Category: Wire Fraud
Second Circuit Doubles Down on Expansive Application of Federal Fraud Statutes
In United States v. Percoco, the Second Circuit (Raggi, Chin, Sullivan) the Second Circuit affirmed the convictions of several defendants involved in the so-called “Buffalo Billion” scandal. The charged crimes included three distinct schemes. One involved bid rigging by a lobbyist, his clients, and an individual with sway over awarding contracts under the project. The other two involved a former aide to Governor Andrew Cuomo, Joseph Percoco, who was charged with helping two companies achieve their business goals by using his influence over state officials. While the allegations are redolent of public corruption in New York State government, these schemes do not comfortably sit within the traditional purview of federal wire, mail, and honest services fraud. In two separate, lengthy opinions, the Circuit upheld the convictions in their entirety, stretching the federal fraud statutes to their limits in order to affirm. Although there is nothing more destructive to a democracy than the public’s loss of faith in its elected officials’ willingness to put the public good over private interests, we express some concerns about the approach taken by the Court in these decisions.
Circuit Affirms Convictions in College Basketball Corruption Case in Split Decision
In United States v. Gatto, the Second Circuit (Lynch, Chin, and Engelmayer, sitting by designation) issued a decision on January 15, 2021 affirming the wire-fraud convictions of James Gatto, Merl Code, and Christian Dawkins in the high-profile college basketball corruption prosecution that was tried in the Southern District of New York in October 2018. Judge Lynch wrote a separate opinion concurring in part and dissenting in part, which addressed his disagreement with the majority concerning certain evidentiary rulings. These evidentiary rulings were a key issue at trial and were the focus of the Court’s decision and Judge Lynch’s opinion.
Circuit Upholds FIFA Convictions, Denying Extraterritoriality and Vagueness Challenges
In United States v. Napout, the Second Circuit (Sack, Hall and Bianco) affirmed the 2017 convictions of Juan Ángel Napout and José Maria Marin in the Eastern District of New York on charges arising out of commercial bribery related to the International Federation of Association Football (“FIFA”) scandal. The Circuit rejected all of the defendants’ arguments: the Circuit held that (i) that there had not been an impermissible extraterritorial application of the wire fraud statute, and (ii) the honest service wire fraud statute was not unconstitutionally vague as applied to them. The Circuit also denied challenges to the sufficiency of the evidence and several trial rulings. Judge Hall wrote a short concurring opinion that addressed one aspect of the parties’ contentions relating to their vagueness challenge.
Circuit Reinstates Securities Fraud and Wire Fraud Conspiracy Conviction In Case Of RMBS Trader
On Friday, the Second Circuit (Livingston, Carney, Sullivan) reinstated the conviction of a former Nomura Securities International, Inc. (“Nomura”) bond trader, Michael Gramins, in United States v. Gramins, No. 18-2007-cr, finding the lower court’s decision to grant Gramins a new trial pursuant to Rule 33 was based on an “overbroad” reading of the Circuit’s 2018 ruling in United States v. Litvak (“Litvak II”) that “cannot be located within the range of permissible decisions.” Litvak II was a major decision and the Gramins decision implicitly limits the reach of Litvak II to cases in which the government or its witnesses expressly described a broker as an agent when he or she is not, in fact, an agent. Future decisions will no doubt revisit these cases, looking for the dividing line between the two.