The Second Circuit’s recent decision in United States v. Connolly underscores the government’s burden of proving a materially false representation to sustain a wire fraud conviction.
On January 27, 2022, the U.S. Court of Appeals for the Second Circuit overturned the convictions of two former investment bankers who had been found guilty of wire fraud and wire fraud conspiracy following a jury trial in 2018 in the Southern District of New York. The defendants had been charged, after a multi-year DOJ investigation with manipulating their investment bank (Bank) employer’s daily submissions relating to the London Interbank Offered Rate (LIBOR) to benefit the Bank and themselves. The Second Circuit concluded that the defendants’ motivation in causing the Bank to alter the submissions was not relevant to whether they had made false representations. Because the Bank’s submissions could have been true and did not violate the applicable guidelines for LIBOR submissions, the Court held that the prosecution failed to prove that the submissions contained false representations within the meaning of the wire fraud statute.