SW Legal studies in Business

Violation of State Law Can Set Basis for Conviction of Federal Mail and Wire Fraud Laws
Description

Appeals court held that a scam by New Mexico insurance regulators that violated state law could be the basis for federal conviction for mail fraud and wire fraud. The actions that violated state law were executed in a manner that violated federal law.

Topic Criminal Law
Key Words

Mail Fraud; Wire Fraud; Corrupt Solicitation; Extortion; Charities; Insurance

C A S E   S U M M A R Y
Facts

Ruiz was hired as deputy superintendent of the New Mexico insurance division. It is responsible for enforcing the state's insurance code, which includes a requirement that insurance adjusters be licensed by the state. Ruiz would threaten insurers for possible licensing violations but inform them that they could avoid paying the fine if they contributed 10-20 percent of the amount of the fine to charities which Ruiz and his boss, Serna, the superintendent of the insurance division, ran. Insurers who made contributions to the charities were not fined and were then in good standing with the state regulators. An investigation showed that Ruiz personally benefitted from contributions made to the charities. He was convicted in federal court of multiple counts of mail and wire fraud, corrupt solicitations, and extortion under the New Mexico insurance code. He appealed, contending that his solicitations for the charities in lieu of paying fines to the state did not violate state law. Since there was no violation of state law, he could not be charged with federal violations of mail and wire fraud based on such solicitations.

Decision

Affirmed. The solicitations made by Ruiz violated the New Mexico insurance code requirement that all money received by the insurance division be paid directly to the state treasurer. That requirement established the predicate of state law violations required for federal fraud conviction. Ruiz used the mail and wire services to execute his fraud to have payments made to his charities rather than to the state. That is sufficient to meet the federal standards for convictions for those offenses.

Citation

U.S. v. Ruiz, 569 F.3d 1310 (10th Cir., 2009)

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