Defrauding Dick’s: Circuit Reaffirms “Right to Control” Theory of Mail and Wire Fraud

Viloski, a lawyer and real estate broker, was a broker/consultant for development projects of Dick’s Sporting Goods. The trial evidence showed that he acted as a consultant for real estate transactions in which he accepted a consulting fee, a portion of which he secretly passed on to Joseph Queri, an employee of Dick’s. In other transactions, Viloski did no consulting work, but accepted a consulting fee that he passed on to Queri in its entirety.

The jury convicted Viloski of conspiracy to commit mail and wire fraud, substantive counts of mail fraud, money laundering, and other charges. The government’s theory of fraud was that the defendant had engaged in a “scheme to deprive another [i.e., Dick’s] of potentially valuable information that could impact on economic decisions.” 

On appeal, the Circuit affirmed Viloski’s convictions, holding that this theory of fraud, premised on the right of a company to control its own assets (including the right to receive accurate material information regarding an employee’s kickbacks), was a valid one, and that the theory was adequately set forth in both the indictment and in the jury instructions. The Court further held that the deprivation of “potentially valuable information” was sufficient to constitute fraud. Accordingly, the district court properly denied Viloski’s motions to dismiss the indictment, to enter a judgment of acquittal, or to grant a new trial.

Viloski did prevail on one issue: the Circuit held that the district court, in imposing forfeiture in excess of $1.2 million, erroneously failed to consider the factors in United States v. Bajakajian, 524 U.S. 321 (1998), to determine whether the forfeiture order violated the “excessive fines” clause of the Eighth Amendment. Thus, the Court remanded the forfeiture order with instructions to the district court to consider the Bajakajian factors.