United States v. Stargell

Under 18 U.S.C. § 1343, a “new or increased risk of loss” is sufficient to establish that wire fraud “affects” a financial institution within the meaning of the statute, regardless of whether the financial institution ultimately suffers actual loss.

From February 2004, through January 2005, Willena Stargell prepared federal income tax returns containing false statements in an ongoing wire fraud scheme to obtain refund anticipation loans (“RAL”) from banks. When the IRS detected the fraud and declined Stargell’s refunds, the banks that were still waiting on returns lost money. Stargell was convicted of twelve felonies, including four counts of “fraud by wire affecting a financial institution” under 18 U.S.C. § 1343. Stargell’s main challenge on appeal was that the RAL banks could only be “affected” in connection with her fraudulent scheme by actually losing money, which did not happen on all the fraudulent returns. The Ninth Circuit found Stargell’s arguments unpersuasive. First, the panel held that “new or increased risk of loss” was sufficient to establish that wire fraud “affects” a financial institution within the meaning of 18 U.S.C. § 1343. The panel cited to two Seventh and Tenth Circuit rulings that held “new or increased risk of loss” was included in the definition of “affects” in similar statutes. Therefore, the banks were “affected” by Stargell’s scheme whether or not there was an actual financial loss. Second, the panel held that the jury did not convict based on conduct occurring before the enactment of 18 U.S.C. § 1028A, aggravated identity theft, because Stargell’s predicate wire fraud offense completed when she transmitted the returns, which was after 18 U.S.C. § 1028A was enacted. Third, the panel held that Stargell’s Sixth Amendment rights were not violated when her former attorney testified at the sentencing hearing because it was Stargell’s own defense attorney that called for the testimony. Further, Stargell’s attorney-client privilege was not violated because none of her former attorney’s testimony contained privileged communications. Finally, the panel upheld the district court’s determination of the loss and restitution amount at sentencing. AFFIRMED.