United States v. Runner: Second Circuit’s Post-Kousisis Endorsement of the Fraudulent-Inducement Theory

Introduction

United States v. Runner, No. 24-1040 (2d Cir. July 9 2025), is the Second Circuit’s first full-dress application of the Supreme Court’s recent decision in Kousisis v. United States, 145 S. Ct. 1382 (2025). The panel (Judges Calabresi, Chin & Merriam) affirms Patrice Runner’s mail, wire-fraud and related convictions arising from a decades-long psychic-mailer scheme that harvested more than $150 million from over one million consumers. Runner argued that his prosecution was fatally tainted by the Government’s failure to prove a separate “intent-to-harm” element historically recognized by Second Circuit precedent. The court rejects that contention, holds that the indictment and evidence satisfied the newly clarified requirements of mail and wire fraud, and finds any Guidelines loss-calculation error harmless.

The decision firmly aligns Second Circuit law with Kousisis: under the federal fraud statutes it is now sufficient that the defendant used materially false statements to induce a victim to part with money or property; proof of a contemplated net economic loss is not required. The ruling therefore closes the “fine line” the Circuit had previously drawn between deceit that merely induces a transaction and deceit that goes to “the very nature of the bargain.”

Summary of the Judgment

Indictment: Adequately alleged that Runner sent materially false mailings to obtain customers’ money; no separate “intent-to-harm” averment was needed after Kousisis.
Sufficiency of the Evidence: Government proved that advertised goods/services (rare gems, bespoke psychic rituals) were nonexistent or mis-described, satisfying the fraudulent-inducement theory.
Jury Instructions: Charge correctly required intent to deceive for the purpose of obtaining money/property; omission of Runner’s proposed “transactions they would otherwise avoid” instruction was not error.
Sentencing: Even assuming an over-estimate of loss (> $150 million), the error was harmless because (a) the Guidelines would still recommend life and (b) the district judge emphatically varied downward to 10 years.
Outcome: Convictions and sentence AFFIRMED.

Analysis

Precedents Cited and Their Influence

The court’s reasoning is structured around the interaction between longstanding Second Circuit doctrine and the Supreme Court’s recent clarification in Kousisis. Key cases include:

Kousisis v. United States, 145 S. Ct. 1382 (2025) – 7-Justice majority embraces the “fraudulent-inducement” theory; rejects any requirement that Government prove intent to leave the victim worse off economically.
United States v. Shellef, 507 F.3d 82 (2d Cir. 2007); United States v. Starr, 816 F.2d 94 (2d Cir. 1987) – formulated the pre-Kousisis “fine line” and separate intent-to-harm component.
United States v. Weaver, 860 F.3d 90 (2d Cir. 2017); United States v. Jabar, 19 F.4th 66 (2d Cir. 2021) – articulated elements of mail/wire fraud and materiality.
District-court and statutory references: 18 U.S.C. §§ 1341, 1343, 1349; Sentencing Guidelines § 2B1.1.

By declaring that “a defendant commits federal fraud whenever he uses a material misstatement to trick a victim into a transaction that requires handing over her money,” Kousisis overruled, in practical effect, portions of Shellef, Starr and related Second Circuit cases that insisted on a distinct proof of contemplated pecuniary harm.

Legal Reasoning of the Court

Indictment Sufficiency: The panel applies a de novo standard and finds the charging language tracks the elements post-Kousisis—a scheme to defraud, material falsehoods, and use of mails/wires. Runner’s claim that “everyone knows magic is fake” is irrelevant because the falsehoods concerned origin, authenticity, and personalization of goods/services.
Evidence: Government witnesses, sample mailings, procurement invoices (e.g., PartyMart bulk purchases) established that letters lied about psychic authorship and the nature/value of items. Under the fraudulent-inducement theory the jury could infer intent to defraud without separate proof of planned net loss.
Jury Instructions: Charge required intent to deceive “for the purpose of causing some financial or property loss,” exceeding what Kousisis actually demands; therefore Runner could not have been prejudiced.
Sentencing: Loss calculation challenged as over-inclusive was immaterial because any reasonable alternative still yielded an offense level that capped at life; district judge explicitly treated the Guidelines as “way, way off” and varied downward, making any error harmless.

Impact on Future Cases and the Law of Fraud

Alignment with Supreme Court: Second Circuit decisively abandons its “two-prong” fraudulent-intent test (deceive and harm) in favor of the single inquiry: Did defendant use material falsehoods to obtain money/property?
Lower Bar for Prosecutors: Proving actual or contemplated economic loss is no longer necessary. Cases involving “experiential” or credence goods (psychic services, alternative medicine, NFTs, online self-help courses) are more readily chargeable under mail/wire fraud.
Consumer-Protection Overlap: Civil-regulatory violations (FTC, USPS false-mail orders) can now more easily translate into criminal exposure where monetary inducement is shown.
Materiality as Backstop: Courts will police overreach via the demanding standard of materiality, not intent-to-harm. Defense counsel will focus on whether the misstatement would naturally influence a reasonable purchaser.
Sentencing Practice: Runner illustrates that district courts remain free to vary dramatically downward from astronomical § 2B1.1 loss-driven ranges, yet defendants cannot bank on appellate relief where the guideline miscalculation does not change the range.
First Amendment & “Spiritual Speech” Arguments: The opinion sidesteps defining “psychic,” leaving open future debates about the intersection of spiritual representations and fraud. Nevertheless, material false claims about physical attributes (origin, uniqueness) remain squarely within fraud’s ambit.

Complex Concepts Simplified

Mail/Wire Fraud (18 U.S.C. §§ 1341, 1343): Federal crimes punishing schemes to obtain money or property through lies, executed via mail or electronic communications.
Fraudulent-Inducement Theory: Liability attaches once the defendant’s material misrepresentation prompts the victim to part with money/property; proving intent to cause further monetary loss is unnecessary.
Materiality: A lie is “material” if it would naturally influence a reasonable person’s decision. It is the principal gatekeeper preventing every puffery or exaggeration from becoming criminal fraud.
Intent-to-Harm vs. Intent-to-Deceive: Pre-2025 Second Circuit cases required both. Post-Kousisis, intent-to-deceive suffices so long as money or property is obtained.
Sentencing “Loss Amount” (§ 2B1.1): Courts add offense levels according to the dollar loss the defendant intended or reasonably foresaw. Above $150 million, 26 extra levels are added, often pushing the advisory range to life.
Harmless Error in Sentencing: An error in the Guidelines calculation is disregarded on appeal if the appellate court is certain the judge would have imposed the same sentence irrespective of the mistake.

Conclusion

United States v. Runner cements the transformative effect of Kousisis within the Second Circuit. By declaring that material falsehoods which merely induce payment are enough for mail or wire fraud, the court forecloses a once-viable defense premised on the absence of “actual harm.” Practitioners should adjust charging decisions, defense strategies, and compliance advice accordingly: the decisive questions are now (1) Was the statement false?, (2) Was the falsity material to the purchasing decision?, and (3) Was the mail or wire used? Runner’s reliance on the mystical nature of his wares could not mask the concrete lies about authorship, origin, and performance. The opinion thus re-aligns Second Circuit fraud jurisprudence with Supreme Court doctrine, lowers the prosecutorial burden, and signals that defendants peddling credence goods must ensure their factual representations are accurate or face criminal exposure irrespective of customers’ subjective “satisfaction.”