United States v. Wedd
| Decision Date | 01 April 2021 |
| Docket Number | No. 18-1392-cr,August Term, 2020,18-1392-cr |
| Citation | 993 F.3d 104 |
| Parties | UNITED STATES of America, Appellee, v. Darcy WEDD, Defendant-Appellant. |
| Court | U.S. Court of Appeals — Second Circuit |
Marc Fernich, New York, New York, for Defendant-Appellant.
Richard Cooper (Anna M. Skotko, on the brief), Assistant United States Attorneys, for Audrey Strauss, Acting United States Attorney for the Southern District of New York, New York, New York, for Appellee.
Before: Cabranes, Park, and Nardini, Circuit Judges.
This case involves a technological fraud. Defendant-Appellant Darcy Wedd and his co-conspirators used a computer program to automatically subscribe cell phone users, without their knowledge or consent, to paid text message services. After two trials resulted in deadlocked juries, the third trial resulted in a conviction for Wedd.
Wedd now appeals from a judgment of conviction entered May 3, 2018, in the United States District Court for the Southern District of New York (Katherine B. Forrest, J .). He argues that the district court erred by: (1) failing to recuse itself under 28 U.S.C. § 455(a) before his third trial; (2) giving a jury instruction on conscious avoidance; and (3) allowing the Government to inadequately plead and prove aggravated identity theft under 18 U.S.C. § 1028A.
We first hold that the district court's conduct did not create an appearance of partiality warranting recusal under Section 455(a). Next, we conclude that the district court properly charged the jury on conscious avoidance because sufficient trial evidence supported that theory of criminal liability. We further conclude that Wedd's indictment adequately pled violations of Section 1028A and so the district court properly declined to dismiss the Section 1028A counts. Finally, we conclude that the district court properly denied Wedd's motion for acquittal because a rational jury could have concluded beyond a reasonable doubt that his conduct, as proven at trial, fit squarely within the scope of the aggravated identity theft statute: By participating in a scheme that employed victims’ cell phone numbers to sign them up for paid text message services without their knowledge or consent by means of an auto-subscribing computer program, Wedd "use[d], without lawful authority, a means of identification of another person" within the meaning of Section 1028A. We therefore AFFIRM the judgment of the district court.
On June 5, 2017, the Government filed an eight-count superseding indictment (the "Indictment") charging Wedd with various crimes stemming from his role in two schemes to automatically subscribe consumers, without their knowledge or consent, to premium SMS text messaging services ("PSMS Services").1
PSMS Services provide subscribers with recurring cell phone text messages containing content such as celebrity gossip, IQ quizzes, stock tips, and daily horoscopes. Subscription results in a regular monthly charge (typically $9.99) on consumers’ phone bills.
A double opt-in, or two-factor, verification process is designed to prevent fraud and ensure that only willing consumers pay for subscriptions to PSMS Services. Consumers typically initiate the subscription process by entering their telephone number into a website. The consumers then receive a text message with a verification code, which the consumers enter back into the website (or confirm by replying to the text message). The consumers then get a welcome text message and start getting charged for the services. Both of the schemes at issue here—as described in further detail below—involved manipulating this verification process to enroll unsuspecting customers in PSMS Services.
During the period covered by the Indictment, Wedd served as the Chief Operating Officer and then Chief Executive Officer of a company called Mobile Messenger. Mobile Messenger was a mobile aggregator—that is, an intermediary between the digital content providers that market PSMS Services to consumers and the mobile phone carriers that transmit the messages to consumers. Mobile aggregators compile consumers’ monthly PSMS Services charges and bundle them for inclusion on the phone bills sent by carriers to consumers, receiving approximately 25% of the revenue generated.
The Indictment alleged that, between 2011 and 2013, Wedd worked with two sets of content providers—Tatto Media, Inc. ("Tatto") and certain companies operated by Wedd's co-defendant Eugeni Tsvetnenko, also known as "Zhenya"—to bypass2 the double opt-in verification procedures using an "auto-subscribing" computer process that made it look as if consumers had provided consent to PSMS Services. Monthly charges would then appear on consumers’ bills until the consumers noticed them and tried to cancel. Cancellation was often difficult.
The first four counts of the Indictment related to the Tatto scheme; the next four related to the Tsvetnenko scheme. Counts One and Five of the Indictment charged Wedd with conspiracy to commit wire fraud in violation of 18 U.S.C. § 1349. Counts Two and Six charged Wedd with wire fraud in violation of 18 U.S.C. §§ 1343 and 2. Counts Three and Seven charged Wedd with aggravated identity theft in violation of 18 U.S.C. §§ 1028A and 2. Counts Four and Eight charged Wedd with conspiracy to commit money laundering in violation of 18 U.S.C. § 1956(h).
On April 3, 2017, a trial began for Wedd and several co-defendants. The jury deadlocked on all the defendants, so the district court declared a mistrial on May 3, 2017.
On August 15, 2017, a second trial began for Wedd and one co-defendant, Fraser Thompson. On September 5, 2017, the jury convicted Thompson on all counts but again was deadlocked as to the charges against Wedd. Accordingly, the district court declared a mistrial as to Wedd for the second time.
After the second trial, the district court talked to the jury and reported to the parties that the vote had been 11-1 in favor of conviction. The district court later received a letter from a juror in the majority, expressing frustration with the holdout juror.
On the same day that the district court declared the second mistrial, the court—unprompted—queried whether "either side" might "believe[ ] that [it] would benefit from a different judge" for the third trial. App'x at 87. The district court raised the question of presiding over the third trial itself. See id . ("I would ask that if at this point, given the fact that the Court has tried this case now twice, I would try the case a third time."). The court speculated that "the government may not have agreed with many of my rulings on allowing in certain things, nor might the defendant" and that either party "may want ... [an] opportunity to raise things in front of another judge." Id . In the event of a reassignment request, the district court stated that it would "consult with [its] colleagues" and that "it may be that it would be the right thing to do ... to put [the case] in the wheel" for reassignment. Id .
After setting a date for Wedd's retrial, the district court excused him and his counsel. The district court proceeded to discuss the upcoming sentencing of Wedd's now-convicted co-defendant Thompson and his counsel, previewing "some of the things that are important to [the court] at the time of sentencing." Id . at 89. The district court identified the potential for recidivism as its "biggest issue" in "sentencing a defendant in a fraud case," observing that "[t]here is an extremely high rate of recidivism with fraud." Id . The court noted, however, that "of all of the defendants," it believed Thompson "was least likely to" recidivate. Id . The court said: "[I]f I were to rank people in terms of their levels of culpability, he would be at the very bottom of all of these defendants, ... and far below Mr. Wedd." Id . at 90.
On September 13, 2017, Wedd's counsel filed a letter asking for a new judge to preside over the third trial. The letter argued that there was "substantial support for the idea of reassigning a case in the context of a retrial following appellate reversal, where many of the same considerations are in play" and that there was "no reason to believe" reassignment would waste or duplicate judicial resources. No. 15 Cr. 616, Dkt. 497 at 2-3. The letter added that, if the case were reassigned, "this Court will be free to 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." Id . at 3 (footnote omitted). The Government opposed the reassignment request "for purposes of judicial efficiency." No. 15 Cr. 616, Dkt. 500.
On September 28, 2017, the district court denied the reassignment request, citing judicial efficiency. At a later pretrial conference, the district court explained that it had spoken to other judges about the possibility of reassignment, but none of them had time available in the period previously discussed for the trial.
On December 4, 2017, Wedd's third trial began. Key testimony for the Government's case came from three cooperating witnesses: Tatto co-owner Lin Miao and Mobile Messenger executives Michael Pajaczkowski and Erdolo Eromo. Wedd testified in his own defense. The cooperating witnesses described Wedd as a knowing and active participant in the Tatto and Tsvetnenko fraud schemes, while Wedd claimed he lacked knowledge of either scheme.
Miao testified that, in 2011, Wedd informed Miao that an internal Mobile Messenger audit had detected Tatto's involvement in auto-subscribing. By email, Wedd told Andrew Bachman, Tatto's other co-owner, that Tatto would be suspended from signing up new customers. Wedd did not, however, require Tatto to stop collecting money from already-billed subscribers. Nor did Wedd...
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