U.S. v. Hedaithy

• Citation: 392 F.3d 580
• Decision Date: 16 December 2004
• Docket Number: No. 03-1566.,No. 03-1885.,03-1566.,03-1885.
• Parties: UNITED STATES of America v. Hany Al HEDAITHY, Appellant United States of America v. Riyadh Al-Aiban, Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (3rd Circuit)

392 F.3d 580

UNITED STATES of America v. Hany Al HEDAITHY, Appellant United States of America v. Riyadh Al-Aiban, Appellant.

No. 03-1566.

No. 03-1885.

United States Court of Appeals, Third Circuit.

Argued June 29, 2004.

Decided December 16, 2004.

COPYRIGHT MATERIAL OMITTED

Donald C. Randolph (Argued), Randolph & Associates, Santa Monica, CA, for Appellant, Hany Al Hedaithy.

Steven G. Sanders (Argued), Arseneault, Fassett & Mariano, Chatham, NJ, for Appellant Riyadh Al-Aiban.

George S. Leone (Argued), Office of the United States Attorney, Newark, NJ, and Glenn J. Moramarco, Office of the United States Attorney, Camden Federal Building & Courthouse, Camden, NJ, for Appellee.

Before: AMBRO, ALDISERT and STAPLETON, Circuit Judges.

OPINION OF THE COURT

STAPLETON, Circuit Judge.

Defendant Riyadh Al-Aiban appeals his conviction, following an unconditional guilty plea, of conspiracy to commit mail fraud in violation 18 U.S.C. §§ 371 and 1341. Defendant Hany Al Hedaithy appeals his conviction, following a bench trial on stipulated facts, for conspiracy to commit mail fraud in violation of 18 U.S.C. §§ 371 and 1341, and mail fraud in violation of 18 U.S.C. §§ 1341 and 2. Al-Aiban and Al Hedaithy (collectively, "Defendants") are two of approximately sixty foreign nationals of Arab and/or Middle Eastern descent who were charged in the United States District Court for the District of New Jersey for allegedly participating in a scheme by which imposters were paid to sit for the Test of English as a Foreign Language ("TOEFL"), a standardized test administered by the Educational Testing Service ("ETS"). The purpose of the scheme was allegedly to create the false appearance that Defendants, among others, had taken and achieved an acceptable score on the TOEFL exam so that they could remain eligible to live in the United States under a student visa.

Both Defendants challenge the sufficiency of their respective superseding indictments, arguing that the conduct alleged therein does not fall within the proscription of the mail fraud statute. Additionally, Al Hedaithy argues that the evidence presented at his bench trial was not sufficient to support his conviction, and he also challenges the District Court's denial of his motion for discovery with respect to a claim that he was selectively prosecuted by the Government on account of his race or ethnicity. As a threshold matter, we must also decide whether Al-Aiban's guilty plea resulted in a waiver of his right to challenge the sufficiency of his superseding indictment. For the reasons that follow, we will affirm the convictions of each Defendant.

I.

"For purposes of determining the sufficiency of the superseding [indictments], we assume the truth of the following facts alleged in the superseding [indictments]." United States v. Panarella, 277 F.3d 678, 681 (3d Cir.2002). ETS is in the business of designing and administering certain standardized tests. One of those tests, TOEFL, is commonly used by educational institutions in the United States when considering a student for admission to its academic program. Certain schools require foreign students, as a condition of admission, to achieve a minimum score on the TOEFL exam in order to demonstrate proficiency in the English language. Full-time enrollment at a federally approved school, college, or university is, in turn, a requirement for foreign nationals to obtain a student visa and thus reside legally in the United States.

According to the Government, ETS possesses, and attempts to maintain, goodwill that it has accumulated based upon the integrity of its TOEFL product. ETS has also endeavored to keep its TOEFL exam exclusive, secure, and confidential. It owns registered trademarks in the terms "Educational Testing Service," "ETS," and "TOEFL." It uses these trademarks on its TOEFL examinations and the score reports that it generates for each applicant who takes TOEFL. ETS also owns copyrights in the TOEFL examination itself and in the questions used on each exam. Furthermore, the company restricts access to, and use of, its copyrighted TOEFL exam and questions, its trademarked score reports, and its test administration and scoring services.

When an applicant applies to take the TOEFL exam and pays the required fee, he is provided with an appointment number. The applicant must then appear at a designated test center, provide proof of identity, provide the appointment number, and sign a confidentiality statement. Pursuant to the confidentiality statement, the applicant promises to preserve the confidentiality of the examination. By signing the statement, the applicant also certifies that he is the same person whose name and address was used in completing the application. The applicant must then have his photograph taken in order to ensure that someone else did not take the exam for the applicant. The photograph subsequently appears on the applicant's score report. Applicants who do not comply with the conditions set by ETS are not permitted to sit for the exam.

Once the TOEFL exam is completed, the exam results are wired from the test center to a company in Baltimore, Maryland, which in turn transmits the results by wire to ETS for processing. ETS then mails each score report to the location designated by the applicant.

In 1999, the Government became aware of a scheme in which Defendants, both Saudi Arabian nationals, and numerous other foreign nationals of Arab and/or Middle Eastern descent, paid an imposter to take and pass the TOEFL exam for them. The purpose of the scheme was to create the false appearance that Defendants themselves had taken and achieved an acceptable score on the TOEFL exam. In furtherance of this scheme, each Defendant applied to take the exam, and then paid money to an imposter to appear at the designated test center and falsely identify himself as the respective Defendant. The imposter then signed the confidentiality statement, had his photograph taken, sat for the TOEFL exam using the respective Defendant's name, and directed that his exam results be mailed to a California address under the control of one Mahmoud Firas. ETS then processed the exam, and the results were mailed to the pre-designated location in California. There, Firas or one of his associates substituted each Defendant's photograph in place of the imposter's photograph. This doctored score report was then sent to legitimate educational institutions in a phony envelope bearing ETS's trademark.

On May 9, 2002, a federal grand jury returned a one-count indictment charging Al-Aiban with conspiring to commit mail fraud in violation of 18 U.S.C. §§ 371 and 1341. That same day, Al Hedaithy was charged in a two-count indictment with conspiring to commit mail fraud in violation of 18 U.S.C. §§ 371 and 1341, and mail fraud in violation of 18 U.S.C. §§ 1341 and 2. Each indictment described the subject of the Defendant's alleged fraud as ETS's "property interest in maintaining the integrity of the testing process." Subsequently, a federal court dismissed a similarly-worded indictment, holding that the integrity of the testing process was not a property interest covered by the mail fraud statute. See United States v. Alkaabi, 223 F.Supp.2d 583, 589-90 (D.N.J.2002).

The Government thereafter filed superseding indictments against Al-Aiban and Al Hedaithy, in which it attempted to describe ETS's property interest in greater detail. Al-Aiban was again charged with one-count of conspiring to commit mail fraud in violation of 18 U.S.C. §§ 371 and 1341, and Al Hedaithy was charged with two counts — conspiring to commit mail fraud in violation of 18 U.S.C. §§ 371 and 1341, and mail fraud in violation of 18 U.S.C. §§ 1341 and 2. Both superseding indictments were identical in their description of ETS's property interest:

ETS had property interests in its TOEFL product, including (i) materials bearing its trademarks, such as the TOEFL exam and score report, (ii) its copyrighted materials, such as the TOEFL exam and its questions, (iii) the ETS-specified test administration and scoring services for the TOEFL exam, and (iv) the value of ETS's goodwill, which is an asset of ETS and is based in part on maintaining the integrity of the testing process.

Each superseding indictment further alleged that:

As part of this conspiracy, the Conspirators defrauded ETS of the property described [above]. They did so by obtaining access to and use of ETS's trademarked materials, copyrighted materials, and services, by obtaining ETS's official score report, and by obtaining the benefit of, and undermining, ETS's goodwill and the value of its trademark and copyright.

Defendants' individual cases then proceeded along significantly different paths. Al-Aiban entered into a plea agreement with the Government, pursuant to which he agreed to enter a guilty plea and waive his right to appeal the conviction.¹ After accepting Al-Aiban's guilty plea, the District Court determined that the final adjusted offense-level was four, and sentenced him to pay a $2,500 fine. This conviction rendered him ineligible to remain in the United States, see 8 U.S.C. § 1227(a)(2)(A)(i), and ineligible to return to the United States for at least five years. 8 U.S.C. § 1182. Al-Aiban voluntarily departed the United States following his conviction. He has filed a timely notice of appeal.

Al Hedaithy, on the other hand, challenged both the superseding indictment and the conduct of the prosecution. He filed a motion to dismiss his superseding indictment pursuant to Fed. R.Crim. P 12(b)(2), claiming that it failed to allege conduct that violated the mail fraud statute. Al Hedaithy's motion also claimed that the Government's attempted expansion of the scope of the federal mail fraud statute in this case constituted a violation of his right to due process. The District Court denied the motion. The Court reasoned that the requirements of the mail fraud statute were satisfied because Al...