Segal Loses Appeal – For Third Time

Michael Segal, convicted of fraud and racketeering, appealed his conviction for a third time in the hopes that a recent U. S. Supreme Court decision on “honest services fraud” would give him a new chance at overturning his conviction.  Segal had been convicted of fraud involving misue of others’ money as well as “honest services” fraud.  The U.S. Supreme Court subsequently limited the theory of honest services fraud so that is only applies to a defendant involved in either bribery or a kickback scheme.  On appeal, Segal argued that his conviction was based on honest services fraud, but because he was not involved in either bribery or a kickback scheme, his conviction must be overturned.  The Appellate Court disagreed.  The Court found that Segal’s conviction would stand because even if the jury concluded that there was an honest services violation, that violation had to be premised on Segal’s misuse of others’ money.  That is, to the extent Segal was depriving others of his honest services, it was because he was taking their money.  Therefore, his conviction stands as a convition for money fraud.  However, the appellate court remanded the case to the district court so that the court can consider resentencing Segal in the event that any honest services conviction affected the severity of his sentence. Of course, if the court would have imposed the same sentence irrespective of any honest services fraud, no resentencing is necessary.

To see a full copy of the appellate court’s decision, click here: