Pp. 226-227. 739 F.2d 1445, reversed. BLACKMUN, J., delivered the opinion of the Court, in which BRENNAN, MARSHALL, REHNQUIST, STEVENS, and O'CONNOR, JJ., joined.
Courts have distinguished between mail fraud schemesinvolving active misrepresentation and those involving nondisclosure or concealment of information the defendant is obligated to disclose. See, e.g., United States v. Dowling, 739 F.2d 1445, 1448-49 (9th Cir. 1984), rev'd in part on other grounds, 473 U.S. 207, 105 S.Ct. 3127, 87 L.Ed.2d 152 (1985). The Barone note could be regarded as falling in the first category in that it contained an affirmative statement that Barone was not the buyer of the bonds.
The Ninth Circuit nonetheless focused on the fact that Dowling had "concealed his activities from the copyright holders with the intent to deprive them of their royalties." United States v. Dowling, 739 F.2d 1445, 1449 (9th Cir. 1984). "It is settled in this Circuit that a scheme to defraud need not be an active misrepresentation.
A non-disclosure, however, can support a fraud charge only “when there exists an independent duty that has been breached by the person so charged.” United States v. Dowling, 739 F.2d 1445, 1449 (9th Cir.1984), rev'd on other grounds, 473 U.S. 207, 105 S.Ct. 3127, 87 L.Ed.2d 152 (1985). “Absent an independent duty, such as a fiduciary duty or an explicit statutory duty, failure to disclose cannot be the basis of a [RICO] fraudulent scheme.”
However, the district court's instruction and the government's closing argument correctly reflect that a scheme to defraud may be based on a nondisclosure "when there exists an independent duty that has been breached by the person so charged. This independent duty may exist in the form of a fiduciary duty to third parties, or may derive from an independent explicit statutory duty created by legislative enactment." United States v. Dowling, 739 F.2d 1445, 1449 (9th Cir. 1984) (internal citations omitted; emphasis added), rev'd on other grounds, 473 U.S. 207, 105 S.Ct. 3127, 87 L.Ed.2d 152 (1985). The Rule could properly serve as the basis for such a duty. It was adopted pursuant to the Telemarketing and Consumer Fraud and Abuse Prevention Act, 15 U.S.C. §§ 6101- 6108, see 16 C.F.R. § 310.1, wherein Congress directed the FTC to prescribe telemarketing rules and requirements, see 15 U.S.C. § 6102(a).
He points out that Brewer was under a statutory obligation to disclose the names of her cigarette customers to taxing authorities. Coyle relies on United States v. Dowling, 739 F.2d 1445 (9th Cir. 1984), rev'd on other grounds, 473 U.S. 207, 105 S.Ct. 3127, 87 L.Ed.2d 152 (1985) (reversing convictions based on National Stolen Property Act, 18 U.S.C. § 2314, without reviewing convictions based on Mail Fraud Act). Dowling emphasized the statutory duty of disclosure under the Copyright Act in upholding a mail fraud conviction for manufacturing and distributing bootleg phonograph records. He also cites United States v. Gallant, 570 F. Supp. 303 (S.D.N.Y. 1983), which dismissed a mail fraud prosecution because there was no fiduciary or explicit statutory duty of disclosure.
We rejected this argument on the appeal by Minor's co-defendant, Dowling. United States v. Dowling, 739 F.2d 1445, 1450-51 (9th Cir. 1984), cert. granted, ___ U.S. ___, 105 S.Ct. 901, 83 L.Ed.2d 917 (1985). 2. Value in Excess of $5,000
A nondisclosure or concealment may serve as a basis for the fraudulent scheme." United States v. Dowling, 739 F.2d 1445, 1449 (9th Cir. 1984), rev'd on other grounds, 473 U.S. 207 (1985). The ability to use an omission to form the basis of a scheme to defraud is narrow.
A non- disclosure, however, can support a fraud charge only "when there exists an independent duty that has been breached by the person so charged." U.S. v. Dowling, 739 F.2d 1445, 1449 (9th Cir.1984), rev'd on other grounds, 473 U.S. 207 (1985). The government does not dispute that a fraud charge supported by omission or non-disclosure requires a duty to disclose, and conceded at the hearing that its concealment theory is not based on any duty to disclose, including a duty to disclose the Sherman Act violations.
A non-disclosure, however, can support a fraud charge only 'when there exists an independent duty that has been breached by the person so charged.'" Eller v. EquiTrust Life Ins. Co., 778 F.3d 1089, 1092 (9th Cir. 2015) (quoting United States v. Dowling, 739 F.2d 1445, 1449 (9th Cir.1984), rev'd on other grounds, 473 U.S. 207 (1985)); see also Dowling, 739 F.2d at 1449 ("a non-disclosure can only serve as the basis for a fraudulent scheme when there exists an independent duty that has been breached by the person so charged."); United States v. Steffen, 687 F.3d 1104, 1116 (8th Cir. 2012) (affirming the dismissal of an indictment alleging bank fraud, mail fraud, and wire fraud where indictment alleged defendant failed to disclose information and duty to disclose arose from contract; "[W]e agree with the district court that in order for a fraudulent disclosure to be actionable fraud (either criminal or civil) the duty to disclose must be independent of any duty imposed by the contract. In the civil context, a fraud claim is permitted only if it arises from acts that are separate and distinct from the contract. If the same rule did not apply in the criminal context, every breach of a bank loan agreement could give rise to criminal fraud prosecution.") (internal citation