Neder v. United States
Citation: 527 U.S. 1 (1999)
Facts
Ellis Neder was convicted of mail fraud, wire fraud, and bank fraud in connection with real estate transactions. The district court failed to instruct the jury that materiality is an element of the fraud offenses. The Eleventh Circuit affirmed, holding the omission was harmless error.
Issue
Is materiality an element of the mail fraud, wire fraud, and bank fraud statutes, and if so, was the failure to submit it to the jury subject to harmless error review?
Holding
Yes, materiality is an element of all three fraud statutes. However, the Court also held that the failure to submit materiality to the jury was subject to harmless error analysis, and in this case the error was harmless given the overwhelming evidence.
Rule
Mail fraud, wire fraud, and bank fraud require that the scheme involve a material misrepresentation or omission — one that a reasonable person would consider important in making a decision. The omission of an element from jury instructions is not automatically reversible; it may be harmless if there is no reasonable possibility the jury would have found otherwise.
Significance
Neder settled a circuit split by confirming materiality as an element of the federal fraud statutes. Its harmless error holding is also important and controversial. Together with United States v. McNally (overruled by statute) and Skilling v. United States, it defines the boundaries of federal fraud.