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Aggravated Identity Theft Conviction Affirmed Despite Ambiguous Statutory Language

In United States v. Wedd, the Second Circuit (Cabranes, Park, Nardini), affirmed the defendant’s 2018 convictions for aggravated identity theft (among other offenses), which arose from a scheme to auto-subscribe customers to pricey premium text messaging services.  In the process, the Second Circuit—enhancing a circuit split—rejected Wedd’s argument that the scheme involved no “use[]” of a means of identification of another person, a requisite for conviction under the aggravated identity theft statute.  The panel also rejected Wedd’s contentions that the district court erred in giving a conscious avoidance instruction and in failing to recuse itself from his (third) trial.

Background

Wedd was the CEO and COO of Mobile Messenger, a company that acted as an intermediary between digital content providers who marketed premium SMS text messaging services (“PSMS Services”) and phone carriers.  PSMS Services provide subscribed customers with recurring text messages concerning, for example, stock tips, horoscopes, and celebrity gossip, at a regular monthly charge.  Mobile Messenger compiled and bundled customers’ PSMS Services charges for inclusion on customers’ phone bills, in exchange for a portion of the revenue generated. 

In 2011, Wedd learned that one of the digital content providers working with Mobile Messenger, a company called Tatto Media Inc. (“Tatto”), was auto-subscribing customers to PSMS Services.  Wedd confronted the company’s co-owner, but rather than disclose the scheme, Wedd agreed that Mobile Messenger would help auto-subscribe additional customers for a cut of the proceeds, and referred the co-owner to another Mobile Messenger executive to work out the scheme’s details.  (Wedd, who testified in his own defense, acknowledged that he learned Tatto was auto-subscribing customers and that Tatto’s co-owner had invited him to join in their activities, but maintained that he refused to do so.)  Mobile Messenger thereafter provided Tatto with lists of phone numbers to be auto-subscribed to PSMS Services.  In 2012, meanwhile, Mobile Messenger entered into a similar auto-subscribing scheme with digital content providers run by a co-defendant, Eugeni Tsvetnenko.  Wedd was close friends with Tsvetnenko and knew Tsvetnenko had been involved in auto-subscribing schemes in other countries.  Through 2013, Mobile Messenger provided Tsvetnenko’s companies with phone numbers for auto-subscription.

Wedd was charged him with multiple counts of wire fraud and wire fraud conspiracy, money laundering conspiracy, and aggravated identity theft.  The case proceeded to trial against Wedd and his codefendants in April 2017; the jury deadlocked as to all defendants, and the court declared a mistrial.  A second trial, commenced only against Wedd and one co-defendant, Fraser Thompson, resulted in Thompson’s conviction on all counts, but another deadlock and mistrial as to Wedd.   The district court spoke with jurors, learning that the jury was 11-1 in favor of conviction.  The court also received a letter from a juror complaining about the holdout. 

Following this second mistrial, the district court sua sponte asked whether the government or defense might want a different judge to preside over the third trial, as both sides may have disagreed with certain rulings, and might seek to raise those questions anew.  The same day, while scheduling Thompson’s sentencing, the court noted that it believed Thompson was least likely of all the defendants in the case to recidivate, and that his culpability was “far below” Wedd’s.  Thereafter, Wedd’s counsel asked for a new judge to preside over the third trial, noting, among other things, that if the case were reassigned the court could “make necessary factual determinations in connection with Mr. Thompson’s sentence, without concern that they may reflect upon the Court’s view of Mr. Wedd’s alleged involvement.”

The court denied the request, and after a third, December 2017 trial, Wedd was convicted on all counts.

The Second Circuit Rejects Wedd’s Construction of the Aggravated Identity Theft Statute

An individual is guilty of aggravated identity theft when he or she, “during and in relation to” certain predicate offenses, “knowingly transfers, possesses, or uses, without lawful authority, a means of identification of another person.”  18 U.S.C. § 1028A(a)(1).  Wedd argued, in both an unsuccessful motion for a judgment of acquittal and on appeal, that the term “use[]” in the statute requires some effort at impersonation.  The Second Circuit disagreed, determining that the ordinary meaning of the word “use” should control, and that an impersonation requirement is inconsistent with that ordinary meaning.  Rather, applying the ordinary meaning of “use,” the panel understood the statute to forbid “employ[ing] or avail[ing] oneself of a means of identification” —here, a phone number—“for a particular purpose.”  Because Wedd “employed the phone numbers [of customers] during and in relation to the predicate schemes to defraud by means of auto-subscribing,” he was properly found guilty of aggravated identity theft. 

In so holding, the Court paid short shrift to debate about the proper interpretation of 18 U.S.C. § 1028A(a)(1).  Just recently, in United States v. Dumitru, No. 19-1486-CR, 2021 WL 1080833, at *4 (2d Cir. Mar. 22, 2021), the Second Circuit acknowledged, without wading into the debate, that “[t]he aggravated identity theft statute is susceptible to multiple reasonable readings, causing uncertainty over the precise conduct this statute covers” and that its “sister circuits have interpreted the statute to avoid potentially overbroad reach.”  Id. at *3.  Indeed, the First Circuit approached the statute entirely differently than the Second Circuit did in Wedd’s case:  that circuit found the term “use[]” ambiguous because a broad reading of the word would “subsume the separate statutory terms ‘transfer[]’ and ‘posses[]’”; and further determined that the legislative history of the statute conveyed Congress’s concern with a “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.”   United States v. Berroa, 856 F.3d 141, 156 (1st Cir. 2017).  The Second Circuit’s decision does not address these arguments. 

Only a few Circuits have weighed in on the proper construction of “use[]” in 18 U.S.C. § 1028A, and it is likely that the question will recur.  The statute’s animating purpose seems to be the punishment of those who would seek to impersonate another person.  At the same time, the Second Circuit is right that the statute is written more broadly than this.  In some instances, where the statute’s plain language is potentially overbroad and ambiguous in its reach, courts will apply the rule of lenity and construe the statute in a more limited fashion.  United States v.SunDiamondGrowers of Cal., 526 U.S. 398, 412 (1999) (holding that where a provision “can linguistically be interpreted to be either a meat axe or a scalpel,” the provision “should reasonably be taken to be the latter”).  In the post-Booker era when judges have substantial discretion at sentencing, this statute takes on new importance because it requires the imposition of a two-year consecutive sentence.  Ultimately, congressional intervention may be necessary to resolve this legal question and fix this statute which has a concededly important purpose but is written in a way that creates uncertainty for all concerned.

The Second Circuit Rejects Wedd’s Conscious Avoidance Argument

Wedd also contended that there was insufficient evidence at trial to support a conscious avoidance charge, and that the district court thus erred in instructing the jury as to conscious avoidance.  The Second Circuit dispensed with this argument easily.  After reciting the relevant standard—that a conscious avoidance charge is appropriate where (1) the defendant claims to lack some specific aspect of knowledge necessary for conviction; and (2) there is sufficient evidence that the defendant (a) was aware of a high probability of the fact in dispute; and (b) consciously avoided learning that fact—the panel observed that Wedd repeatedly claimed to be unaware of the auto-subscription fraud, and that, in light of (i) his own testimony that Tatto’s co-owner told him of the fraud and invited him to join it; and evidence that (ii) Wedd had directed the co-owner to other Mobile Messenger executives after this invitation, (iii) knew of Tsvetnenko’s past involvement in such schemes, and (iv) received payments pursuant to the scheme, the jury reasonably could find that Wedd was aware of a high probability consumers were being auto-subscribed and avoided confirming that fact.  In addition, given the apparent strength of the government’s evidence of actual knowledge, the Court ruled that any error was harmless.

Although not necessary for resolution of Wedd’s conscious avoidance argument (as “trial evidence supported a conclusion that [Wedd] took active, affirmative steps”), the Second Circuit nonetheless emphasized that a conscious avoidance charge does not require a showing of affirmative steps taken by the defendant to avoid learning the truth, so long as the circumstances were “sufficiently suspicious.”  Though this principle had been expressed in concurrences and unpublished opinions, see, e.g., United States v. Fofanah, 765 F.3d 141, 150 (2d Cir. 2014) (Leval, J., concurring); United States v. Dambelly, 714 F. App’x 87, 88 (2d Cir. 2018) (summary order), the decision in Wedd marks the most explicit articulation of it in a precedential opinion. 

The Second Circuit Finds Disqualification Unwarranted

Finally, the Second Circuit rejected Wedd’s argument that the district court erred in failing to recuse itself from Wedd’s third trial. 

Pursuant to 28 U.S.C. § 455(a), a federal judge “shall disqualify” himself or herself “in any proceeding in which [his or her] impartiality might reasonably be questioned.”  Wedd proffered five reasons the district court should have disqualified itself under this standard:  the court (a) sua sponte raised the prospect of reassignment; (b) made statements about the comparative culpability of Wedd and a co-defendant; (c) spoke with the second trial jury following the declaration of a mistrial, and later received a note from a juror complaining about a holdout juror; (d) made statements suggesting a high recidivism rate is associated with fraud; and (e) made various evidentiary rulings unfavorable to the defense. 

Reviewing for plain error after determining that counsel’s request that a new judge preside over the third trial did not sufficiently preserve Wedd’s Section 455(a) argument, the court summarily disposed of most of Wedd’s reasons for recusal.  It elaborated on the second reason and fifth reasons, however.  As to the second, the panel explained that in multi-defendant cases, “[q]uestions of relative culpability may sometimes be unavoidable” and that a judge does not “manifest[] impartiality simply by expressing a view of a particular defendant’s culpability based on information that has been presented to the court.”  More generally, it repeated long-standing precedent holding that opinions a judge forms in the course of proceedings typically provide no basis for recusal.  As to the fifth, the panel noted that Wedd did not identify error in the unfavorable rulings, but, in any event, “judicial rulings alone almost never constitute a valid basis for” disqualification.  While Wedd did not have a strong argument for disqualification in this case, the Second Circuit’s analysis reinforces the difficulty demonstrating that a district court’s recusal is required.  The multiple mistrials for Wedd led the district court to sentence some of the defendants far ahead of him, giving the district court an inevitable opportunity to comment on the defendants’ relative culpability before the guilt or innocence of a particular defendant was decided.  The Court of Appeals likely did not want to create a scenario in which a case needed to be reassigned every time this happened.  Bottom line:  the denial of a recusal motion is rarely disturbed on appeal.