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Supreme Court of the United States
February 23, 1999, Argued ; June 10, 1999, Decided
[*4] [**1831] [***44] CHIEF JUSTICE REHNQUIST delivered the opinion of the Court.
Petitioner was tried on charges of violating a number of federal criminal statutes penalizing fraud. It is agreed that the District Court erred in refusing to submit the issue of materiality to the jury with respect to [****8] those charges involving tax fraud. See United States v. Gaudin, 515 U.S. 506, 132 L. Ed. 2d 444, 115 S. Ct. 2310 (1995). We hold that the harmless-error rule of Chapman v. California applies to this error. We also hold that materiality is an element of the federal mail fraud, wire fraud, and bank fraud statutes under which petitioner was also charged.
In the mid-1980's, petitioner Ellis E. Neder, Jr., an attorney and real estate developer in Jacksonville, Florida, engaged in a number of real estate transactions financed by fraudulently obtained bank loans. Between 1984 and 1986, Neder purchased 12 parcels of land using shell corporations set up by his attorneys and then immediately resold the land at much higher prices to limited partnerships that he controlled. [*5] Using inflated appraisals, Neder secured bank loans that typically amounted to 70 to 75% of the inflated resale price of the land. In so doing, he concealed from lenders that he controlled the shell corporations, that he had purchased the land at prices substantially lower than the inflated resale prices, and that the limited partnerships had not made substantial down payments as represented. In several cases, Neder agreed to sign affidavits [****9] falsely stating that he had no relationship to the shell [**1832] corporations and that he was not sharing in the profits from the inflated land sales. By keeping for himself the amount by which the loan proceeds exceeded the original purchase price of the land, Neder was able to obtain more than $ 7 million. He failed to report nearly all of this money on his personal income-tax returns. He eventually defaulted on the loans.
Neder also engaged in a number of schemes involving land development fraud. In 1985, he obtained a $ 4,150,000 construction loan to build condominiums on a project known as Cedar Creek. To obtain the loan, he falsely represented to the lender that he had satisfied a condition of the loan by making advance sales of 20 condominium units. In fact, he had been unable to meet the condition, so he secured additional buyers by making their down payments himself. He then had the down payments transferred back to him from the escrow accounts into which they had been placed. Neder later defaulted on the loan without repaying any of the principal. He employed a similar scheme to obtain a second construction loan of $ 5,400,000, and unsuccessfully attempted to obtain an additional [****10] loan in the same manner.
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527 U.S. 1 *; 119 S. Ct. 1827 **; 144 L. Ed. 2d 35 ***; 1999 U.S. LEXIS 4007 ****; 67 U.S.L.W. 4404; 99-1 U.S. Tax Cas. (CCH) P50,586; 83 A.F.T.R.2d (RIA) 99-2668; 99 Cal. Daily Op. Service 4515; 99 Daily Journal DAR 5799; 1999 Colo. J. C.A.R. 3267; 12 Fla. L. Weekly Fed. S 322
ELLIS E. NEDER, JR., PETITIONER v. UNITED STATES
Subsequent History: On remand at United States v. Neder, 197 F.3d 1122, 1999 U.S. App. LEXIS 32215 (11th Cir. Fla., Dec. 10, 1999)
Prior History: [****1] ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT.
United States v. Neder, 136 F.3d 1459, 1998 U.S. App. LEXIS 5102 (11th Cir. Fla., Mar. 19, 1998)
Disposition: 136 F.3d 1459, affirmed in part, reversed in part, and remanded.
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