Affirming Admissibility of Co-Conspirator Statements and Excluding Wharton's Rule in Honest Services Fraud Conspiracies

Introduction

United States v. Maharaj is a Second Circuit summary order decided on April 25, 2025. The case arises from a multi-count indictment charging Shivanand Maharaj with a complex false-invoicing and kickback scheme targeting two employee benefit funds—the AFTRA Retirement Fund and the SAG-AFTRA Health & Retirement Funds. After a two-week trial, a jury convicted Maharaj on four counts: conspiracy to commit honest services wire fraud; substantive honest services wire fraud; conspiracy to give and offer kickbacks in violation of Section 371; and offering kickbacks to influence an employee benefit plan under Sections 1954 and 2. The district court sentenced Maharaj to 44 months’ imprisonment, forfeiture of $1,846,665, restitution of $1,932,920.06, and three years of supervised release. On appeal, Maharaj challenged (1) the admission of testimony regarding a prior kickback scheme with his co-defendant, and (2) the application of Wharton’s Rule to bar his conspiracy conviction for honest services wire fraud. The Second Circuit affirmed.

Summary of the Judgment

The Court of Appeals affirmed the district court’s decision in full. First, it held that the trial court did not abuse its discretion in admitting Zeynep Ekemen’s testimony about Maharaj’s earlier kickback scheme with Enrico Rubano. The testimony was probative as a co-conspirator statement under Federal Rules of Evidence 401 and 403 and Second Circuit precedents, and its marginal prejudicial effect did not substantially outweigh its value. Second, the Court rejected Maharaj’s argument that Wharton’s Rule—which excepts certain single-offender conspiracies from separate conspiracy liability—barred his conviction for conspiracy to commit honest services wire fraud. Honest services fraud does not require a meeting of the minds; it may be committed by a single actor. Even if Wharton’s Rule theoretically applied, Maharaj failed plain-error review because the law was not “clear or obvious” to that effect. Accordingly, the Court affirmed the judgment of the district court.

Analysis

1. Precedents Cited

United States v. Quinones, 511 F.3d 289 (2d Cir. 2007) – Standard of review for evidentiary rulings (“abuse of discretion”).
United States v. Paulino, 445 F.3d 211 (2d Cir. 2006) – Definition of “harmless error” in evidentiary rulings.
Fed. R. Evid. 401 & 403 – Relevance and balancing probative value against unfair prejudice.
Old Chief v. United States, 519 U.S. 172 (1997) – Definition of “unfair prejudice” in criminal cases.
United States v. Lyle, 919 F.3d 716 (2d Cir. 2019) – Precedent on relative sensationalism of evidence.
United States v. Simmons, 923 F.2d 934 (2d Cir. 1991) – Co-conspirator statements doctrine.
United States v. Roldan-Zapata, 916 F.2d 795 (2d Cir. 1990) – Pre-existing relationship evidence and its probative value.
Pinkerton v. United States, 328 U.S. 640 (1946) – Distinction between substantive offense and conspiracy.
Iannelli v. United States, 420 U.S. 770 (1975) – Wharton’s Rule and its four-factor test for application.
Shannon v. Commonwealth, 14 Pa. 226 (1850) – Origin of Wharton’s Rule in common law.

2. Legal Reasoning

Admissibility of Co-Conspirator Statements: The Court reviewed the district court’s Rule 403 ruling for abuse of discretion. It found Ekemen’s testimony probative because it explained how Maharaj and Rubano formed trust, maintained the scheme, and induced participation. The Court held the risk of unfair prejudice was low: the prior kickback scheme was remote in time, non-sensational compared to charged offenses, and did not distract the jury from the funds at issue. The evidentiary ruling was neither arbitrary nor irrational.

Wharton’s Rule and Honest Services Fraud: Wharton’s Rule presumes that if an offense by its nature requires only the immediate participants, a separate conspiracy count merges into the substantive crime. The Court unanimously held that honest services wire fraud (18 U.S.C. §§ 1343, 1346) does not require a meeting of the minds or multiple actors: an individual can execute such a fraudulent scheme alone. Moreover, Wharton’s Rule is a default presumption overcome by legislative intent when the substantive statute and conspiracy statute coexist. Finally, Maharaj failed plain-error review: no binding precedent clearly extended Wharton’s Rule to honest services fraud conspiracies.

3. Impact

Reinforces the low threshold for admitting co-conspirator statements when they illuminate how a fraud scheme operates.
Clarifies that honest services wire fraud is not a “Wharton’s Rule offense,” preserving the government’s ability to charge conspiracies separately from substantive violations.
Guides trial courts in applying Rule 403 balancing to evidence of prior, related misconduct without excluding probative context.
Limits Wharton’s Rule to traditional “plurality-required” crimes (e.g., adultery, bigamy), narrowing its reach in white-collar and public corruption prosecutions.

Complex Concepts Simplified

Honest Services Wire Fraud: A crime in which a perpetrator uses wire communications (e.g., phone calls, emails) to deprive another of the intangible right to honest services, typically through bribery or kickbacks.
Co-Conspirator Statements: Under Rule 801(d)(2)(E), statements made by one member of a conspiracy during and in furtherance of that conspiracy are not hearsay and may be admitted against other members.
Rule 403 Balancing: Even relevant evidence may be excluded if its probative value is substantially outweighed by unfair prejudice, confusing the issues, or misleading the jury.
Wharton’s Rule: A common-law doctrine providing that when a substantive crime necessarily requires two persons (e.g., dueling), a separate conspiracy charge cannot stand—absent clear legislative intent to allow both charges.
Plain-Error Review: An appellate standard applied when an issue was not raised below, requiring an obvious error that affects substantial rights and the fairness of the proceedings.

Conclusion

United States v. Maharaj affirms two important principles in federal criminal practice. First, courts should freely admit co-conspirator statements that illuminate the formation, scope, and mechanics of a fraud scheme, so long as the evidence is relevant and not unduly prejudicial. Second, Wharton’s Rule does not bar conspiracy convictions for honest services wire fraud because that offense does not inherently require multiple participants. This decision preserves prosecutorial flexibility in charging conspiracies in white-collar cases and clarifies the narrow, traditional scope of Wharton’s Rule. Trial courts and practitioners should take heed of these rulings when framing charges and assessing the admissibility of related-conduct testimony in future prosecutions.