2d Circuit Majority and Concurring Opinions of Fraud and Sentencing

In United States v. Corsey, ___ F.3d ___, 2013 U.S. App. LEXIS 14897 (2d Cir. 2013), here free version, [enhanced version available to lexis.com subscribers], a per curiam decision, the Second Circuit opens its opinion:

This appeal principally raises two issues: (1) whether the misrepresentations underlying these convictions were not material because no reasonable financial professional would have believed them, and (2) whether the sentences imposed on appellants are procedurally unreasonable.

The Fraud Issue

In an FBI directed sting operation, the defendants attempted to sell the FBI informant in the financial brokerage industry on a laughable financial scheme. I won't get into the details of it since they are well summarized in the opinion linked above. The opinion later captures the flavor of this comical adventure in a question posed by defendant's counsel at sentencing:

"[W]hat hedge fund would fall prey to a purported coalition of Buryatian nationals and Yamasee tribesmen using AOL email accounts to offer five billion dollars in collateral for a loan to build a pipeline across Siberia?

Buryatia is a federal republic of Russia, in the south central area of Siberia. Yamasee is a confederation of native Americans.

But, the scheme, if anyone would have believed it and acted on it, could have defrauded a lender of over $3 billion. The problem in the case was that no lender with that kind of resources would have been defrauded because minimum due diligence would have easily uncovered the Three Stooges transparency of the fraud. That set the stage for the defendants claim that they should not have been convicted of a fraud that could not occur.

The Court of Appeals first states the test of fraud:

View Jack Townsend's opinion in its entirety on the Federal Tax Crimes blog site.

For additional insight, explore Tax Crimes, authored by Jack Townsend and available at the LexisNexis® Store

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