3

https://en.wikipedia.org/wiki/Steve_Comisar#cite_note-4

Steve Comisar sold solar powered clothes drier. He then sent ropes.

I wonder how the US government would handle this? Is this fraud? Technically a rope can indeed be used to dry clothes, namely by hanging it.

11

I wonder how would US government handle this? Is this fraud? Technically a rope can indeed be used to dry clothes, namely by hanging it.

We don't have to guess how the US government would handle this because this individual was charged and convicted for this conduct and similar conduct by federal prosecutors on multiple occasions and sentenced to federal prison for doing so. See, for example, here, here (the FBI considered him "the Jeffrey Dahmer of fraud" and convicted him of fraud at least four times, usually of telemarketing fraud), here, here, and here ("Comisar was convicted in Los Angeles federal court in 1983, 1990, 1994 and 1999 for various telemarketing frauds.")

The usual form of telemarketing fraud would be mail fraud (18 U.S.C. § 1341) or wire fraud (18 U.S.C. § 1344). Per those links the elements of mail fraud and wire fraud, respectively, are as follows:

"There are two elements in mail fraud: (1) having devised or intending to devise a scheme to defraud (or to perform specified fraudulent acts), and (2) use of the mail for the purpose of executing, or attempting to execute, the scheme (or specified fraudulent acts)." Schmuck v. United States, 489 U.S. 705, 721 n. 10 (1989); see also Pereira v. United States, 347 U.S. 1, 8 (1954) ("The elements of the offense of mail fraud under . . . § 1341 are (1) a scheme to defraud, and (2) the mailing of a letter, etc., for the purpose of executing the scheme."); Laura A. Eilers & Harvey B. Silikovitz, Mail and Wire Fraud, 31 Am. Crim. L. Rev. 703, 704 (1994) (cases cited).

and

The elements of wire fraud under Section 1343 directly parallel those of the mail fraud statute, but require the use of an interstate telephone call or electronic communication made in furtherance of the scheme. United States v. Briscoe, 65 F.3d 576, 583 (7th Cir. 1995) (citing United States v. Ames Sintering Co., 927 F.2d 232, 234 (6th Cir. 1990) (per curiam)); United States v. Frey, 42 F.3d 795, 797 (3d Cir. 1994) (wire fraud is identical to mail fraud statute except that it speaks of communications transmitted by wire); see also, e.g., United States v. Profit, 49 F.3d 404, 406 n. 1 (8th Cir.) (the four essential elements of the crime of wire fraud are: (1) that the defendant voluntarily and intentionally devised or participated in a scheme to defraud another out of money; (2) that the defendant did so with the intent to defraud; (3) that it was reasonably foreseeable that interstate wire communications would be used; and (4) that interstate wire communications were in fact used) (citing Manual of Model Criminal Jury Instructions for the District Courts of the Eighth Circuit 6.18.1341 (West 1994)), cert. denied, 115 S.Ct. 2289 (1995); United States v. Hanson, 41 F.3d 580, 583 (10th Cir. 1994) (two elements comprise the crime of wire fraud: (1) a scheme or artifice to defraud; and (2) use of interstate wire communication to facilitate that scheme); United States v. Faulkner, 17 F.3d 745, 771 (5th Cir. 1994) (essential elements of wire fraud are: (1) a scheme to defraud and (2) the use of, or causing the use of, interstate wire communications to execute the scheme), cert. denied, 115 S.Ct. 193 (1995); United States v. Cassiere, 4 F.3d 1006 (1st Cir. 1993) (to prove wire fraud government must show (1) scheme to defraud by means of false pretenses, (2) defendant's knowing and willful participation in scheme with intent to defraud, and (3) use of interstate wire communications in furtherance of scheme); United States v. Maxwell, 920 F.2d 1028, 1035 (D.C. Cir. 1990) ("Wire fraud requires proof of (1) a scheme to defraud; and (2) the use of an interstate wire communication to further the scheme.").

The definition of a fraudulent scheme for mail and wire fraud statute purposes is broader than for common law fraud:

The mail fraud and wire fraud statutes do not define the terms "scheme" or "artifice" and the courts have traditionally been reluctant to offer definitions of either term except in the broadest and most general terms. Lemire, 720 F.2d at 1335 ("Congress did not define 'scheme or artifice to defraud' when it first coined that phrase, nor has it since. Instead that expression has taken on its present meaning from 111 years of case law.").

The fraudulent aspect of the scheme to defraud is to be measured by nontechnical standards and is not restricted by any common-law definition of false pretenses. "[T]he words 'to defraud' in the mail fraud statute have the 'common understanding' of '"wrongdoing one in his property rights by dishonest methods or schemes," and "usually signify the deprivation of something of value by trick, chicane, or overreaching."'" Carpenter, 484 U.S. at 27 (quoting McNally v. United States, 483 U.S. 350, 358 (1987) (quoting Hammerschmidt v. United States, 265 U.S. 182, 188 (1924))). "The concept of 'fraud' includes the act of embezzlement, which is '"the fraudulent appropriation to one's own use of the money or goods entrusted to one's own care by another."'" Id. (quoting Grin v. Shine, 187 U.S. 181, 189 (1902)).

No actual loss to a particular victim need be shown and the fraud can be one that only deceives gullible people per this source. See also Shaw v. United States, 196 L.Ed.2d 372, 137 S.Ct. 462 (2016) (lack of financial loss is not a defense).

The mailing or wiring can be done by a third party and need not contain actual false statements themselves per this source (indeed a fraudulent scheme is not required to involve a false representation of fact at all). See, e.g., Carpenter v. United States, 484 U.S. 19 (1987) (stock trading in advance of publication of a Wall Street Journal column to profit from a predictable effect on the stock market is actionable as fraudulent scheme under the mail and wire fraud statutes even if the columns themselves are true); SEC v Zanford, Case No. 01-147 (U.S. 2002) (false statement of fact not required for fraudulent scheme liability).

If a fact that would prevent a reasonable customer from being misled is omitted, it is still a scheme to defraud. Edwards v. United States, 312 U.S. 473 (1941). See also Worden v. California Fig Syrup Company, 187 U.S. 516 (1903) (it was misleading and fraudulent to call a product "Fig Syrup" when fig syrup was present in the product but was only a minor ingredient making up a small part of the total product).

For example, in this case, the description, by not clearly stating that it is a clothesline that is being sold, even if the statements made could be construed to be technically true, is still mail fraud because the omission is likely to mislead a reasonable customer without a complete disclosure of the fact that it is a clothesline being sold for far more than going price for a clothesline at the time.

5

There's no question that it's fraud. This isn't even a close call.

  1. He knew it's a rope.

  2. He knew that if the customers knew it was a rope, they wouldn't have bought it.

  3. He didn't tell them it was a rope.

  4. He took their money.

The only conceivable argument that it's not fraud would be to argue that an omission of a material fact (that it's a rope) somehow can't be fraud so long as everything you actually do say is true. But of course it can. There are literally hundreds of citations for this simple, obvious fact. One very clear one is in Schmeusser v. Schmeusser, “Fraud may also occur through deliberate concealment of material facts, or by silence in the face of a duty to speak".

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  • 1
    Do you know of even one single case in California (or held by SCOTUS) – the relevant jurisdiction – upholding a conviction where a person sold a non-defective product, told the truth, and does not have the "duty to speak" as arises during court proceedings, relevant to your citation? (Or, can you establish that there is such a "duty to speak" in a sales transaction?) I just think you picked a bad illustration out of the hundreds out there.
    – user6726
    Feb 26 '17 at 6:14
  • @user6726 There are literally hundreds of citations from various jurisdictions. Punch "silent fraud", "fraud by omission" or "intentional misrepresentation" into your favorite search engine. In California, it's quite well established that a duty is created when a party has partially disclosed material facts to another party but created the impression of full disclosure. This is truly a silly thing to argue over, it's unbelievably well established. You have a duty to correct material false impressions you intentionally created. Feb 26 '17 at 6:36
  • 1
    I was just wondering if you were able to provide a more on-point citation, rather than leave it to the "self-evident".
    – user6726
    Feb 26 '17 at 15:27
  • It's hard to find a cite for something so obvious because people are generally not willing to make frivolous arguments to courts. If there's a specific piece of the reasoning you want a citation for (for example, that deliberately creating a false impression creates a duty to correct it) let me know. Feb 27 '17 at 10:27
  • You might then want to revise your answer to not assert that there are literally hundreds of citations. I specifically want a citation because I do not believe that the courts have held that sellers have a duty to act in the interest of buyers. Since there are no statutes that assert your position, and apparently no actual case law, then I am baffled that you could assert your position with such certainty. I surmise that this conclusion must be based on how you think the law should be. More generally, my position is that one should treat law as related to "fact", which requires evidence.
    – user6726
    Feb 27 '17 at 15:39
2

Yes this will s fraud: obtaining benefit by deceit.

"Deceit" does not necessarily mean telling lies - if you tell the truth in a way that a reasonable person could be deceived and profit from that, then you have committed fraud.

5
  • What was the deceit?
    – user4951
    Oct 6 '16 at 1:37
  • No, in California, fraud (Civ. Code §1572) and deceit (Civ. Code §1710) are separate (Comisar is in California). You need to fill in the gap.
    – user6726
    Oct 6 '16 at 2:00
  • @user6726 and s192E of the Crimes Act New South Wales says that it is fraud - the OP gives no jurisdiction so I used the common law definition
    – Dale M
    Oct 6 '16 at 2:17
  • what's the difference between deceit and fraud and scam?
    – user4951
    Oct 6 '16 at 3:06
  • 1
    @JimThio that sounds like a question. Why not post it?
    – Dale M
    Oct 6 '16 at 5:32
-1

yes, it is fraud. the rope is not solar powered. the sun is doing the drying, not the rope. if the instructions were to heat up the rope, and then dry the clothes with hot rope in the absence of direct sunlight, then maybe... xD

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  • 1
    I have down voted this because many "solar powered" items actually have the sun doing the work. Compare this "solar powered" oven(hometrainingtools.com/a/build-a-solar-oven-project), wherein its a reflective piece of metal to reflect the sun's rays. "Solar powered" does not mean that the sun's energy must be converted to electricity before it is used (it can be used in it's natural form of heat and radiation as is)
    – sharur
    Oct 6 '16 at 21:06
  • your 1 example is not described as "solar powered." whether it must be converted to electricity is irrelevant--i never mentioned this.
    – JJBee
    Oct 6 '16 at 21:48
  • It is a single example because I picked the first link off of a google search for "solar powered oven". Good catch, I will yield the point over the semantic differences between "solar oven" and "solar powered oven". Here is, from the first page of the same search a "solar powered oven"(www.perkinselearning.org/activity-bank/create-solar-powered-oven-out-pizza-box) as well as well as two "solar powered cookers" that use the same concept as the solar(powered) ovens (www.stevespanglerscience.com/lab/experiments/solar-oven/) (www.gosunstove.com)
    – sharur
    Oct 6 '16 at 22:04
  • what youre linking is not for sale. it would be better if you had examples of items actually sold (literally) as "solar powered."
    – JJBee
    Oct 6 '16 at 22:11
  • The gosunstove example is for sale, with prices listed. My point being there is a well understood concept of an oven powered by solar energy to the point that a decade ago there was a diagram in my boy scout handbook. Whether it is referred to as solar or solar-powered is irrelevant (e.g. the stevespanglerscience link above calls it "solar-oven" in the URL and "solar-powered cooker" in the article. For comparison, no one can successfully sue Tesla for selling "electric cars" rather than "electric powered cars". The terms are understood to be synonymous.
    – sharur
    Oct 6 '16 at 22:22

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