US v. Milovanovic, No. 08-30381 (4-24-12)(en banc)(Tallman writing; Clifton concurring). Sitting en banc, the 9th considers what exactly is required for theft of honest services under the mail fraud statutes. The context was an alleged bribery scheme where Serbian translators in a state administered commercial license test gave the answers to the test, allowing unqualified nonresident drivers to pass. The indictment was dismissed on the basis of the scope of the fiduciary relationship and the need for economic harm. The 9th reverses, holding that (1) a fiduciary relationship is an element of honest services mail fraud, but that it does not need to be a classic or formal fiduciary relationship, but one of comparable loyalty, trust and confidence, the material breach of which, with the intent to defraud, deprives the victim of the intangible right to honest services (bribe and kickback situations). (2) The foreseeable risk of economic harm is not required when evaluating a breach of honest services fiduciary duty, but instead the test of fraudulent intent and materiality.
Lastly, and case specific, (3), the superseding indictment properly states an offense of honest services fraud. Concurring, Clifton feels that the 9th does not have to spell out all the permutations of what is a fiduciary duty, but leave it as a trust relationship.