United States v. Lane & Wang: Limits on Mental-Health Evidence, Expert Hearsay, and Entrapment in IEEPA Sanctions Prosecutions

United States v. Lane & Wang: Limits on Mental-Health Evidence, Expert Hearsay, and Entrapment in IEEPA Sanctions Prosecutions

Court: United States Court of Appeals for the Third Circuit
Decision Date: November 19, 2025
Case Nos.: 24-2109 & 24-2111
Panel: Hardiman, Krause, and Freeman, Circuit Judges
Opinion by: Judge Krause
Precedential Status: Not precedential (I.O.P. 5.7)

I. Introduction

This not-precedential opinion from the Third Circuit in United States v. Daniel Ray Lane and United States v. Zhenyu (“Bill”) Wang arises from a sanctions-evasion and money-laundering scheme involving Iranian oil. The defendants were convicted of:

  • Conspiracy, attempt, and substantive offenses related to transactions in sanctioned Iranian oil, in violation of the International Emergency Economic Powers Act (IEEPA), 50 U.S.C. §§ 1701–1707, and 18 U.S.C. § 371; and
  • Money laundering conspiracy, in violation of 18 U.S.C. § 1956(h).

On appeal, the defendants raised a range of constitutional, evidentiary, and jury-instruction challenges. The Third Circuit affirmed the convictions, rejecting:

  • Wang’s nondelegation challenge to IEEPA;
  • Wang’s challenges to limitations on mental-health expert testimony, including use of his own statements to the expert under Federal Rules of Evidence 803(4) and 703;
  • Wang’s claim that the District Court erred in refusing to give his requested mistake-of-law instruction; and
  • Lane’s entrapment-related arguments (both sufficiency of the evidence on entrapment and alleged errors in the entrapment jury instruction), as well as a challenge to limits on cross-examination of a key government witness.

Although formally nonprecedential, the opinion provides a concentrated and current application of several important doctrines:

  • The nondelegation doctrine as applied to IEEPA;
  • The permissible scope of mental-health evidence to negate mens rea and the hearsay rules that constrain it;
  • The threshold for obtaining a theory-of-defense jury instruction based on mistake of law; and
  • The elements and evidentiary requirements for the entrapment defense in the context of complex undercover operations.

II. Summary of the Opinion

A. Disposition

The Third Circuit affirmed the judgments of the Eastern District of Pennsylvania in full. Every appellate challenge by both defendants failed:

  • Wang:
    • IEEPA is not an unconstitutional delegation of legislative power.
    • The District Court did not abuse its discretion in limiting the testimony of his psychiatric expert, Dr. Barber, concerning the effect of Wang’s mental illness on his intent.
    • The court properly excluded Wang’s own statements to Dr. Barber as hearsay not within Rule 803(4) and as inadmissible under Rule 703.
    • The court properly declined to give Wang’s requested mistake-of-law jury instruction.
  • Lane:
    • The jury’s rejection of Lane’s entrapment defense was supported by sufficient evidence; no reasonable jury would have been required to find entrapment.
    • The District Court did not abuse its discretion by limiting cross-examination of government witness Nicholas Fuchs regarding third-party Samuel Gonzalez.
    • Under plain-error review, the entrapment instructions given to the jury were adequate and non-prejudicial.

B. Key Doctrinal Clarifications

While not creating binding precedent, the opinion sharply illustrates and reinforces several principles:

  1. IEEPA and nondelegation: The court reaffirms its prior decision in United States v. Amirnazmi that IEEPA passes the “intelligible principle” test and is a constitutional delegation, even in light of allegedly expanded executive use of the statute.
  2. Mental-health evidence and mens rea: Evidence of mental illness is admissible to negate mens rea under United States v. Pohlot, but psychiatric testimony that merely explains why a defendant intentionally joined an illegal scheme (e.g., to avoid losing “face”) does not negate the requisite intent.
  3. Rule 803(4) and Rule 703 limits in forensic evaluations: Self-serving statements by a defendant to an expert retained for litigation—particularly when not primarily for medical treatment—do not qualify under Rule 803(4), and Rule 703 does not allow experts to serve as conduits for otherwise inadmissible hearsay.
  4. Mistake-of-law instructions: A defendant is not entitled to a separate mistake-of-law instruction where:
    • The evidence shows repeated awareness that the conduct was illegal; and
    • The court’s general “knowingly” instruction and explanation that a genuine mistake can negate mens rea already substantially cover the theory.
  5. Entrapment in undercover operations:
    • Mere opportunity, high profit, or contact by a cooperating individual is insufficient to show “inducement.” Coercive tactics or pressure are required.
    • Predisposition can be inferred from a defendant’s ready and repeated willingness to participate, particularly when he is told he can withdraw at any time.

III. Detailed Analysis

A. Precedents and Authorities Cited

1. Nondelegation and IEEPA

  • United States v. Amirnazmi, 645 F.3d 564 (3d Cir. 2011)
    • In Amirnazmi, the Third Circuit rejected a nondelegation challenge to IEEPA, holding that the statute satisfies the requirement that Congress articulate an “intelligible principle” to guide the Executive.
    • The current opinion explicitly relies on Amirnazmi to foreclose Wang’s renewed nondelegation claim.
    • The court emphasizes that even if the executive branch has expanded its use of IEEPA since 2011, this operational evolution does not alter the statute’s constitutional sufficiency as interpreted in Amirnazmi.
  • United States v. Rodia, 194 F.3d 465 (3d Cir. 1999); United States v. Bishop, 66 F.3d 569 (3d Cir. 1995)
    • These cases are cited for the standard of review: constitutional challenges to a statute are reviewed de novo.

Takeaway: The court treats IEEPA’s constitutionality as settled within the Third Circuit, signaling little appetite for revisiting nondelegation arguments against this key national-security statute.

2. Mental-Health Evidence and Mens Rea

  • United States v. Pohlot, 827 F.2d 889 (3d Cir. 1987)
    • Pohlot is the foundational Third Circuit case distinguishing between:
      • Permissible use of mental-condition evidence to negate mens rea, and
      • Impermissible de facto “diminished capacity” defenses outside the insanity framework.
    • The court in this opinion reaffirms that mental-illness evidence may be used to show that the defendant did not, in fact, form the specific mental state required for the offense.
    • But Dr. Barber’s proposed testimony—that Wang’s social anxiety and PTSD led him to exaggerate his experience in illegal oil transactions and to participate to avoid losing “face”—did not show that he lacked intent; it described his motivation for intentional participation.

Takeaway: The Third Circuit maintains a narrow gate: psychiatric evidence is admissible to show a defendant did not intend to commit the crime, but not to say, “He intended it, but for psychologically understandable reasons.”

3. Hearsay and Expert Testimony (Rules 803(4) and 703)

  • Fed. R. Evid. 803(4) – Statements for purposes of medical diagnosis or treatment
    • Wang argued that his own statements to Dr. Barber during her evaluation should be admissible under 803(4).
    • The court held that the statements were largely about Wang’s upbringing and background and were made to a psychiatrist retained by defense counsel for litigation purposes—not primarily for medical diagnosis or treatment.
    • Therefore, they did not qualify for the 803(4) exception.
    • Compared to:
      • United States v. Gonzalez, 905 F.3d 165, 199–201 (3d Cir. 2018), where statements were made to a treating therapist about emotional state and symptoms, squarely for treatment.
      • United States v. Iron Shell, 633 F.2d 77, 84 (8th Cir. 1980), where a victim’s statements to a doctor were admissible because they were made for “no reason other than promoting treatment.”
  • Fed. R. Evid. 703 – Basis of an expert’s opinion
    • Rule 703 allows experts to base opinions on facts or data that may themselves be inadmissible, but those facts/data can be disclosed to the jury only if their probative value substantially outweighs their prejudicial effect.
    • The District Court allowed Dr. Barber to testify about her methods and conclusions but barred her from repeating Wang’s “self-serving” statements to her.
    • The Third Circuit found no abuse of discretion, emphasizing that Rule 703 is not a “conduit” for hearsay.
    • Citing:
      • Marvel Characters, Inc. v. Kirby, 726 F.3d 119, 136 (2d Cir. 2013), quoting Malletier v. Dooney & Bourke, Inc., 525 F. Supp. 2d 558, 666 (S.D.N.Y. 2007): Rule 703 cannot be used to smuggle inadmissible hearsay to the jury “under the guise” that it is merely the basis for expert opinion.

Takeaway: The court firmly distinguishes between therapeutic statements to medical providers, which may fall under 803(4), and forensic, litigation-driven examinations, which typically will not. It also underscores that defendants cannot launder their own self-exculpatory narrative through experts under Rule 703.

4. Mistake-of-Law Jury Instructions

  • United States v. Hoffecker, 530 F.3d 137 (3d Cir. 2008)
    • Sets a four-part test for whether a defendant is entitled to a requested theory-of-defense instruction:
      1. The instruction must accurately state the law;
      2. The defendant’s theory must be supported by the evidence;
      3. The instruction must not be substantially covered by the existing charge; and
      4. Failure to give it must deprive the defendant of a fair trial.
    • The court found Wang’s request failed at least parts (2) and (3):
      • Evidence showed Wang repeatedly knew trading in sanctioned Iranian oil was illegal and potentially had legal consequences.
      • The given jury instructions already conveyed that a mistake could negate mens rea if the defendant did not act “knowingly.”
  • United States v. Petersen, 622 F.3d 196, 208–09 (3d Cir. 2010)
    • Petersen stands for the rule that a court need not give a defendant’s preferred wording if the charge as a whole “substantially covers” the requested instruction.
    • The court here relied on Petersen to conclude that the general mens rea instruction was sufficient and a separate “mistake-of-law” charge was unnecessary.

Takeaway: The court reinforces that a separate, explicit “mistake-of-law” instruction is rarely required—especially where the evidence shows actual knowledge of illegality and the jury is otherwise instructed on the knowledge element.

5. Entrapment and Undercover Operations

  • United States v. Davis, 985 F.3d 298, 306–07 (3d Cir. 2021)
    • Confirms that a jury’s rejection of an entrapment defense is reviewed tightly: the verdict is overturned only if no reasonable jury could have reached it.
    • The Third Circuit applied this standard to uphold the jury’s rejection of Lane’s entrapment defense.
  • United States v. Russell, 411 U.S. 423, 435 (1973)
    • Supreme Court authority holding that law enforcement may “afford opportunities or facilities for the commission of the offense” without this becoming entrapment.
    • Entrapment requires more than the mere presentation of an opportunity.
  • United States v. Marino, 868 F.2d 549, 553–54 (3d Cir. 1989)
    • In the Third Circuit, “inducement” typically requires coercive tactics—such as repeated pressure, manipulation, intimidation, or threats—beyond simply making the crime possible.
  • United States v. Spentz, 653 F.3d 815, 819 (9th Cir. 2011), citing Sherman v. United States, 356 U.S. 369, 372 (1958)
    • The Third Circuit cites Spentz for the principle that the promise of a large financial reward does not itself amount to unlawful inducement.
  • United States v. Fedroff, 874 F.2d 178, 183 (3d Cir. 1989), quoting United States v. Reynoso-Uloa, 548 F.2d 1329 (9th Cir. 1977)
    • Emphasizes that a “particularly significant factor” in predisposition analysis is whether the defendant showed reluctance to engage in crime that was overcome by repeated government inducement.
    • The court here concludes that Lane did the opposite—he repeatedly expressed willingness to participate even when told he could back out.

Takeaway: The opinion underscores that in the Third Circuit, entrapment is a narrow defense. The bar for “inducement” and for disproving predisposition remains high—especially in sophisticated financial or sanctions-evasion schemes where defendants demonstrate ready cooperation.

6. Limits on Cross-Examination

  • United States v. Casoni, 950 F.2d 893, 918 (3d Cir. 1991)
    • Affirms the trial judge’s “wide discretion in limiting cross-examination.”
    • The Lane opinion applies this to uphold a ruling preventing defense counsel from questioning witness Fuchs about Samuel Gonzalez—another individual contacted about the scheme—to try to shift knowledge of money laundering away from Lane and to further impeach Fuchs.
    • The court found the proposed cross-examination minimally probative and cumulative in light of existing impeachment evidence.

7. Jury Instructions and Plain Error

  • United States v. Marcus, 560 U.S. 258, 262 (2010); Fed. R. Crim. P. 52(b)
    • Establish the standard for plain error review where an issue is raised for the first time on appeal.
    • Lane’s challenge to the entrapment instruction fell into this category.
    • The court concludes no plain error occurred: the instructions adequately defined entrapment and the government’s burden, and Lane could not show prejudice.
  • United States v. Hoffecker, 530 F.3d 137 (3d Cir. 2008)
    • Used again here in the entrapment-instruction context for prejudice analysis—Lane could not show that the alleged instructional error denied him a fair trial.

B. The Court’s Legal Reasoning

1. Wang’s Claims

(a) Nondelegation Challenge to IEEPA

Wang argued that IEEPA unconstitutionally delegates legislative power to the President, allegedly without adequate standards, particularly given a claimed expansion in executive use of the statute over time.

The Third Circuit’s reasoning is direct:

  • In Amirnazmi, it already held that IEEPA provides an intelligible principle restraining executive discretion, as required by the nondelegation doctrine.
  • The court notes that even if the executive branch has broadened its use of IEEPA in practice since Amirnazmi, that does not undermine the statute’s facial constitutionality.
  • As a lower panel, it is bound by Amirnazmi; revisiting that decision would require en banc review or Supreme Court intervention, neither of which is present here.

Accordingly, the nondelegation challenge is rejected de novo as foreclosed by controlling circuit authority.

(b) Exclusion/Limitation of Mental-Health Expert Testimony

Wang contended that the District Court improperly limited Dr. Barber’s testimony about his social anxiety and PTSD, which he claimed bore directly on his ability to form the requisite mens rea.

The court’s reasoning proceeds in two steps:

  1. Scope of permissible mental-health evidence (Pohlot):
    • The Third Circuit reiterates that mental-health evidence can be used to disprove the required state of mind. For example, it may be relevant if the condition prevented a defendant from understanding what he was doing or appreciating its illegality, where those are elements of the offense.
    • But Dr. Barber’s proffered testimony was:
      • That Wang’s social anxiety and PTSD caused him to pretend to have experience in illegal oil transactions; and
      • That he joined the scheme to avoid losing “face” to co-conspirators.
    • This narrative acknowledges his intentional participation in the scheme; it just supplies a psychological motive (saving face), not an absence of intent.
    • Thus, the proposed testimony would not “negate mens rea” in the sense recognized by Pohlot; it would amount to a “diminished responsibility” or “motive” argument, which is not a proper use of psychiatric evidence.
  2. Abuse of discretion standard:
    • Evidentiary rulings are reviewed for abuse of discretion.
    • Because the proposed testimony did not squarely bear on whether Wang knew he was engaging in illegal Iranian oil transactions or intended to do so, excluding it falls within the District Court’s discretion.
(c) Exclusion of Wang’s Statements to Dr. Barber (803(4) and 703)

Wang attempted to have his own statements to Dr. Barber admitted indirectly through her testimony. He argued:

  • They fell under Rule 803(4) as statements for purposes of medical diagnosis or treatment; or,
  • They could be disclosed under Rule 703 as the basis of Dr. Barber’s opinion.

The court’s analysis:

  1. Rule 803(4):
    • 803(4) covers statements made for—and reasonably pertinent to—medical diagnosis or treatment.
    • The District Court found that Wang’s statements were made primarily to assist in his criminal defense, not for treatment, and largely concerned his background, upbringing, and life story.
    • That finding is contrasted with:
      • Gonzalez, where statements were to a treating therapist; and
      • Iron Shell, where a victim’s statements to a doctor were clearly for treatment.
    • Given this context, the District Court reasonably concluded 803(4) does not apply.
  2. Rule 703:
    • The District Court permitted Dr. Barber to describe her methods and conclusions but barred her from reiterating Wang’s “self-serving” statements.
    • Implicit in this ruling was a determination that the statements’ probative value did not “substantially outweigh” their prejudicial effect.
    • The Third Circuit endorses this approach, emphasizing that Rule 703 cannot be used as a vehicle to place otherwise inadmissible hearsay before the jury, particularly when that hearsay is the defendant’s own exculpatory narrative.
    • This aligns with the Second Circuit’s reasoning in Marvel Characters v. Kirby and the district court’s reasoning in Dooney & Bourke.
(d) Denial of Wang’s Mistake-of-Law Instruction

Wang requested a specific jury instruction on mistake of law. The court reviewed the denial under Hoffecker’s four-part standard.

The Third Circuit held:

  • No evidentiary support for the theory:
    • The record showed Wang repeatedly evidenced knowledge that transacting in sanctioned Iranian oil was illegal and that his conduct had potential legal consequences.
    • A defendant who repeatedly acknowledges the illegality of his conduct cannot plausibly claim a good-faith mistake of law.
  • Existing instructions already covered the point:
    • The District Court’s jury charge explained that a mistake could negate mens rea where it meant the defendant did not act “knowingly.”
    • Under Petersen, this “substantially covered” Wang’s requested instruction.
  • No unfair trial:
    • Given the lack of evidence supporting a genuine mistake-of-law claim and the coverage in the existing instructions, the refusal to give Wang’s additional instruction did not deny him a fair trial.

The court therefore found no abuse of discretion in refusing Wang’s proposed instruction.

2. Lane’s Claims

(a) Entrapment Defense – Sufficiency of the Evidence

Lane argued that he was entrapped as a matter of law and that no reasonable jury could have rejected his entrapment defense. The court disagreed.

Entrapment has two elements:

  1. Inducement by the government; and
  2. Lack of predisposition to commit the offense.

Under Davis, the appellate court will disturb the jury’s finding only if no reasonable jury could have rejected entrapment.

Inducement:

  • Lane needed to show more than that the government “afforded an opportunity” to commit the offense (Russell).
  • He had to demonstrate coercive tactics—e.g., intimidation or threats—consistent with Marino.
  • The evidence showed:
    • The opportunity often came from Lane’s own employee, Nicholas Fuchs, not solely from government agents.
    • Undercover operatives repeatedly told Lane and others they could withdraw from the deal at any time.
    • The potential financial gain, even if large, does not itself constitute inducement (Spentz, Sherman).

Predisposition:

  • Fedroff emphasizes a defendant’s reluctance and whether it was overcome by repeated government inducement.
  • The record showed Lane repeatedly indicated willingness to join the scheme, despite being told multiple times he could walk away.
  • Far from showing reluctance overcome by governmental pressure, the evidence showed Lane was eager and willing to proceed.

Given this, the panel held that a reasonable jury could easily reject the entrapment defense. The burden for overturning the jury’s judgment on entrapment was therefore not met.

(b) Limits on Cross-Examination Concerning Samuel Gonzalez

Lane argued that the District Court improperly limited his cross-examination of Fuchs regarding Samuel Gonzalez, a money launderer and drug dealer contacted as part of the scheme. Lane sought to:

  • Discredit Fuchs’s credibility further; and
  • Shift knowledge of money laundering from Lane to Gonzalez.

The Third Circuit, relying on Casoni, emphasized that trial judges have “wide discretion” to limit cross-examination, especially where further questions would be cumulative or of marginal probative value.

The court reasoned:

  • There was already substantial impeachment material on Fuchs in the record.
  • Additional questioning about Gonzalez would have produced only limited incremental value.
  • Evidence that Gonzalez was knowledgeable about money laundering does not show that Lane lacked such knowledge, so it had limited relevance to Lane’s state of mind.

Accordingly, the restriction on cross-examination was within the trial court’s discretion.

(c) Entrapment Jury Instruction – Plain Error Review

Lane raised, for the first time on appeal, a challenge to the entrapment instruction, arguing it lacked sufficient detail and that his preferred instruction would have produced a different verdict.

Under Fed. R. Crim. P. 52(b) and Marcus, plain-error review requires:

  1. An error that is clear or obvious;
  2. That affected substantial rights (typically meaning it affected the outcome); and
  3. That seriously affects the fairness, integrity, or public reputation of judicial proceedings.

The Third Circuit held:

  • The District Court’s instructions:
    • “Sufficiently define[d] the elements of entrapment and the Government’s burden.”
    • Were clarified in response to a jury question, further diminishing any risk of confusion.
  • Lane failed to show prejudice:
    • Many of the “facts” he claimed the jury would have focused on under his preferred instruction—such as his alleged reluctance or the influence of profit—were either unsupported by the record or legally insufficient to prove entrapment.
  • Accordingly, no plain error occurred.

IV. Impact and Future Implications

Although “not precedential,” the opinion offers instructive guidance in several areas.

A. National-Security and Sanctions Enforcement (IEEPA)

  • The court’s reaffirmation of Amirnazmi fortifies the view that IEEPA is constitutionally robust against nondelegation challenges in the Third Circuit.
  • Defendants in future IEEPA prosecutions face an uphill battle if they attempt to challenge the statute itself as an impermissible delegation, particularly where the challenge is facial rather than as-applied.
  • As sanctions enforcement continues to be a central tool of U.S. foreign policy, this opinion reinforces IEEPA’s stability as a prosecutorial framework.

B. Criminal Defense Strategy and Mental-Health Evidence

  • The opinion illustrates the limits of mental-health evidence when used as a partial exculpation strategy in complex economic or sanctions cases:
    • Courts will look closely at whether the evidence truly shows that the defendant lacked the required intent, not just that he had an unusual or sympathetic motive for intentional misconduct.
  • Forensic psychiatric evaluations commissioned by defense counsel:
    • Will face strict scrutiny under Rule 803(4) when used to introduce the defendant’s own statements.
    • Cannot be used, via Rule 703, simply to place those self-serving statements before the jury.
  • This may push defense counsel to:
    • Rely more heavily on mental-health evidence that can clearly negate a statutory mental element; and
    • Separate therapeutic treatment records (when genuinely for treatment) from forensic evaluations undertaken solely for litigation.

C. Evidentiary Practice: Hearsay and Expert Testimony

  • Trial courts in the Third Circuit now have a recent example—though nonbinding—of:
    • Refusing to treat forensic examinations as “medical treatment” under Rule 803(4); and
    • Allowing experts to testify to opinions and methodologies while barring disclosure of underlying self-serving hearsay under Rule 703.
  • This reinforces a more conservative approach to expert-based hearsay, consistent with broader federal trends.

D. Entrapment in Financial and Sanctions-Related Undercover Operations

  • For undercover operations targeting complex schemes (e.g., money laundering, sanctions evasion), this opinion underscores:
    • Providing an opportunity, detailed plans, or large potential profits does not, by itself, constitute unlawful inducement.
    • Use of cooperating individuals (like Fuchs) does not lower the constitutional bar for entrapment; the same standards apply.
  • Defendants asserting entrapment must come forward with substantial evidence of:
    • Coercive or manipulative government tactics; and
    • Genuine initial reluctance that was overcome by such tactics.
  • Simply pointing to substantial profit or after-the-fact reinterpretations of recorded conduct will generally be insufficient.

E. Jury Instructions and Appellate Preservation

  • The opinion highlights the importance of:
    • Timely requesting and objecting to jury instructions in the trial court; and
    • Framing requested instructions so they are firmly anchored in the evidentiary record.
  • On appeal, challenges raised for the first time face plain-error review, which is highly deferential.
  • The court’s willingness to deem general instructions on “knowingly” sufficient to cover mistake-of-law and entrapment nuances underscores:
    • A reluctance to micromanage trial-level instructional decisions; and
    • The need for defense counsel to build a specific, fact-supported basis for any specialized instruction at trial.

V. Complex Concepts Simplified

A. Nondelegation Doctrine and “Intelligible Principle”

The Constitution gives Congress, not the President, the power to make laws. But Congress may delegate some authority to the Executive if it sets out an “intelligible principle” to guide how that authority is used. IEEPA, for example, authorizes the President to regulate certain economic transactions during national emergencies but sets conditions and purposes (national security, foreign policy), which courts have found sufficient.

B. Mens Rea and Mental-Health Evidence

  • Mens rea is the required mental state a defendant must have—such as “knowingly” or “willfully.”
  • Mental-health evidence can be used to argue: “Because of this mental condition, I did not form the required intent.”
  • But it generally cannot be used to say: “I knowingly joined the crime, but for psychological reasons, I should be less blameworthy.” That is, mental illness cannot typically be used to reweigh moral blame outside of a formal insanity defense.

C. Hearsay, Rule 803(4), and Rule 703

  • Hearsay is an out-of-court statement offered to prove the truth of what it says. It is usually not allowed unless an exception applies.
  • Rule 803(4) allows certain statements made to medical professionals for diagnosis or treatment (e.g., “My chest hurts and started last night”) because people have a strong motive to be truthful to get proper care.
  • Rule 703 lets experts rely on materials that might not themselves be admissible (such as hearsay reports), but those materials are only disclosed to the jury when their value greatly outweighs any prejudice.
  • Courts are wary of defendants using these rules to have expert witnesses simply repeat the defendant’s own self-serving story.

D. Mistake of Law vs. Mistake of Fact

  • Mistake of fact (e.g., “I thought the oil was from a lawful source”) can sometimes negate mens rea.
  • Mistake of law (e.g., “I knew it was Iranian oil, but I didn’t know that was illegal”) is usually not a defense, except in limited circumstances where the statute itself requires knowledge of the law.
  • Even when a mistake-of-law theory is arguably relevant, courts will often treat it as part of the broader question whether the defendant acted “knowingly.”

E. Entrapment

  • Entrapment occurs when:
    1. The government induces the defendant to commit a crime; and
    2. The defendant was not predisposed—that is, not ready and willing—to commit the crime beforehand.
  • Inducement requires more than just offering the chance to commit the crime; it usually includes pressure, harassment, or manipulation.
  • Predisposition can be shown if the defendant quickly agrees, suggests improvements to the plan, or continues despite easy opportunities to walk away.

VI. Conclusion

The Third Circuit’s decision in United States v. Lane & Wang, although not precedential, is a rich application of settled principles to a sophisticated sanctions-evasion prosecution. The court:

  • Reaffirms the constitutional standing of IEEPA against nondelegation challenges;
  • Clarifies the narrow permissible scope of mental-health evidence to negate mens rea and underscores evidentiary limits on introducing defendants’ own statements through experts;
  • Demonstrates a cautious approach to theory-of-defense jury instructions, especially on mistake-of-law claims not well supported by the record;
  • Applies stringent standards for entrapment, reinforcing that government provision of opportunity and prospect of profit do not by themselves constitute unlawful inducement; and
  • Affirms trial courts’ broad discretion over cross-examination and jury instructions, particularly under deferential and plain-error standards of review.

In the broader legal landscape, this opinion signals continuity rather than innovation: the Third Circuit remains aligned with a strict, evidence-driven approach to defenses like entrapment and mistake of law, while carefully cabin­ing the use of psychiatric and expert testimony. For practitioners in sanctions, national-security, and complex fraud prosecutions, it offers a concise, contemporary roadmap of how these doctrines are likely to be applied in future cases within the circuit.

Case Details

Year: 2025
Court: Court of Appeals for the Third Circuit

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