sovereign, not as
property holder," id. at 24.
The Court also noted that there was no evidence Congress
had intended to override the traditional definition of "property"
by including licenses in the "property" protected by the mail fraud
statute. Id. Moreover, the state had already created penalties
for false statements made on license applications. Accordingly,
defining licenses as property would "'significantly change[] the
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federal-state balance' in the prosecution of crimes." Id. at 25
(quoting Jones v. United States, 529 U.S. 848, 858 (2000)).
Because Congress had not clearly stated that the term "property"
included licenses, the Court declined to accept such an
interpretation with its resultant policy implications.
Although the majority acknowledges that the government
has not charged a scheme in which a state license was treated as
property, it asserts that "the very same federalism concerns"
underlie this case. In so doing, it misconstrues the federalism
problem identified by the Cleveland Court. The Court hesitated to
adopt a novel definition of "property" in Cleveland that could
change the balance of federal-state power in the prosecution of
crimes without a clear statement of Congressional intent. It did
not imply, however, that the government is forbidden from bringing
a case that otherwise fits within the boundaries of the mail fraud
statute simply because the case begins with an abuse of the state's
licensing authority. Cf. Pasquantino v. United States, 544 U.S.
349, 357 (2005) (distinguishing Cleveland and upholding wire fraud
conviction for scheme to defraud Canadian government of tax
revenue); McMillan, 600 F.3d at 434 (upholding mail and wire fraud
convictions for scheme deceiving state health insurance
regulators).
Here, the government does not focus its mail fraud
charge, as it did in Cleveland, on the use of false statements to
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obtain a license. Instead, it focuses on the use of the
fraudulently obtained licenses to secure the money of patients
(and their insurers and other payers) who received services from
the improperly licensed defendant physicians. Contrary to the
majority's implication, the money of the patients and payers was
not "far removed from" the defendants' fraudulent scheme. Indeed,
the object of the charged scheme and its fraudulent representations
was the money the physicians could earn with their fraudulently
obtained medical licenses. Their continued use of their fraudulent
licenses to practice medicine and obtain patients' money years
after deceiving the Board of Medical Examiners demonstrates that
the payments, not the license, were the object of the scheme. The
use of the mail fraud statute to protect the property of members
of the public in situations such as this fits comfortably within
the intended scope of the mail fraud statute.
The majority argues that the mail fraud statute must be
narrowed, or else "virtually any false statement in an application
for a medical license could constitute a federal crime."
Permitting the statute to have such a broad scope, it asserts,
would "impermissibly infringe on the states' 'distinctively
sovereign authority to impose criminal penalties for violations
of' licensing schemes." (Quoting Cleveland, 531 U.S. at 23). The
fact that a federal statute may be used to prosecute conduct that
also implicates state concerns does not, however, mean that the
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federal government has "impermissibly infringe[d]" on the state's
sovereign authority. The federal and state governments often bring
parallel prosecutions to vindicate their separate interests. See
United States v. Lanza, 260 U.S. 377, 382 (1922) ("We have here
two sovereignties, deriving power from different sources, capable
of dealing with the same subject-matter within the same
territory. . . . [A]n act denounced as a crime by both national
and state sovereignties is an offense against the peace and dignity
of both and may be punished by each."). Congress has determined
that there is a significant federal interest in ensuring that the
mails are not used in furtherance of fraudulent schemes. The
Commonwealth might have invoked its own criminal statute to
prosecute the defendants in this case for false statements in their
license applications. But the Commonwealth's interest does not
prevent the federal government from also prosecuting them for a
different crime that involves a distinct federal interest. See
United States v. Volungus, 595 F.3d 1, 9 (1st Cir. 2010) ("When
the federal government exercises any of the powers granted to it
by the Constitution, it is not a valid objection that the exercise
may bring with it some incidents of the [state's] police power.").
The government's charging decision in this case was not
an evasion of Cleveland. It was a recognition of Cleveland's
limited scope. The federalism concerns raised in that case are
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inapplicable here, and significant federal interests support the
government's application of the mail fraud statute in this case.
III.
The convictions of the defendants in this case comport
with the traditional understanding of the scope of the mail fraud
statute applied by courts for decades.23 The majority's decision
to incorporate into the mail fraud statute the Loughrin Court's
limiting interpretation of the bank fraud statute's "by means of"
language will unnecessarily and unwisely constrain the federal
government in its prosecution of fraud cases. Because the text,
purpose, and long-standing application of the mail fraud statute
do not support the novel limitation that the majority imposes on
it, I respectfully dissent.
23Of course, if my position had prevailed, we would have to
address defendants' other arguments challenging their mail fraud
convictions. I express no view on those arguments.
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