United States v. Ethan Jinian

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA , No. 11-10593

Plaintiff-Appellee,

D.C. No.

v. 3:09-cr-01103-

JSW-1

ETHAN FARID JINIAN , AKA Farid

Khoujinian,

Defendant-Appellant. OPINION

Appeal from the United States District Court

for the Northern District of California

Jeffrey S. White, District Judge, Presiding

Argued and Submitted

October 18, 2012—San Francisco, California

Filed March 26, 2013

Before: Dorothy W. Nelson, Mary H. Murguia, and

Morgan Christen, Circuit Judges.1

Opinion by Judge Murguia;

Concurrence by Judge Christen

1

This case was submitted to a panel that included Judge Betty B.

Fletcher, who recently passed away. Following Judge Fletcher’s death,

Judge Christen was drawn by lot to replace Judge Fletcher. Judge

Christen has read the briefs, reviewed the record, and listened to the oral

argument.

2 UNITED STATES V . JINIAN

SUMMARY*

Criminal Law

The panel affirmed a defendant’s conviction and sentence

on thirteen counts of wire fraud in violation of 18 U.S.C.

§ 1343 stemming from a scheme to defraud his employer,

Bricsnet FM America, Inc., by diverting part of the

company’s profits to a shell company through which the

defendant and other employees distributed the diverted profits

in the form of salaries, dividends, and bonuses.

The defendant asserted that routine wire communications

between two California banks and the Federal Reserve Bank

in Dallas occurred after the defendant deposited the monies

into his Mechanics Bank account and, as a result, were

neither initiated for the purpose of defrauding Bricsnet nor

related to his scheme to defraud. The panel disagreed

because the defendant conducted an ongoing scheme to

defraud Bricsnet, and even if each check the defendant

deposited is viewed as a discrete fraudulent scheme, the

interstate wire communications were necessary to complete

the fraud.

The panel rejected the defendant’s arguments that his

conviction should be overturned because there was

insufficient evidence to prove that his use of an interstate

wire communication was reasonably foreseeable and because

the jury should have been instructed to find the same. The

panel wrote that no mens rea requirement exists with regard

*

This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

UNITED STATES V . JINIAN 3

to the jurisdictional, interstate nexus of the defendant’s

actions under § 1343, which requires only that the defendant

used – or caused the use of – interstate wires in furtherance of

his scheme to defraud Bricsnet.

The panel held that § 1343 is a valid extension of

congressional power under the Commerce Clause, and that

since Congress enacted the statute based upon a

constitutionally enumerated power, analysis of the statute

under the Necessary and Proper Clause is inappropriate. The

panel also held that because § 1343 is a valid exercise of

powers delegated to Congress by the Commerce Clause, the

defendant’s Tenth Amendment challenge to the statute fails.

Concurring, Judge Christen wrote separately to emphasize

the attribute of the defendant’s fraudulent scheme that is fatal

to his argument that his crime was complete upon the deposit

of each check into his account at Mechanics Bank. She wrote

that when the identity of the ultimate victim matters to the

perpetrator’s ability to repeat an ongoing scheme, the crime

is not complete until the intended victim is swindled.

COUNSEL

Benjamin L. Coleman, Coleman & Balogh LLP, San Diego,

California; and Ethan A. Balogh, Coleman & Balogh LLP,

San Francisco, California, for Defendant–Appellant.

Suzanne Miles, Assistant United States Attorney, San

Francisco, California, for Plaintiff–Appellee.

4 UNITED STATES V . JINIAN

OPINION

MURGUIA, Circuit Judge:

Ethan Farid Jinian was charged with fourteen counts of

wire fraud in violation of 18 U.S.C. § 1343 stemming from

his scheme to defraud his employer. Jinian contends that the

district court erred in denying his motions for judgment of

acquittal, a new trial, and for an arrest of judgment.

Specifically, he argues that (1) routine transmissions

occurring during the interbank collection process are not

made for the purpose of executing a scheme to defraud or in

furtherance thereof, (2) the jury should have been instructed

that it was necessary to find that the interstate nature of the

wire communications was reasonably likely or foreseeable,

(3) there was insufficient evidence to establish that an

interstate wire communication was reasonably foreseeable

between two California banks, and (4) the wire fraud statute

is unconstitutional as applied to him. We reject these

arguments and affirm Jinian’s conviction and sentence.

I. FACTUAL AND PROCEDURAL BACKGROUND

From 2004 until 2008, Jinian served as the chief executive

officer (“CEO”) of Bricsnet FM America, Inc. (“Bricsnet”),

a company that developed and sold software. As CEO, Jinian

was authorized to spend Bricsnet monies to further its

business operations and make executive and financial

decisions. He was also responsible for reviewing the

company’s daily expenditures. Briscnet’s board of directors

and a majority of its investors were located in Europe,

enabling Jinian to control Briscnet’s operations from the

company’s San Francisco, California office with limited daily

oversight.

UNITED STATES V . JINIAN 5

In 2006, Jinian informed Leon Brown, Bricsnet’s finance

manager, that the company’s chairman of the board of

directors authorized Jinian to receive compensation in excess

of his annual salary and to draw advances on that

compensation. Unbeknownst to Brown, Jinian never received

any such authorization. Nevertheless, Brown, in reliance

upon Jinian’s representations, began issuing to Jinian checks

from Bricsnet’s account at Silicon Valley Bank in Santa

Clara, California. Jinian deposited these checks into his

account at Mechanics Bank in Hercules, California.

Jinian instructed Brown to issue multiple, small-

denomination checks instead of a single, lump-sum payment.

Between November 2006 and September 2008, Jinian

obtained from Brown nearly 100 checks, ranging in monthly

amounts from $25,000 to over $60,000. The checks were

issued regularly, some within days of each other. In total,

Jinian improperly obtained over $1.5 million from Bricsnet.

Jinian was indicted on fourteen counts of wire fraud,

which corresponded to fourteen Bricsnet checks Jinian

deposited into his Mechanics Bank account. At trial, the

government presented evidence showing that Mechanics

Bank utilized the Federal Reserve Bank as an intermediary

between it and Silicon Valley Bank to process the checks for

payment. Howard Ng, an internal auditor for the Federal

Reserve Bank, testified about the process through which

checks were cleared. Ng explained that, when Jinian

deposited a check into his Mechanics Bank account,

Mechanics Bank sent an electronic image of the check via

wire communication to the Federal Reserve Bank, which

utilized an image server located in Dallas, Texas to sort and

process the check. Once the check was processed in Dallas,

Ng testified, the Federal Reserve Bank wired an image of the

6 UNITED STATES V . JINIAN

check to Silicon Valley Bank to be negotiated and paid. Ng

testified that these wire communications facilitated the check

clearing process by ensuring that the appropriate accounts

were debited and credited.

At the close of the government’s case and the close of all

evidence, Jinian moved, pursuant to Federal Rule of Criminal

Procedure 29, for a judgment of acquittal, arguing that the

government failed to prove each element of wire fraud

beyond a reasonable doubt. The district court denied Jinian’s

motion, and the jury returned a guilty verdict on thirteen of

fourteen counts charged in the indictment.

Following his conviction, Jinian renewed his motion for

judgment of acquittal. Jinian also moved for a new trial and

for an arrest of judgment pursuant to Federal Rules of

Criminal Procedure 33 and 34, respectively, arguing, among

other things, that there was insufficient evidence that he

knew—or knew it was reasonably likely—that interstate

wires would be used to further the fraudulent scheme. The

district court again denied Jinian’s motions and affirmed the

jury’s convictions. It then sentenced Jinian to sixty-four

months imprisonment, three years of supervised release, and

ordered him to pay restitution of $1,587,860.04.

Jinian timely appealed. We have jurisdiction pursuant to

28 U.S.C. § 1291.

II. STANDARD OF REVIEW

We review de novo a district court’s interpretation of a

criminal statute, United States v. Dahl, 314 F.3d 976, 977

(9th Cir. 2002), and denial of a motion for judgment of

acquittal, United States v. Anaya-Acosta, 629 F.3d 1091,

UNITED STATES V . JINIAN 7

1093 (9th Cir. 2011). Sufficient evidence to support a

conviction exists if, “after viewing the evidence in the light

most favorable to the prosecution, any rational trier of fact

could have found the essential elements of the crime beyond

a reasonable doubt.” Jackson v. Virginia, 443 U.S. 307, 319

(1979). We also review de novo whether the district court’s

jury instructions adequately presented the defendant’s theory

of the case and whether the district court presented the jury

with every element of the crime. United States v. Knapp,

120 F.3d 928, 930 (9th Cir. 1997). If the district court’s

instructions fairly and adequately covered the elements of the

offense, then we review the instruction’s “‘precise

formulation’ for an abuse of discretion.” Id. Finally, we

review de novo questions regarding the constitutionality of a

federal statute. United States v. Zakharov, 468 F.3d 1171,

1176 (9th Cir. 2006).

III. DISCUSSION

The wire fraud statute criminalizes conduct by any person

who, “having devised or intending to devise any scheme or

artifice to defraud, . . . transmits or causes to be transmitted

by means of wire . . . communication in interstate or foreign

commerce, any writings, signs, signals, pictures, or sounds

for the purpose of executing such scheme or artifice . . . .”

18 U.S.C. § 1343 (2006). Section 1343, however, “does not

purport to reach all frauds, but only those limited instances”

wherein use of a wire “is a part of the execution of the fraud,

leaving all other cases to be dealt with by appropriate state

law.” Kann v. United States, 323 U.S. 88, 95 (1944).2

2

Kann involved alleged violations of the mail fraud statute. Since mail

and wire fraud are both defined as “any scheme or artifice to defraud, or

for obtaining money or property by means of false or fraudulent pretenses,

8 UNITED STATES V . JINIAN

The elements of wire fraud are: (1) the existence of a

scheme to defraud; (2) the use of wire, radio, or television to

further the scheme; and (3) a specific intent to defraud.

United States v. Pelisamen, 641 F.3d 399, 409 (9th Cir.

2011). “The specific intent requirement is an aspect of the

‘scheme to defraud’ requirement; i.e., there is no fraudulent

scheme without specific intent.” United States v. Bohonus,

628 F.2d 1167, 1172 (9th Cir. 1980). “One ‘causes’ use of

. . . wire communications where such use can reasonably be

foreseen, even though not specifically intended.” United

States v. Cusino, 694 F.2d 185, 188 (9th Cir. 1982). A wire

communication is “in furtherance” of a fraudulent scheme if

it is “incident to the execution of the scheme,” United States

v. Lo, 231 F.3d 471, 478 (9th Cir. 2000), meaning that it

“need not be an essential element of the scheme, just a ‘step

in the plot,’” United States v. Garlick, 240 F.3d 789, 795 (9th

Cir. 2001) (quoting Schmuck v. United States, 489 U.S. 705,

711 (1989)); accord United States v. Garner, 663 F.2d 834,

838 (9th Cir. 1981) (explaining that the wire transfer “need

only be made for the purpose of executing the scheme”).

For purposes of 18 U.S.C. § 1343, a wire communication

cannot be “part of an after-the-fact transaction that, although

foreseeable, was not in furtherance of the defendant’s

fraudulent scheme.” Lo, 231 F.3d at 478. Ultimately, “the

issue is not one purely of time sequence.” Id. As the

Supreme Court recognized in United States v. Sampson,

“subsequent mailings can in some circumstances provide the

representations, or promises,” 18 U.S.C. §§ 1341, 1343, “the wire fraud

statute is read in light of the case law on mail fraud,” United States v.

M anarite, 44 F.3d 1407, 1411 n.5 (9th Cir. 1995); accord Carpenter v.

United States, 484 U.S. 19, 25 n.6 (1987) (applying the same analysis to

mail and wire fraud).

UNITED STATES V . JINIAN 9

basis for an indictment under the mail fraud statutes.”

371 U.S. 75, 80 (1962). Thus, the “relevant question at all

times” is whether a wire “is part of the execution of the

scheme as conceived by the perpetrator at the time,”

Schmuck, 489 U.S. at 715, not whether the defendant, prior to

the wiring, “had obtained all the money [he] expected to get,”

Sampson, 371 U.S. at 79.

A.

Jinian’s principle argument is that the Supreme Court’s

decision in Kann is legally indistinguishable from this case

and, as such, compels a reversal of his conviction and entry

of judgment of acquittal. Kann, together with six other

employees, devised a scheme to defraud their employer by

diverting part of the company’s profits to a shell company

through which the defendants distributed the diverted profits

in the form of salaries, dividends, and bonuses. Kann,

323 U.S. at 89–90. The defendants were indicted on three

counts—based upon three banking transactions—of using the

mail in execution of a scheme to defraud, though the

government abandoned the first count at trial.3 Id. at 89–91.

Kann was convicted on the remaining two counts. Id. at 89;

supra note 3. Challenging his conviction, Kann argued that

the mailing of the checks by the banks “could not be for the

purpose of executing the scheme since the defendants to

3

The second count alleged that the defendants, who defrauded a

contractor hired to build a factory for their shell company, endorsed and

cashed in Maryland the contractor’s check in the amount of $12,000,

which the Maryland bank then “deposited in the mail to be delivered to the

bank in Wilmington, Delaware, on which it was drawn.” Kann, 323 U.S.

at 92. The third count alleged that one defendant deposited a check in the

amount of $5,000 at a Delaware bank, which then mailed the check to the

drawee bank located in Maryland. Id. at 92.

10 UNITED STATES V . JINIAN

whom those checks were delivered had received the money

represented by the checks and each transaction, after such

receipt, was irrevocable as respects the drawer.” Kann,

323 U.S. at 93.

The Supreme Court agreed with Kann, explaining that the

defendants received the money “irrevocably” once the two

checks were cashed or deposited, which constituted the point

at which “the scheme in each case had reached fruition.”4 Id.

at 94; accord id. at 95 (determining that “the scheme was

completely executed as respects the transactions in question

when the defendants received the money intended to be

obtained by their fraud”). The banks became the owners of

the checks once they were cashed or deposited and, “being

holders in due course, were entitled to collect from the

drawee bank . . . and the drawer had no defense to payment.”

Id. at 94. Reasoning that it was “immaterial” to the

defendants “or to any consummation of the scheme[] how the

bank which paid or credited the check would collect from the

drawee bank,” id., the Kann Court concluded that, based upon

the facts before it, the “subsequent banking transactions

between the banks concerned were merely incidental and

collateral to the scheme and not a part of it.” Id. at 95.

Because the mailings at issue were not for the purpose of

executing the fraud, the Supreme Court reversed Kann’s

conviction. Id.

4

The Supreme Court, however, rejected Kann’s contention that he

lacked the requisite intent under the mail fraud statute based upon the fact

that he had no reasonable belief that the checks would go through the

mails, explaining: “[W ]e think it a fair inference that those defendants who

drew, or those who cashed, the checks believed that the banks which took

them would mail them to the banks on which they were drawn, and

assuming [Kann] participated in the scheme, their knowledge was his

knowledge.” Kann, 323 U.S. at 93.

UNITED STATES V . JINIAN 11

Jinian asserts that the wire communications between the

two California banks and the Federal Reserve Bank in Dallas,

like the mailings in Kann, occurred after he deposited the

monies into his Mechanics Bank account and, as a result,

were neither initiated for the purpose of defrauding Bricsnet

nor related to his scheme to defraud. We disagree for two

reasons. First, Jinian conducted an ongoing scheme to

defraud Bricsnet. Second, even if we view each check Jinian

deposited as a discrete fraudulent scheme, the interstate wire

communications were necessary to complete and conceal

each fraud.

Kann involved two discrete, independent transactions.

There was no indication that the transactions were sequential

or that the success of one depended upon the other. Although

the government argued in Kann that the two transactions were

part of a larger scheme devised by the defendants to commit

future frauds against their employer, the Kann Court

construed the scheme narrowly, focusing upon the

“transactions in question” and explaining that the scheme was

“completely executed” once the defendants “received the

money intended to be obtained by their fraud.” Id. at 95.

Determining that the funds were irrevocably in the

defendants’ possession at the moment the checks were

deposited or cashed, id. at 94, the Kann Court concluded that

the subsequent interbank mailings were separate and distinct

from the defendants’ fraudulent scheme. Id. at 95.

Jinian’s conduct, in contrast to the circumstances at issue

in Kann, suggests that he executed an ongoing scheme to

defraud Bricsnet. The government, which charged Jinan with

fourteen counts of wire fraud, introduced evidence showing

that Jinian deposited nearly 100 checks over the course of a

two-year period. Thus, Jinian’s ability to perpetuate his

12 UNITED STATES V . JINIAN

scheme without interruption for two years was dependent

upon the successful completion of the check clearing process

for each Briscnet check Jinian deposited into his Mechanics

Bank account. See Schmuck, 489 U.S. at 711–12.

While Kann certainly represents an “important

limitation[] on the government’s use of the mail fraud

statute,” United States v. Lack, 129 F.3d 403, 407 (7th Cir.

1997), we must consider it in light of the Supreme Court’s

more recent pronouncements in Schmuck. See United States

v. Ashman, 979 F.2d 469, 482 (7th Cir. 1992) (acknowledging

that Schmuck did not overrule Kann). The fraudulent scheme

in Schmuck was devised by a used-automobile distributor

who rolled back odometers and sold the vehicles to dealers at

artificially inflated prices. 489 U.S. at 707. The dealers then

resold the automobiles to customers. Id. In order to complete

the resale of each automobile to its customers, the dealers had

to obtain title to each vehicle. Id. To that end, the dealers

mailed title application forms to the state on behalf of their

customers. Id. Schmuck was indicted on—and convicted

of—twelve counts of mail fraud, id., and challenged his

conviction on the basis that the mailings were routine,

occurred after the fraud came to fruition, and were “merely

tangentially related to the fraud,” id. at 711.

The Supreme Court disagreed with Schmuck’s

characterization of the mailings. Id. Focusing upon the

“scope” of the fraudulent scheme, the Schmuck Court

observed that Schmuck did not engage in a “‘one-shot’

operation in which he sold a single car to an isolated dealer”

but rather maintained “an ongoing fraudulent venture.” Id. at

711. The scheme, the Schmuck Court reasoned, “did not

reach fruition until the retail dealers resold the cars and

effected transfers of title” and would have “come to an abrupt

UNITED STATES V . JINIAN 13

halt” if the dealers were unable to resell the cars they

purchased from Schmuck. Id. at 712. Thus, it concluded

that, “although the registration-form mailings may not have

contributed directly to the duping of either the retail dealers

or the customers, they were necessary to the passage of title,

which in turn was essential to the perpetuation of Schmuck’s

scheme.” Id. The registration-form mailings were therefore

distinguishable from the intrabanking mailings in Kann

because the former were “essential step[s] in the successful

passage of title to the retail purchasers,” while the latter

“involved little more than post-fraud accounting among the

potential victims of the various schemes, and the long-term

success of the fraud did not turn on which of the potential

victims bore the ultimate loss.” Id. at 714. On this basis, the

Schmuck Court held that a rational jury could have found that

the title-registration mailings were part of the execution of

Schmuck’s fraudulent scheme. Id. at 712.

We conclude that Jinian’s conduct is more akin to the

fraud perpetrated in Schmuck than in Kann. The scheme in

Schmuck remained incomplete until the mailing activity,

thereby rendering the mailing an “essential step in the

successful passage of title,” occurred. Id. at 714. Similarly,

Jinian’s scheme remained incomplete—and Jinian could not

permanently access the monies he deposited—until the

interstate wire communication completed each deposit

transaction, thereby rendering it an “essential step” in

facilitating the transfer of funds from Bricsnet’s Silicon

Valley Bank account to Jinian’s Mechanics Bank account.

Simply stated, Jinian’s deposit of each check implicated use

of a wire—and its interstate component—and was therefore

“part of the execution of the scheme as conceived by [Jinian]

at the time” he devised his scheme. Id.

14 UNITED STATES V . JINIAN

Our ruling today is consistent with the manner in which

we, as well as our sister courts, have interpreted Kann and

Schmuck. For example, in United States v. Shipsey, a case

involving the diversion of construction loan proceeds through

wire payment transfers, we distinguished Kann by observing

that the fraudulent scheme “did not ‘reach fruition’” when the

wire draw requests were submitted and concluded, under the

logic of Schmuck, that the wires were incident to an essential

part of the fraudulent scheme. 363 F.3d 962, 965–66, 972

(9th Cir. 2004). The Seventh Circuit, in Lack, distinguished

the mailings at issue in that case—opening a bank account to

launder money and providing a mailing address to which

monthly statements were mailed—from those in Kann by

explaining that they, like the mailings in Schmuck, helped

conceal and were in furtherance of the fraudulent scheme.

129 F.3d at 408–09. The Third Circuit, affirming a

conviction for mail fraud where the defendant “devised and

executed a scheme to obtain additional bonuses” from her

employer by falsifying reports, distinguished Kann by

explaining that the fraud was “ongoing,” rather than

involving a single false report, and was therefore similar to

the scheme in Schmuck. United States v. Tiller, 302 F.3d 98,

100, 102 (3d Cir. 2002). Furthermore, the Fifth Circuit, in

United States v. Mills, relied principally upon Schmuck to

conclude that the defendant, who wrongfully obtained funds

from his company’s bank account in Colorado and deposited

them into his personal bank accounts in Texas, engaged in an

“ongoing venture and not a ‘one-shot’ operation” that

involved numerous checks over the course of at least thirteen

months.5 199 F.3d 184, 187, 189–90 (5th Cir. 1999). Finally,

5

The Mills Court also recognized that the defendant’s conduct fell

within an exception set forth in Kann, discussed infra, namely that it was

conceivable in some settings that the mere clearing of a check would be

UNITED STATES V . JINIAN 15

the Seventh Circuit has also distinguished Kann by virtue of

the fact that the decision predated the Uniform Commercial

Code, “which ma[de] it easy for a customer’s bank to reverse

the credit if the instrument cannot be collected.” United

States v. Franks, 309 F.3d 977, 978 (7th Cir. 2002).

Even if we construe each check Jinian deposited as an

individual, discrete scheme, Kann remains distinguishable.

The Supreme Court recognized exceptions to the rule it

announced in Kann: instances in which the mails—or, as

here, interstate wires—are used as “a means of concealment

so that further frauds which are part of the scheme may be

perpetuated.” 323 U.S. at 94. The Kann Court observed that,

in such cases, “the mailing has ordinarily had a much closer

relation to further fraudulent conduct than has the mere

clearing of a check . . . .” Id. at 95. It also described as

“conceivable” that the mere clearing of a check, “alone, in

some settings, would be enough” to support a fraud

conviction. Id.

Here, the mere clearing of a check is enough because the

interstate communication was necessary to complete and

conceal Jinian’s fraud. The monies Jinian deposited into his

Mechanics Bank account, unlike the monies involved in

Kann, were not irrevocably his at the moment of deposit.

Indeed, the monies did not belong to Jinian until the checks

cleared through Silicon Valley Bank. Evidence introduced at

trial showed that the interstate wire communications between

Mechanics Bank and the Federal Reserve Bank in

Dallas—and between the Federal Reserve Bank in Dallas and

Silicon Valley Bank—were a necessary component of the

enough to confer federal jurisdiction under the wire fraud statute. Mills,

199 F.3d at 189.

16 UNITED STATES V . JINIAN

check clearing process. Absent those wire communications

through Dallas, Jinian’s deposit was incomplete, and the

monies were subject to hold or cancellation, i.e., they were

not irrevocably in his possession. Consequently, a rational

jury could have concluded that the interstate wire

communications among the three banks were “incident to the

execution of,” Lo, 231 F.3d at 478—rather than “merely

incidental and collateral” to, Kann, 323 U.S. at 95—Jinian’s

scheme because they advanced and facilitated the deposit of

monies into Jinian’s account. See Jackson, 443 U.S. at 319.

The government also introduced evidence that Jinian

directed Brown to issue multiple, smaller-denomination

checks, rather than a large, lump-sum payment.6 Such

conduct gives rise to inferences that Jinian intended to

conceal his transactions entirely from detection by Bricsnet

or structure the transactions in a manner that gave them the

appearance of regular or necessary business expenditures.

Jinian’s conduct further suggests that depositing multiple,

smaller-denomination checks insulated his conduct from

suspicion by or scrutiny from Mechanics Bank about large-

sum deposits. Thus, a rational jury could have concluded that

Jinian utilized the interstate wires to structure, perpetuate, and

conceal his fraudulent scheme.

In short, having considered the principles set forth in

Kann and Schmuck, we sustain Jinian’s wire fraud conviction.

6

For example, Jinian, on March 3, 2008, deposited two separate checks

in the amounts of $17,500 and $15,500, rather than one check for $33,000.

On April 4, 2008, Jinian deposited two separate checks in the amounts of

$14,000 and $9,000, rather than one check for $23,000.

UNITED STATES V . JINIAN 17

B.

Next, Jinian, interpreting 18 U.S.C. § 1343 to require that

the government prove beyond a reasonable doubt that a

defendant intended to use an interstate wire communication

as part of a scheme to defraud, contends that the district court

erred by failing to instruct the jury that the interstate

component of a wire must be reasonably likely or foreseeable.

The district court instructed the jury, in relevant part, as

follows:

With regard to each of these 14 counts, in

order for the defendant to be found guilty . . . ,

the government must prove each of the

following elements beyond a reasonable

doubt:

First, the defendant knowingly devised a

scheme or plan to defraud or a scheme or plan

for obtaining money by means of false or

fraudulent pretenses, representations, or

promises[.]

....

Third, the defendant acted with the intent

to defraud; that is, the intent to deceive or

cheat[.] And fourth, the defendant used or

caused to be used a wire communication in

interstate commerce to carry out or attempt to

carry out an essential part of the scheme.

....

18 UNITED STATES V . JINIAN

A wire fraud involves the use of wire in

interstate commerce. An interstate wire

communication includes a wire transmission

so long as it goes across a state line.

A wiring is caused when one knows that a

wire will be used in the ordinary course of

business or when one can reasonably foresee

such use. It does not matter whether the

information wired was itself false or deceptive

so long as the wire was used as part of the

scheme, nor does it matter whether the

scheme or plan was successful or that any

money was obtained.

An intent to defraud is an intent to deceive

or cheat.

These jury instructions fairly and adequately covered the

elements of wire fraud. See Pelisamen, 641 F.3d at 409;

Knapp, 120 F.3d at 930.

While there is a presumption in favor of finding an intent

requirement in each statutory element that criminalizes

otherwise innocent conduct, United States v. X-Citement

Video, Inc., 513 U.S. 64, 72 (1994), the Supreme Court has

distinguished between proscribed conduct generally and

conduct that falls within the scope of congressional

regulation. Specifically, it explained that a “requirement is

sufficient to confer jurisdiction on the federal courts for what

otherwise are state crimes precisely because it implicates

factors that are an appropriate subject for federal concern”:

UNITED STATES V . JINIAN 19

The significance of labeling a statutory

requirement as “jurisdictional” is not that the

requirement is viewed as outside the scope of

the evil Congress intended to forestall, but

merely that the existence of the fact that

confers federal jurisdiction need not be one in

the mind of the actor at the time he perpetrates

the act made criminal by the federal statute.

The question, then, is not whether the

requirement is jurisdictional, but whether it is

jurisdictional only.

United States v. Feola, 420 U.S. 671, 676 n.9 (1975). Here,

the “fact that confers federal jurisdiction,” id., in 18 U.S.C.

§ 1343 is the interstate nexus: use of an interstate

communication “is included in the statute merely as a ground

for federal jurisdiction . . . . If the wire employed is an

interstate wire the requirements for federal jurisdiction are

satisfied.” United States v. Blassingame, 427 F.2d 329, 330

(2d Cir. 1970). The interstate nexus is necessary, of course,

“because Congress’s power over intrastate activities is limited

by the Commerce Clause.” United States v. Lindemann,

85 F.3d 1232, 1241 (7th Cir. 1996). We therefore hold that

the interstate requirement in 18 U.S.C. § 1343 is jurisdictional

and not a substantive element of a wire fraud offense.

“Jurisdictional language need not contain the same

culpability requirement as other elements of the offense.”

United States v. Yermian, 468 U.S. 63, 68 (1984). In light of

our holding, the government is not required to prove under

18 U.S.C. § 1343 that the interstate nature of the wire was

reasonably likely or foreseeable, see Lindemann, 85 F.3d at

1241, because the statute “does not condition guilt upon

knowledge that interstate communication is used” and “use of

20 UNITED STATES V . JINIAN

interstate communication is logically no part of the crime

itself,” Blassingame, 427 F.2d at 330; see also United States

v. Roselli, 432 F.2d 879, 891 (9th Cir. 1970) (explaining that

the purpose of statutes such as 18 U.S.C. § 1343 “argues

against a construction making a specific ‘anti-federal’ intent

an element of the offense”). As the Seventh Circuit

recognized,

it has consistently been held that for statutes

in which Congress included an “interstate

nexus” for the purpose of establishing a basis

for its authority, the government must prove

that the defendant knew he was involved in

the wrongful conduct, but need not prove that

the defendant knew the “interstate nexus” of

his actions.

Lindemann, 85 F.3d at 1241 (emphasis added). It is therefore

“wholly irrelevant to any purpose of the statute that the

perpetrator of the fraud knows about the use of interstate

communication.” Blasingame, 427 F.2d at 330; accord

United States v. Bryant, 766 F.2d 370, 375 (8th Cir. 1985)

(explaining that 18 U.S.C. § 1343, “read literally, require[s]

only that the wire communication be interstate, not that

defendants know that it is to be interstate”).

A specific intent to defraud is the only mens rea

requirement under the wire fraud statute. See United States

v. Green, 745 F.2d 1205, 1207 (9th Cir. 1984) (construing the

mail fraud statute); accord United States v. Walker, 191 F.3d

326, 334 (2d Cir. 1999) (construing the mail fraud statute and

explaining that “[p]roof of fraudulent intent, or the specific

intent to harm or defraud the victims of the scheme, is an

essential component of the ‘scheme to defraud’ element”).

UNITED STATES V . JINIAN 21

The Supreme Court’s decision in Pereira v. United States,

which establishes that a defendant “causes” an interstate wire

if he acts “with knowledge that the use of the [wire] will

follow in the ordinary course of business, or where such use

can reasonably be foreseen, even though not actually

intended,” 347 U.S. 1, 8–9 (1954), does not hold to the

contrary.

Jinian’s reliance upon Fowler v. United States, 131 S. Ct.

2045 (2011), which he contends supports his position that the

government must prove he reasonably foresaw that an

interstate wire communication—rather than a wire

communication in general—would occur, is misplaced. At

issue in Fowler was the federal witness tampering statute,

which makes it a crime to kill—or attempt to kill—another

person “with intent to . . . prevent the communication by any

person to a law enforcement officer . . . of the United States

of information relating to the commission or possible

commission of a Federal offense . . . .” 18 U.S.C.

§ 1512(a)(1)(C) (2006). Focusing upon instances where a

defendant killed a person with an intent to prevent the victim

from communicating with law enforcement officers generally

but did not have federal law enforcement officers in mind, the

Supreme Court addressed how the government needed to

prove a federal nexus under the statute in order “to show that

the defendant more particularly intended to prevent

communication with federal officers as well.” Fowler, 131

S. Ct. at 2048. Since it could not construe the witness

tampering statute “as intending to excuse the Government

from proving something about the hypothetical

communication with federal officers,” id. at 2051, the

Supreme Court held that the government was required to

show there was a reasonable likelihood that a relevant

22 UNITED STATES V . JINIAN

communication would have been made to a federal officer,7

id. at 2048. In other words, killing a victim with an intent to

prevent communication with law enforcement officers

generally includes “an intent to prevent communications with

federal law enforcement officers only if it is reasonably likely

under the circumstances that . . . at least one of the relevant

communications would have been made to a federal officer.”8

Id. at 2052.

The Fowler Court adopted a foreseeability standard

because the witness tampering statute addresses hypothetical

communications. See 131 S. Ct. at 2049 (“Witness tampering

may prove more serious (and more effective) when the crime

takes place before the victim has engaged in any

communication at all with law enforcement officers—at a

time when the precise communication and nature of the

officer who may receive it are not yet known.”). The wire

fraud statute, by contrast, requires an actual wire

communication. Moreover, the Fowler Court’s enunciation

of a “reasonable likelihood” standard was directed toward the

“broad indefinite intent,” id. at 2050, set forth in 18 U.S.C.

§1512(a)(1)(C) that requires the likelihood of communication

to a federal officer to be “more than remote, outlandish, or

7

The government, however, need not show that the defendant intended

to prevent a communication from reaching a law enforcement officer

whom the defendant knew to be a federal officer because 18 U.S.C.

§ 1512(g)(2) provides that “no state of mind need be proved” with respect

to the victim’s status as a federal officer. Fowler, 131 S. Ct. at 2049.

8

The “reasonable likelihood” standard the Fowler Court adopted

reflected the shortcomings of a “mere possibility” standard that, it

reasoned, would enable the government “to show little more than the

possible commission of a federal offense.” 131 S. Ct. at 2051 (emphasis

added).

UNITED STATES V . JINIAN 23

simply hypothetical,” id. at 2052. No such broad, indefinite

intent exists in the wire fraud statute, which requires an intent

to defraud, see Bohonus, 628 F.2d at 1172, not the intent to

utilize an interstate wire communication, 18 U.S.C. § 1343.

Fowler, therefore, is wholly inapposite.

We reject Jinian’s arguments that his conviction should be

overturned on the basis that there was insufficient evidence

to prove his use of an interstate wire communication was

reasonably foreseeable and the jury should have been

instructed to find the same. No mens rea requirement exists

with regard to the jurisdictional, interstate nexus of Jinian’s

actions under 18 U.S.C. § 1343, which requires only that

Jinian used—or caused the use of—interstate wires in

furtherance of his scheme to defraud Bricsnet. The

government proved each element of wire fraud by introducing

sufficient evidence for a reasonable jury to conclude that (1)

Jinian devised a scheme with the specific intent to defraud

Bricsnet, (2) it was reasonably foreseeable to Jinian that wire

communications between Mechanics Bank and Silicon Valley

Bank would be made in furtherance of his scheme, and (3)

interstate wire communications actually occurred in

furtherance of Jinian’s scheme. Accordingly, the district

court properly instructed the jury and did not abuse its

discretion by refusing to give Jinian’s proposed jury

instruction.

C.

Finally, Jinian argues that the district court erred by

denying his motion for judgment of acquittal because the wire

fraud statute, as applied to his case, constitutes an improper

exercise of congressional authority under the Necessary and

24 UNITED STATES V . JINIAN

Proper Clause and violates the Tenth Amendment. We reject

these constitutional challenges.

The Necessary and Proper Clause “grants Congress broad

authority to enact federal legislation.” United States v.

Comstock, 130 S. Ct. 1949, 1956 (2010). When determining

whether the Necessary and Proper Clause grants Congress the

legislative authority to enact a federal statute, courts examine

whether “the statute constitutes a means that is rationally

related to the implementation of a constitutionally

enumerated power.” Id.

The wire fraud statute falls “within the extensive reach of

the Commerce Clause,” United States v. Hook, 195 F.3d 299,

310 (7th Cir. 1999), under which Congress may (1) “regulate

the use of the channels of interstate commerce,” (2) “regulate

and protect the instrumentalities of interstate commerce, or

persons or things in interstate commerce, even though the

threat may come only from intrastate activities,” and (3)

“regulate those activities having a substantial relation to

interstate commerce, i.e., those activities that substantially

affect interstate commerce,” United States v. Lopez, 514 U.S.

549, 558–59 (1995) (citation omitted); accord Gonzales v.

Raich, 545 U.S. 1, 22 (2005) (recognizing that it is “of no

moment” that Congress’s valid regulation of interstate

activity “ensnares some purely intrastate activity”). Wires are

channels or instrumentalities of interstate commerce. See

Heart of Atlanta Motel, Inc. v. United States, 379 U.S. 241,

271 (1964) (“The facilities and instrumentalities used to carry

on . . . commerce, such as railroads, truck lines, ships, rivers,

and even highways are also subject to congressional

regulation . . . .”); United States v. Carnes, 309 F.3d 950, 954

(6th Cir. 2002) (recognizing that telecommunications are

channels and instrumentalities of interstate commerce); see

UNITED STATES V . JINIAN 25

also United States v. Wright, 625 F.3d 583, 594 (9th Cir.

2010) (“[O]ur precedent indicates that criminal statutes

punishing the transmission of the relevant material ‘in

interstate or foreign commerce’ require the material itself to

cross state lines.”). Accordingly, 18 U.S.C. § 1343 “is a valid

extension of congressional power” under the Commerce

Clause. Hook, 195 F.3d at 310.

Since Congress enacted 18 U.S.C. § 1343 based upon a

constitutionally enumerated power, analysis of the statute

under the Necessary and Proper Clause is inappropriate.

Gonzales, 545 U.S. at 39 (explaining that the Necessary and

Proper Clause “empowers Congress to enact laws in

effectuation of its enumerated powers that are not within its

authority to enact in isolation” (emphasis added) (citing

McCulloch v. Maryland, 17 U.S. (4 Wheat.) 316, 421–22

(1819))). Furthermore, because 18 U.S.C. § 1343 is a valid

exercise of powers delegated to Congress by the Commerce

Clause, Jinian’s Tenth Amendment challenge fails. United

States v. Jones, 231 F.3d 508, 515 (9th Cir. 2000) (“We have

held that if Congress acts under one of its enumerated

powers, there can be no violation of the Tenth Amendment.”).

IV. CONCLUSION

We conclude that Jinian’s fraudulent scheme closely

resembles the fraud perpetrated in Schmuck, rather than the

conduct at issue in Kann, and hold that the interstate

requirement in 18 U.S.C. § 1343 is jurisdictional and not a

substantive element of the wire fraud offense. We further

26 UNITED STATES V . JINIAN

conclude that Jinian’s constitutional challenges to the wire

fraud statute are without merit. Accordingly, we affirm

Jinian’s conviction and sentence.

AFFIRMED.

CHRISTEN, Circuit Judge, concurring:

I concur with the majority opinion. I write separately to

emphasize the attribute of Jinian’s fraudulent scheme that is

fatal to his argument that his crime was complete upon the

deposit of each check into his account at Mechanics Bank.

When a perpetrator—like Jinian—conceives of an

ongoing scheme to defraud, he is necessarily concerned with

which party ultimately bears the loss; indeed, his ability to

continue the scheme depends upon it. See Schmuck v. United

States, 489 U.S. 705, 714 (1989). In contrast, one-time

fraudsters are indifferent to who pays for their crimes,

because they do not need to leave one party whole in order to

avoid detection and swindle again. See Kann v. United

States, 323 U.S. 88, 93–94 (1944). The Schmuck and Kann

cases illustrate that when a perpetrator is indifferent to the

ability to repeat the fraudulent scheme, the use of mail or

wires after money or services are obtained cannot be “for the

purpose of executing [that] scheme.” See 18 U.S.C. § 1343.

For federal wire fraud, the point at which this type of

transaction is deemed “completed” is illustrated by

comparing the facts in Schmuck with the facts in Kann.

Schmuck involved an “ongoing fraudulent venture”: an

automobile distributor turned back the odometers on used

UNITED STATES V . JINIAN 27

cars before selling them to unsuspecting dealers. The dealers

resold the cars to consumers at inflated prices, using the mail

to transfer title to their customers. 489 U.S. at 707. Schmuck

argued that his crimes were completed once he collected his

money from the dealers, which was before the mail was used

to transfer the titles. Id. at 707–08. But the Court explained

that Schmuck fell within the bounds of the federal mail fraud

statute because the scheme Schmuck envisioned required that

the dealers could successfully re-sell the used cars and

transfer titles to the new owners. Id. at 712. If the dealers

had been unable to do so, they surely would not have agreed

to continue doing business with Schmuck and his scheme

likely would have been discovered. Id. at 714.

In contrast, the federal prohibition on mail fraud was not

triggered in the one-off scheme that took place in Kann.

There, businessmen cashed or deposited fraudulently

obtained checks and moved on, unconcerned about whether

the drawee banks reimbursed the payee banks. See 323 U.S.

at 94. The Kann crimes were completed when the

businessmen deposited or cashed their checks because the

scheme they envisioned did not depend on who ultimately

bore the loss. Id. The Court reached the same result in Parr

v. United States, 363 U.S. 370 (1960), where two fraudsters

used a school district credit card to buy gasoline and other

services from a filling station. Each fraudulent transaction

was completed long before the credit card bill was mailed to

the school district for payment. See id. at 392–93. The Parr

Court explained that it “was immaterial to [the perpetrators],

or to any consummation of the scheme, how the [oil

company] . . . would collect from the [District].” Id. at 393

(quoting Kann, 323 U.S. at 94) (first alternation added, the

remainder in Parr).

28 UNITED STATES V . JINIAN

Jinian convinced an employee at Bricsnet that he had

permission to receive funds in excess of his regular

compensation. He obtained checks through this

misrepresentation and deposited them into his account at

Mechanics Bank. The ability to perpetuate his scam

depended on his employer, not Mechanics Bank, bearing the

loss. If Mechanics Bank had credited Jinian’s account for

any one of his fraudulently-obtained checks and the check

had subsequently failed to clear Silicon Valley Bank

(Bricsnet’s bank), Mechanics Bank would have sustained the

loss, and Jinian would have “jeopardized [his] relationship of

trust and goodwill” with Mechanics Bank. Schmuck,

489 U.S. at 714. No doubt additional questions would have

been asked that would have risked disclosure of Jinian’s

fraudulent operation. Because the ongoing nature of Jinian’s

scheme depended on every check clearing (so that Bricsnet

bore the loss rather than Mechanics Bank), wiring the image

of every check to the Federal Reserve in Dallas was “part of

the execution of the scheme as conceived by [Jinian].” Id. at

715.

The majority and the district court rely on United States

v. Franks, 309 F.3d 977, 978 (7th Cir. 2002), to conclude that

Jinian’s fraudulent transactions were not complete until the

deposited checks cleared because the funds “were not

irrevocably in his possession” until that time. Majority at 16.

Franks stated that the deposit of fraudulently obtained checks

should not determine the “completion” of a similar scheme to

defraud because the adoption of the Uniform Commercial

Code (after Kann was decided) made it easier for banks to

recall deposited funds when checks fail to clear. Id. I agree

with the conclusion that Jinian’s transactions were not

complete until clearance, but not because the funds were not

irrevocably his before that time.

UNITED STATES V . JINIAN 29

First, the record does not support the majority’s statement

that Jinian’s funds were “subject to hold or cancellation” by

Mechanics Bank until after the images of the checks were

wired to the Federal Reserve. Majority at 16. No testimony

was offered from employees at Mechanics Bank to establish

when deposited funds were credited to customers’ accounts

and made available to them to withdraw. It is easy to

envision that a bank customer like Jinian, with a large

account balance and an active account, may have been given

the courtesy of having access to funds in his account before

the checks cleared via wire transfer to the Federal Reserve.

Without knowing the specifics of Mechanics Bank’s policies,

we cannot know whether Mechanics Bank would have been

able to recall, and thereby recover, Jinian’s ill-gotten checks.

Without this evidence, reliance on the reasoning in Franks is

misplaced.

More to the point, the result of Jinian’s case would not

change even if Jinian had cashed the checks at Mechanics

Bank, rather than depositing them, because Schmuck does

not focus on retrievability. Schmuck instructs that the

dispositive fact in wire and mail fraud cases such as this one

is whether the fraud “as conceived by the perpetrator at the

time” was complete before the intended victim suffered a

loss. 489 U.S. at 715 (emphasis added). When the identity

of the ultimate victim matters to the perpetrator’s ability to

repeat an ongoing scheme, the crime is not complete until the

intended victim is swindled. Here, the wires to the Federal

Reserve were “incident to an essential part of [Jinian’s]

scheme” because the wires—not Jinian’s deposits to

Mechanics Bank—ensured that it was Bricsnet’s funds that

were fraudulently obtained. See Pereira v. United States,

347 U.S. 1, 8 (1954).