White-Collar Defendants Get Wire Fraud, Money Laundering Convictions Reversed

U.S. v. Lake, 2007 WL 30038 (1/5/07) - Ho hum, another defense success, this time for well-heeled corporate types. The 10th reversed for insufficiency of the evidence the defendants' numerous convictions for wire fraud and the money laundering connected to the wire fraud. The government's case hinged on the defendants' failure to inform the SEC in a number of documents about their personal use of Westar's corporate airplane. Because the law required the defendants to file the documents, they could be guilty of wire fraud only if the defendants lied in the documents or omitted information that had to be reported. The government failed to prove the defendants had to report their personal airplane use because they presented no evidence about the cost to the corporation of the personal use, which had to be over $ 50,000 before it had to be reported. The government only presented evidence of the value of the plane flights to the defendants.

The 10th also reversed for retrial convictions for "circumventing" and conspiracy to "circumvent" by omitting mention of the personal plane use in internal documents, because the trial court failed to instruct the jury about the SEC regulations. The jury could not properly evaluate the defendants' intent in omitting the information without knowing what the SEC required to be reported. The 10th rejected the defendants' argument that they could not be guilty of conspiracy under the circumvention statute. With few exceptions, [e.g. a person being transported for prostitution purposes], not applicable here, a person can be guilty of conspiring to violate a statute.