The Supreme Court has held that "[T]he well-settled meaning of 'fraud' require[s] a misrepresentation or concealment of material fact" and "materiality of falsehood is an element of the federal mail fraud, wire fraud, and bank fraud statutes." Neder v. United States, 527 U.S. 1, 23, 25 (1999). Since Neder, the federal circuits have uniformly ruled that schemes criminalized by the mail or wire fraud statutes must involve material false representations, material omissions of fact, or both.

Federal prosecutors in the Ninth Circuit recently have advanced the proposition that the federal wire and mail fraud statutes criminalize two different types of schemes: (1) those involving the common law element of material false statements and omissions; and (2) those covered by the term "scheme to defraud," as used in those fraud statutes, which omits this common law requirement and requires only an intent to deceive; nothing deceptive need actually ever be said or done.

In a recent case in the Central District of California, the defendant was charged with obtaining funds by means of fraudulent representations and omissions, an allegation necessary to adequately state a fraud offense under Neder. But at trial the government argued that the wire fraud statute reaches "schemes" involving an intent to deceive or cheat, even absent the making of a material falsehood or omission. Over Namvar's objection, the district court took the unprecedented step of redacting from the Circuit's model instruction the element of a material misrepresentation and/or omission of fact, and Namvar was convicted. In an unpublished opinion, a three judge panel affirmed.

In fact, the term "scheme to defraud," has always been interpreted to incorporate the core element of fraud at common law: "everything designed to defraud by representations as to the past or present, or suggestion, or promises as to the future." McNally v. United States, Id. 483 U.S. 350, 358 (1987) (quoting Durland v. United States, 161 U.S. 306, 313 (1896)) (emphasis added). Neder rejected the argument that the federal fraud statutes can be read to require no more than an intent to deceive. 527 U.S. at 23-24 (emphasis in original)

That a panel decision could approve a sea change in the law of fraud in an unpublished opinion is deeply disturbing, not least of all because unpublished opinions rarely are reviewed by the Circuit sitting en banc. A group of ex-federal prosecutors, however, has taken the highly unusual step of filing an amicus in support of Namvar's petition for rehearing en banc. The amicus support provides hope that the Namvar opinion will receive reconsideration. If it does not, more fraud-less fraud prosecutions can be expected in the Ninth Circuit, and defense counsel will need to be prepared to counter them on the basis of Neder and McNally. Thanks to Dennis Riordan.