United States v. Gatto - 986 F.3d 104 (2d Cir. 2021)

Rule:

As to the "object of the scheme" element of wire fraud, a defendant need not literally obtain money or property -- in the sense of putting money into his own pocket -- to violate the wire fraud statute. And because individuals have the right to control their property, depriving the victim of economic information it would consider valuable in deciding how to use its assets satisfies the object-of-the-scheme element. Still, as the U.S. Supreme Court has noted, a property fraud conviction cannot stand when the loss to the victim is only an incidental byproduct of the scheme. Loss to the victim must play more than some bit part in a scheme: It must be an object of the fraud.

Facts:

Defendants-appellants James Gatto, Merl Code, and Christian Dawkins were convicted of engaging in a scheme to defraud three universities by paying tens of thousands of dollars to the families of high school basketball players to induce them to attend the universities, which were sponsored by Adidas, the sports apparel company, and covering up the payments so that the recruits could certify to the universities that they had complied with rules of the National Collegiate Athletic Association (the "NCAA") barring student-athletes and recruits from being paid. At trial, defendants admitted that they engaged in the scheme and broke NCAA rules, but argued that what they did was not criminal. On appeal, they contended that the government failed to prove that they intended to defraud the universities, and that their intent instead was to help the Universities by bringing them top recruits to ensure winning basketball programs.

Issue:

Did the government fail to prove that the defendants intended to defraud the universities? 

Answer:

No.

Conclusion:

The court affirmed the defendants’ conviction, holding that the defendants had not shown that the government failed to present enough evidence for any rational trier of fact to find, beyond a reasonable doubt, that there was a scheme to defraud to support wire fraud, 18 U.S.C.S. § 1343. According to the court, the jury was presented with enough evidence for a rational trier of fact to find that universities' athletic-based aid was "an object" of their scheme. Moreover, the evidence, construed in the government’s favor, showed that defendants deprived the universities of information that would have helped them decide whether to award the Recruits athletic-based aid. This deprivation was enough to support a wire fraud conviction.