819 F.3d 351 (7th Cir. 2016), 15-2453, United States v. Weimert

Docket Nº:15-2453
Citation:819 F.3d 351
Opinion Judge:Hamilton, Circuit Judge.
Party Name:UNITED STATES OF AMERICA, Plaintiff-Appellee, v. DAVID WEIMERT, Defendant-Appellant
Attorney:For United States of America, Plaintiff - Appellee: Antonio M. Trillo, Attorney, Office of The United States Attorney, Madison, WI. For David Weimert, Defendant - Appellant: Stephen J. Meyer, Attorney, Meyer Law Office, Madison, WI.
Judge Panel:Before BAUER, FLAUM, and HAMILTON, Circuit Judges. Flaum, Circuit Judge, dissenting.
Case Date:April 08, 2016
Court:United States Courts of Appeals, Court of Appeals for the Seventh Circuit
SUMMARY

During the 2008–09 financial crisis, Wisconsin’s AnchorBank was struggling. Needing cash to pay its lenders, the bank’s president told vice president Weimert to try to sell the bank’s share in a Texas commercial real estate development. Weimert arranged a sale that exceeded the bank’s target price by one-third. Weimert persuaded potential buyers that he would be a useful partner. Their offer... (see full summary)

 
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Page 351

819 F.3d 351 (7th Cir. 2016)

UNITED STATES OF AMERICA, Plaintiff-Appellee,

v.

DAVID WEIMERT, Defendant-Appellant

No. 15-2453

United States Court of Appeals, Seventh Circuit

April 8, 2016

Argued January 22, 2016.

Appeal from the United States District Court for the Western District of Wisconsin. No. 3:14-cr-00022-jdp-1 -- James D. Peterson, Judge.

For United States of America, Plaintiff - Appellee: Antonio M. Trillo, Attorney, Office of The United States Attorney, Madison, WI.

For David Weimert, Defendant - Appellant: Stephen J. Meyer, Attorney, Meyer Law Office, Madison, WI.

Before BAUER, FLAUM, and HAMILTON, Circuit Judges. FLAUM, Circuit Judge, dissenting.

OPINION

Hamilton, Circuit Judge.

In the midst of the 2008-09 financial crisis, a Wisconsin bank called AnchorBank was struggling to stay above water. Under pressure to find cash to pay its own lenders, the bank's president told vice president David Weimert to try to sell the bank's share in a commercial real estate development in Texas. Weimert, who is the defendant and appellant in this criminal wire fraud case, successfully arranged a sale that exceeded the bank's target price by about one third. The deal also relieved the bank of a liability of twice the sale price.

Given the version of the facts we must accept for this appeal, however, Weimert saw an opportunity to insert himself into the deal personally. He persuaded two potential buyers that he would be a useful partner for them. Both buyers included in their offer letters a term having Weimert buy a minority interest in the property. The bank agreed. It also agreed to pay Weimert an unusual bonus to enable him to buy the minority interest. We must also assume that the successful buyer, at least, would have been willing to go forward without Weimert as a partner, and that Weimert deliberately misled his board and bank officials to believe that the successful buyer would not close the deal if he were not included as a minority partner. The government prosecuted Weimert for wire fraud on the theory that his actions added up to a scheme to obtain money or property by fraud, and the jury convicted him on five of six counts of wire fraud under 18 U.S.C. § 1343.

We reverse and order judgment of acquittal. Federal wire fraud is an expansive tool, but as best we can tell, no previous case at the appellate level has treated as criminal a person's lack of candor about the negotiating positions of parties to a business deal. In commercial negotiations, it is not unusual for parties to conceal from others their true goals, values, priorities, or reserve prices in a proposed transaction. When we look closely at the evidence, the only ways in which Weimert misled anyone concerned such negotiating positions. He led the successful buyer to believe the seller wanted him to have a piece of the deal. He led the seller to believe the buyer insisted he have a piece of the deal. All the actual terms of the deal, however, were fully disclosed and subject to negotiation. There is no evidence that Weimert misled anyone about any material facts or about promises of future actions. While one can understand the bank's later decision to fire Weimert when the deception about negotiating positions came to light, his actions did not add up to federal wire fraud. Weimert is entitled to judgment of acquittal. We order his prompt release from federal prison, on the stated terms of supervised release in his sentence, pending issuance of our mandate.

I. The Standard of Review

We review de novo the denial of a motion for judgment of acquittal. United States v. Durham, 766 F.3d 672, 678 (7th Cir. 2014), citing United States v. Claybrooks, 729 F.3d 699, 704 (7th Cir. 2013). We construe the evidence in the light most favorable to the government, asking whether a rational trier of fact could have found the elements of the crime beyond a reasonable doubt. Durham, 766 F.3d at 678, quoting United States v. Love, 706 F.3d 832, 837 (7th Cir. 2013).

Given our deference to jury determinations on evidentiary matters, we rarely reverse a conviction for mail or wire fraud due to insufficient evidence. See United States v. Mullins, 800 F.3d 866, 870 (7th Cir. 2015) (" Sufficiency challenges are very difficult to win ... ." ). We have sometimes said that such appeals face " a nearly insurmountable hurdle." E.g., United States v. Domnenko, 763 F.3d 768, 772 (7th Cir. 2014), quoting United States v. Torres-Chavez, 744 F.3d 988, 993 (7th Cir. 2014). The hurdle is not actually insurmountable, though. See, e.g., Durham, 766 F.3d at 678-79 (reversing on two counts); United States v. Dooley, 578 F.3d 582, 588-89 (7th Cir. 2009) (reversing on one count); see also United States v. Lake, 472 F.3d 1247, 1260 (10th Cir. 2007); United States v. Izydore, 167 F.3d 213, 220 (5th Cir. 1999); United States v. Goodman, 984 F.2d 235, 239-40 (8th Cir. 1993). Even more to the point, the Supreme Court has reversed mail and wire fraud convictions that would have dramatically expanded the scope of the statutes. Skilling v. United States, 561 U.S. 358, 413-15, 130 S.Ct. 2896, 177 L.Ed.2d 619 (2010) (affirming the reversal of honest-services wire fraud conviction); Cleveland v. United States, 531 U.S. 12, 26-27, 121 S.Ct. 365, 148 L.Ed.2d 221 (2000) (reversing wire fraud conviction for failure to demonstrate loss of property); McNally v. United States, 483 U.S. 350, 360-61, 107 S.Ct. 2875, 97 L.Ed.2d 292 (1987) (reversing wire fraud conviction on honest services theory of fraud prior to statutory revision). We take a similar step here.

II. The Limits of Mail and Wire Fraud

A. The Breadth of Mail and Wire Fraud

Before giving a detailed account of the evidence, we explain the legal standards we apply. The wire fraud statute prohibits schemes to defraud or to obtain money or property by means of " false or fraudulent pretenses, representations, or promises" if interstate wire or electronic communications are used to execute the scheme. 18 U.S.C. § 1343. To convict a person under § 1343, the government must prove that he " (1) was involved in a scheme to defraud; (2) had an intent to defraud; and (3) used the wires in furtherance of that scheme." United States v. Faruki, 803 F.3d 847, 852 (7th Cir. 2015), quoting Durham, 766 F.3d at 678.

To prove a scheme to defraud, the government must show that Weimert made a material false statement, misrepresentation, or promise, or concealed a material fact. United States v. Powell, 576 F.3d 482, 490 (7th Cir. 2009); see also Neder v. United States, 527 U.S. 1, 25, 119 S.Ct. 1827, 144 L.Ed.2d 35 (1999) (holding " materiality of falsehood" is an element of federal mail and wire fraud statutes). Intent to defraud requires proof that the defendant acted willfully " with the specific intent to deceive or cheat, usually for the purpose of getting financial gain for one's self or causing financial loss to another." Faruki, 803 F.3d at 853, quoting United States v. Howard, 619 F.3d 723, 727 (7th Cir. 2010).

Like its cousin mail fraud, the wire fraud statute has been interpreted to reach a broad range of activity. Courts have taken an expansive approach to what counts as a material misrepresentation or concealment in a scheme to defraud. As we will see, it is possible to put together broad language from courts' opinions on several different points so as to stretch the reach of the mail and wire fraud statutes far beyond where they should go.

First, for example, materiality has been defined in broad and general terms as having a tendency to influence or to be capable of influencing the decision-maker. Neder, 527 U.S. at 16; United States v. Seidling, 737 F.3d 1155, 1160 (7th Cir. 2013).

Second, the concept of a misrepresentation is also broad, reaching not only false statements of fact but also misleading half-truths and knowingly false promises. Powell, 576 F.3d at 490-91; United States v. Sloan, 492 F.3d 884, 890 (7th Cir. 2007), citing United States v. Stephens, 421 F.3d 503, 507 (7th Cir. 2005); see generally Durland v. United States, 161 U.S. 306, 312, 16 S.Ct. 508, 40 L.Ed. 709 (1896) (mail fraud not limited to common law fraud but includes " representations as to past or present, or suggestions and promises as to the future" ). It can also include the omission or concealment of material information, even absent an affirmative duty to disclose, if the omission was intended to induce a false belief and action to the advantage of the schemer and the disadvantage of the victim. United States v. Morris, 80 F.3d 1151, 1160-61 (7th Cir. 1996), quoting Emery v. American General Finance, Inc., 71 F.3d 1343, 1346 (7th Cir. 1995); see also United States v. Keplinger, 776 F.2d 678, 697-98 (7th Cir. 1985).

Third, wire fraud does not require the false...

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