Background
Defendants Byramji Javat and Luis Soto participated in a scheme where Javat lied to manufacturers about exporting goods to Afghanistan for the United States military to secure steep export discounts. In reality, Javat sold the goods domestically in the United States for a profit. Soto, a customs broker, helped divert the goods by exporting them to Dubai and reimporting them into the United States while falsifying documents to hide the true destination. They were convicted of conspiracy to commit wire fraud, wire fraud, and related offenses involving pre-retail medical products.
The court’s reasoning
The court held that Javat’s challenge to the indictment was waived by his unconditional guilty plea and failed on the merits because the Supreme Court’s decision in Kousisis eliminated the requirement for economic loss in wire fraud cases. Regarding Soto, the court found the district court properly admitted Rule 404(b) evidence of prior similar diversion schemes to prove Soto’s knowledge and intent. The court also affirmed the exclusion of Soto’s expert witness, ruling that testimony on the legality of gray market transactions was irrelevant to the issue of fraudulent intent. Finally, the court found sufficient evidence supported the jury’s guilty verdict.
What it means going forward
The ruling reinforces that wire fraud statutes cover schemes to deceive regardless of whether the victim suffers an economic loss, provided property is obtained by false representations. It also clarifies that evidence of prior similar acts is admissible to prove intent in fraud cases and that expert testimony on the legality of the underlying transaction is not a defense to criminal fraud.
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