Friday, August 19, 2005

Mail Fraud - "Culpable participation" requirement

In US v. Marsha Dobson (No. 04-2169, 8/16/05), the 3rd Cir has written a very helpful decision regarding the "cuplable participation" requirement in the mail fraud statute. This decision is also very helpful on the issue of plain error in jury instructions. The court ruled, following its prior decision in US v. Pearlstein, that it is not enough for the government to show that defendant participated in a fraudulent scheme; "rather, it must show that the defendant did so knowingly and 'in furtherance of the illicit enterprise.'" Thus, "the relevant inquiry is not whether the defendant acted knowingly in making any misstatement, but whether she did so with respect to the overarching fraudulent scheme -- that is, the particular 'illicit scheme' charged in the indictment."
As the court explained, this case involved two layers of potential fraud or misrepresentation -- the defendant's misrepresentations as a salesperson for a fraudulent enterprise, and the fraudulent enterprise itself. The court found the district court's instruction on this issue constituted plain error because it did not convey the culpable participation aspect of the knowledge element. The instruction allowed the jury to convict based on the defendant's own misrepresentations, without proof that she knew about the the enterprise's broader illicit purpose.

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