Takhalov: Convictions reversed in B-Girls case

In U.S. v. Takhalov, No. 13-12385 (July 11, 2016), the Court reversed wire fraud and other related convictions arising out of the South Beach B-Girls scheme, finding that the district court erroneously declined to instruct the jury, as the defendants requested, that the jurors must acquit if they found that the defendants had tricked the victims into coming into a bar but nevertheless gave the victims exactly what they asked for and charged them exactly what they had agreed to pay. The Court explained that a “scheme to deceive” only becomes a “scheme to defraud” in violation of the wire fraud statute if the scheme caused harm. Here, the B-girls may have deceived victims to go to bars and order drinks, by not disclosing the B-girls’ financial arrangement with the clubs, but unless the defendants schemed to lie about the quality or price of goods sold to the victims, no wire fraud occurred. The defendants’ proposed instruction to this effect was a correct statement of the law. The Court recognized that the instructions given by the district court “logically entailed” that the defendants intended to cheat the club customers out of money, but the instruction did not “substantially cover” the defense. This difference was meaningful because “the average juror is not Mr. Spock.” Turning to whether the instructional error was “harmless” error, the Court noted that the test was whether the faulty jury instruction did not contribute to the verdict, or whether the record contained evidence that could lead a jury to find that the defendants lacked the intent to defraud. Here, the defendants testified that they did not intend to defraud customers. The Court rejected the government’s reliance on “overwhelming evidence” of guilt, pointing out that the question is not whether the jury could still have convicted the defendants if the instruction had been given, but whether the jury could have acquitted them. Here the evidence “was not so overwhelming that an acquittal would have been irrational.” The Court also reversed the related money laundering counts.