If the DOJ charges you with the wrong crime, did you actually do anything wrong?
KPMG's David Middendorf and PCAOB's Jeffrey Wada were convicted of wire fraud. Four more pled guilty to similar crimes. Now DOJ says its reading of the law was bad, asks for verdict to be set aside.
The filing, made July 31, 2023, by U.S. Attorney Margaret Graham is here.
The Government concedes that in light of the Department of Justice’s post-Kelly interpretation of “property” in 18 U.S.C. § 1343, as well as this Court’s decision in Blaszczak II, Middendorf’s and Wada’s convictions should be set aside.
16. The Government has determined, in consultation with the Solicitor General’s Office, that the evidence at trial was insufficient to establish that the confidential information at issue in this case constituted “property” under Kelly and Blaszczak II because it had value only in the “‘exercise of regulatory power,’” Blaszczak II, 56 F.4th at 243 (quoting Kelly, 140 S. Ct. at 1568), and not in the government’s “role ‘as property holder,’” Kelly, 140 S. Ct. at 1568 (quoting Cleveland, 531 U.S. at 24).
To be sure, the PCAOB “invested time and resources into [the inspection lists’] creation.” (SPA 18); see also Blaszczak I, 947 F.3d at 33 (recognizing, pre-Kelly, that “CMS does have an economic interest in its confidential predecisional information” because the agency “invests time and resources into generating and maintaining the confidentiality of ” that information, and leaks affect the “efficient use of its limited time and resources”). But in the Department’s view, shaped by Kelly, the time and resources at issue in this case did not constitute “an object of the fraud,” and thus the associated “labor costs could not sustain the conviction[s]” here. Kelly, 140 S. Ct. at 1573.
Thus, the Government concedes that the evidence adduced at trial did not sufficiently distinguish the information at issue here from the predecisional CMS information at issue in Blaszczak to satisfy the “property” requirement of Section 1343. Accordingly, and because each count of conviction required the Government to prove that “property” was an object of the scheme, the Government moves to remand the case to the District Court to permit the Government to dismiss each count of conviction as to Middendorf and Wada.
My source for the filing said that it was likely that the other parties who had pled guilty — David Britt who was deported to his native Australia, Cynthia Holder who actually served jail time, Thomas Whittle who got two years of supervised release, and Brian Sweet who got time served and probation — would now request that their pleas be vacated.
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