Background
Defendants Byramji Javat and Luis Soto participated in a scheme where Javat lied to manufacturers about exporting goods to Afghanistan for use by the United States military. Based on these false representations, manufacturers sold goods to Javat at steep export discounts. Javat then diverted the goods to the United States domestic market, selling them at a profit. Soto, a customs broker, assisted by exporting the goods to Dubai and reimporting them into the United States while falsifying documents to hide the true destination from manufacturers and Customs officials.
The court’s reasoning
The court affirmed that the indictment properly alleged an illegal scheme to defraud under the wire fraud statute, noting that the Supreme Court in Kousisis rejected the requirement of economic loss for fraud convictions. The court found the district court did not abuse its discretion in admitting Rule four zero four B evidence of prior acts to prove intent, as the prior acts were materially similar to the charged conduct. The court also upheld the exclusion of expert testimony on gray market legality, ruling it irrelevant to the question of criminal intent. Finally, the court affirmed the sentencing enhancements and restitution orders but remanded for the district court to correct clerical errors in the criminal judgment to incorporate the forfeiture order.
What it means going forward
The decision reinforces that deceptive schemes to obtain property through false representations constitute wire fraud even without proof of economic loss to the victim. It also clarifies that evidence of similar prior acts is admissible to prove intent in fraud cases and that expert testimony on the civil legality of a transaction is not a defense to criminal fraud charges.
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