On April 13, 2011, the Ninth Circuit Court of Appeals upheld an “honest services” fraud conviction where the government also argued and submitted an alternative theory that the defendant had deprived the victims of “money and property.” In U.S. v. Pelisamen the defendant was accused, along with his former lawyer, of removing funds from his grandmother’s estate, of which he was the administrator. The government charged both Pelisamen and the former lawyer with, among other things, wire fraud in violation of 18 U.S.C. § 1343. The indictment specified that such wire fraud was for the purposes of “obtaining money and property.” The indictment did not mention 18 U.S.C. § 1346, which provides that the behavior punishable under § 1343 includes a scheme or artifice “to deprive another of the intangible right of honest services” (at issue in Skilling). The district judge however instructed the jury that it could convict Pelisamen if it found that he had either (1) “defrauded the heirs of the Estate of Rita Kaipat,” or (2) “deprived the heirs . . . of their right to honest services,” or (3) done both.
Because Pelisamen did not object to the jury instruction (Skillingwas decided after the trial), the Court engaged in a plain error analysis. The panel concluded that because there were no bribes or kickbacks alleged, the incorporation of honest-services fraud into the jury instructions and jury verdict form was plainly erroneous under Skilling. However, the Court held that Pelisman was not prejudiced by the error because the jury had convicted on both of the government’s alternative theories. Therefore, the conviction was based on a valid “money or property” theory of wire fraud.