Mail Fraud Conviction of Executive Reversed on Appeal

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(US criminal law) Mark E. Phillips, the MOD Systems executive who was previously convicted of mail fraud and sentenced to four years has had mail fraud charge reversed by a Federal Appeals Court. This reversal provides new arguments for White Collar Criminal Lawyers in pending mail fraud or wire fraud cases. In late December 2012, the Court announced the decision to reverse the mail fraud conviction, but refused to reverse other charges of upon which he was convicted, including wire fraud and money laundering. The Court specifically denied Phillips’ claims of prosecutorial misconduct based on the prosecutor’s arguments to the jury that Phillips was a liar.

The Appeals Court reversed the mail fraud charge because the actual crime committed by Phillips did not use the United States Postal Service. Prosecutors sought mail fraud charges based upon Phillips receipt, through the mail, of two expensive watches that executive bought with corporate money through a fake consulting agreement created with his girlfriend.

Prosecutors presented an email from Phillips to his girlfriend stating: “If possible could I pay you for this so I can pay out of a company for consulting work.” Their argument was that he used fraudulently obtained funds to receive these watches through the US mail.

However, the Court of Appeals decided the mail fraud charge was due to be overturned. They determined that the plan to pay for a watch and receive it through the mail was not part of the actual scheme to defraud the company, but was simply a byproduct of the greater scheme. In other words, Phillips’ successful fraud simply provided the funds to purchase the watches, the fraud was not created to obtain the watches.

While this decision by the Federal Court occurred in Washington, it is expected to provide ammunition for mail fraud attorneys and wire fraud attorneys nationwide from to argue that the mail or wire transactions in question were not used in furtherance of any scheme to defraud. The Phillips opinion, will support the argument that the mailing or the wire transfer is required to facilitate the fraud, and not simply be a product of the fruits of the fraud.

MOD Systems is now defunct, but was in the business of providing kiosk for the digital distribution of movies and TV shows. Phillips remains jailed on his remaining wire fraud and money laundering convictions, but may obtain an earlier release with the reversal of the mail fraud convictions.