In United States v. Tamaz Pasternak, No. 23-6316-cr, the Second Circuit (Parker, Robinson, Oliver (D. Conn.)) affirmed the defendant’s wire fraud convictions despite a concededly erroneous jury instruction.
The charges arose from a purported scheme to conceal the “salvage” histories of used cars—histories of purchase by insurance companies after they’ve been damaged. Pasternak, a used-car dealer, often sold these cars at a significant discount—so one of the government’s theories of wire fraud centered on depriving customers of information about the cars, not depriving them of money. After a jury convicted Pasternak of wire fraud and conspiracy to commit the same, Pasternak alleged two instructional errors on appeal. First, Pasternak challenged a right-to-control instruction that was held invalid in Ciminelli v. United States, 598 U.S. 306 (2023). Second, Pasternak argued that the district court should have required the jury to find that the fraudulent scheme contemplated inflicting tangible economic harm. Together, Pasternak argued, these errors risked the jury convicting him because he intended informational harm—not pecuniary harm—a theory that is no longer valid after Ciminelli.
The Second Circuit affirmed. Although the government agreed that the right-to-control instruction was invalid in light of Ciminelli, the Court found no reasonable possibility that Pasternak was convicted on a right-to-control theory, as the government presented “overwhelming” evidence that Pasternak induced victims to part with their money, rather than deprived them of information regarding the cars. And the Court found that the jury did not need to be instructed to find that Pasternak intended to harm victims financially. The court quoted Shaw v. United States, 580 U.S. 63, 67 (2016)—a case interpreting the federal bank fraud statute pre-Ciminelli—to hold that the wire-fraud statute “demands neither a showing of ultimate financial loss nor a showing of intent to cause financial loss.”
Relatedly, Pasternak argued that the district court was wrong to rely on a Guidelines application note to treat the total purchase price of the used cars as a “loss” under U.S.S.G. § 2B1.1(b)(1), with no offset for the substantial value that the buyers received in return. The Second Circuit, continuing to apply deference under Stinson v. United States, 508 U.S. 36, 38 (1993), found no irreconcilable conflict between the Guidelines themselves and the application note, as “[t]he term ‘loss’ in § 2B1.1 has no one definition and can mean different things in different contexts.” The Court also rejected a challenge to the district court’s decision to limit expert testimony on the salvage industry.
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