Contemporary Business and Online Commerce Law 7th Edition by Henry R Cheeseman

Exercise 1

Internet Fraud

United States of America v. Deppe

509 F.3d 54, Web 2007 U.S. App. Lexis 28562 (2007)

United States Court of Appeals for the First Circuit

“The circus impresario, P. T. Barnum, is famously reputed to have said that ‘there’s a sucker born every minute.’”

—Judge Selya

Facts

Michael R. Deppe, 21 years old, offered Rolex watches for sale over the Internet in exchange for funds wire-transferred directly to his bank account. He engaged in twenty-seven transactions and snared approximately $115,000 in payments. But there was just one hitch: Deppe did not send a single customer a watch. Instead, he sent them packages that contained crumpled newspaper. Two weeks before a Super Bowl championship professional football game, Deppe and another person offered to sell over the Internet nonexistent tickets to the Super Bowl. This scheme netted nearly $263,000 for tickets that Deppe and his business partner did not possess.

A federal grand jury indicted Deppe of wire fraud and mail fraud, which are federal crimes. Deppe pled guilty regarding his Rolex fraud. The Super Bowl ticket scheme went to trial in U.S. District Court. The jury convicted Deppe, and the District Court judge sentenced Deppe to seventy-eight months in jail. The court also fined Deppe $520,375. Deppe appealed his sentence, arguing that his sentence should have been reduced because he accepted responsibility for his crimes.

Issue

Did the District Court err in not reducing Deppe’s jail sentence?

Language of the Court

The circus impresario, P. T. Barnum, is famously reputed to have said that “there’s a sucker born every minute. ” That droll commentary on the human condition, whether or not fairly attributed to Barnum, appears to be as insightful in cyber-commerce as in face-to-face business transactions. This conclusion is borne out by the case at hand, which involves an Internet fraud. In the appeal proper, we are asked to consider allegations of sentencing error. The overarching themes are those of chicanery and greed.

When a defendant proceeds to trial and puts the government to its proof, a credit for acceptance of responsibility normally will not be available. The district court concluded: “The defendant did not truthfully admit the conduct of the offensive conviction and did not truthfully admit and has falsely denied other relevant conduct.” The court also spoke about the appellant’s failure to accept full responsibility, the need for deterrence, and the unfortunate hallmarks of the appellant’s crimes (cynicism, brazenness, greed, and deliberateness). The short of it is that the sentencing court provided a logical explanation for the 78-month sentence and—given the nature of the crimes committed and the characteristics of the criminal—that sentence represents a sensible punishment.

Decision

The U.S. Court of Appeals held that defendant Deppe did not deserve a sentence reduction. The Court of Appeals upheld the District Court’s sentencing of Deppe to seventy-eight months in prison.

Case Questions

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Critical Legal Thinking What is wire fraud? Explain. What is mail fraud? Explain.

Ethics Did Deppe act ethically in using the Internet to perpetrate his frauds?

Contemporary Business Does the Internet make it easier for crooks to commit fraud? Explain.