United States v. Steffen, No. 12-1098 (8th Cir. 2012)
Annotate this CaseDefendant was indicted for bank fraud, mail fraud, and wire fraud. The government alleged that Defendant's sale of collateral pledged as security for a loan from a bank and his failure to carry out his disclosure duties under the security agreement amounted to a scheme to defraud for purposes of the bank, mail, and wire fraud statutes. The district court dismissed the indictment, finding (1) a false representation is a required element of a federal fraud offense and the indictment failed to allege any express misrepresentation by Defendant; and (2) absent a statutory, fiduciary, or independent disclosure duty, nondisclosure was insufficient to state a fraud claim under any of the charged offenses. The Eighth Circuit Court of Appeals affirmed, holding that the district court correctly dismissed the indictment for failure to state an offense, as the indictment failed to sufficiently allege a scheme to defraud under the mail, wire, and bank fraud statutes.
Court Description: Criminal Case - dismissal of indictment. Government appeals dismissal of indictment of bank, mail, and wire fraud charges for failure to allege express misrepresentation by defendant and for failure to assert a duty to disclose apart from contractual duty. Although a scheme to defraud does not require an affirmative representation, the indictment failed to allege a scheme to defraud, as Steffen did not misrepresent the status of the collateral pledged to the Bank and was silent after he sold the collateral to the third party, the indictment did not allege acts to conceal, no duty to disclose independent of contractual duty was present, and an breach of the security agreement and subsequent silence did not demonstrate a scheme to defraud. Accordingly the district court's dismissal of the indictment is affirmed.
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