## Facts

- Leonard S. Siegel and Martin B. Abrams were officers of Mego Corporation, a wholly owned subsidiary of Mego International, Inc.
- The government alleged a scheme involving cash sales of Mego merchandise that were not recorded on corporate books, producing over $100,000 in unaccounted funds.
- Evidence supported an inference that the unrecorded cash was used for bribes and personal enrichment rather than corporate purposes.
- The indictment charged multiple counts of wire fraud based on the use of interstate wire communications to further the off-the-books cash-sales scheme and diversion of proceeds.
- Abrams was separately charged with endeavoring to obstruct federal investigators after a customer threatened to report the conduct to the SEC or other authorities.
- After a jury trial in the Southern District of New York, both defendants were convicted of multiple wire-fraud counts; Abrams was also convicted of obstruction under 18 U.S.C. § 1510.
- On appeal, defendants challenged the wire-fraud convictions; Abrams also challenged the obstruction conviction.

## Issues

1. Whether the evidence was sufficient to support convictions for wire fraud under 18 U.S.C. § 1343 (and aiding and abetting under 18 U.S.C. § 2) based on unrecorded cash sales and diversion of proceeds.
2. Whether a conviction under 18 U.S.C. § 1510 can stand when the defendant’s conduct occurred before any federal criminal investigator or investigation existed.

## Decision

- The court affirmed the wire-fraud convictions, holding the evidence sufficient to prove a scheme to defraud and use of interstate wires in furtherance of that scheme.
- The court reversed Abrams’s obstruction conviction under § 1510, holding the statute requires an actual federal criminal investigator or investigation, which was not shown.
- The court left undisturbed the defendants’ convictions for aiding in the preparation of a false corporate tax return because those convictions were not challenged on appeal.

## Legal Principles

- A “scheme or artifice to defraud” under 18 U.S.C. § 1343 may be established where corporate officers arrange off-the-books cash sales and divert proceeds to non-corporate purposes, breaching fiduciary duties owed to the corporation and its shareholders.
- Proof of unrecorded transactions, substantial unaccounted cash, and evidence permitting an inference of diversion to bribes or personal enrichment can support a finding of fraudulent intent.
- The wire-fraud statute’s jurisdictional element is satisfied when interstate wire communications are sufficiently connected to executing or furthering the fraudulent scheme.
- In reviewing sufficiency of the evidence, the appellate court views the record in the light most favorable to the government and defers to the jury’s credibility determinations where the evidence permits the verdict.
- Under 18 U.S.C. § 1510, obstruction requires interference with communication of information about a federal crime to a “criminal investigator,” which presupposes the existence of a federal criminal investigator or investigation; a mere threat to report to federal authorities, without more, is insufficient.

## Conclusion

The Second Circuit held that the unrecorded cash-sales scheme and diversion of proceeds, implemented through interstate wire communications, supported the wire-fraud convictions, but it reversed Abrams’s § 1510 obstruction conviction because the government failed to show the existence of a federal criminal investigator or investigation at the time of the alleged obstructive conduct.


United States v. Siegel, 717 F.2d 9 (2d Cir. 1983)