United States v. Sewall: “Intent to Defraud” Encompasses Cheating One Person by Deceiving Another; No Separate Good-Faith Instruction Required When Specific-Intent Instruction Is Given

I. Introduction

In United States v. Sewall (10th Cir. Apr. 9, 2026), the Tenth Circuit affirmed wire-fraud and wire-fraud-conspiracy convictions arising from a foreign-exchange (“forex”) investment operation marketed through claims of uninterrupted monthly profitability. The defendant, Bryant Edwin Sewall, was a principal trader for Mediatrix (and a related brokerage, Blue Isle). The government alleged a classic “profits-on-paper” scheme: investor-facing account statements reflected only closed trades (closed P&L), while substantial negative exposure from open trades (floating P&L) was kept from investors, allowing Mediatrix to appear consistently profitable even when the overall portfolio was deteriorating.

The appeal focused on three categories of issues:

  • Sufficiency of the evidence, particularly whether Sewall possessed the required specific intent to defraud.
  • Evidentiary exclusions, including whether the defense could introduce Rule 1006 summary exhibits based on the Grant Thornton report and “flash crash” accounting.
  • Jury instructions, including whether a separate good-faith instruction was required and how “intent to defraud” should be defined—especially where alleged deception targeted an intermediary (marketing partner) who then solicited funds from investors.

Although styled as an “Order and Judgment” (nonbinding except under law-of-the-case, res judicata, and collateral estoppel), the decision is noteworthy for its explicit approval of an “intent to defraud” definition that avoids requiring that the same person be both deceived and cheated—an issue that matters in multi-actor marketing-and-operations fraud structures.

II. Summary of the Opinion

The court affirmed across the board:

  • Sufficiency: The evidence supported that Sewall knew Mediatrix was not truly profitable and knew (or promoted) investor solicitations premised on false profitability representations.
  • Evidentiary exclusions: Even assuming exclusion of defense summary exhibits (A60 and A61) was error, it was harmless because the substance was otherwise before the jury and the evidence of fraudulent intent was overwhelming.
  • Instructions: (a) No separate good-faith instruction was required because the jury was properly instructed on specific intent to defraud; (b) the district court did not err in defining “intent to defraud” as “an intent to cheat someone out of money or property by means of deception,” which permits deception of one party and cheating of another.

III. Analysis

A. Precedents Cited

1. Standards for sufficiency review

The court grounded its de novo sufficiency review in United States v. Kaspereit, emphasizing that evidence must be viewed in the light most favorable to the government, with reasonable inferences drawn for the verdict, and that appellate courts do not reweigh evidence or assess credibility. This framing is outcome-determinative in fraud cases where intent is frequently inferred from circumstantial evidence and communications.

The court also cited United States v. Trammell for the proposition that a schemer’s “indifference to the truth” can evidence fraudulent intent. That citation mattered because Sewall’s position was not “I made truthful statements,” but rather “I did not personally market and I believed the trading was successful.” The court treated indifference/knowing falsity as inferable from Sewall’s own communications about the firm’s financial “hole.”

2. Harmless error framework for evidentiary issues

For evidentiary rulings challenged under the Federal Rules of Evidence, the court applied nonconstitutional harmless-error review under United States v. Walker. It then relied on the substantial-rights articulation in United States v. Charley and the classic harmless-error benchmark from Kotteakos v. United States (“substantial influence” or “grave doubt”).

The opinion also invoked United States v. Jean-Pierre to underscore that overwhelming evidence of guilt frequently establishes harmlessness. And it applied United States v. Gould for the specific principle that exclusion is harmless when the substance of excluded evidence reached the jury through other channels.

3. Preservation/forfeiture of constitutional theories

When Sewall argued that excluding the defense exhibits violated a constitutional right to present a complete defense, the court held the claim forfeited and then waived (because Sewall did not argue plain error). It relied on United States v. Thurber for the point that failure to raise the constitutional basis below triggers plain-error review, and on United States v. Coulter to reject the notion that routine evidentiary objections (e.g., hearsay) preserve distinct constitutional theories.

4. Good faith and intent instructions

The court relied on United States v. Bowling to hold that a separate good-faith instruction is not required when the jury is properly instructed that conviction requires specific intent to defraud—because a finding of intent to defraud necessarily negates good faith.

For review of jury instructions, the court cited United States v. Thomas, applying de novo review to legal accuracy while deferring (abuse-of-discretion review) to the district court’s “shaping or phrasing” of language.

5. “Belief in the plan” does not sanitize reckless/baseless representations

The court’s treatment of Sewall’s “we can trade our way out” defense drew on United States v. Themy: even a firm subjective belief in a plan does not justify “baseless or reckless representations.” This principle is particularly salient in investment and trading fraud where defendants often claim optimism, strategy, or eventual recovery as a substitute for present truthfulness.

B. Legal Reasoning

1. Inferring fraudulent intent from the trader’s operational knowledge and communications

The core dispute was intent: Sewall argued that he was merely the trader, separated physically and functionally from marketing, and that he did not intend to defraud investors. The court held a reasonable jury could find intent based on:

  • Direct admissions and metaphors (texts/calls about being in a “hole,” “deck chairs on the Titanic,” and discussion of avoiding “jail”), evidencing awareness of catastrophic liabilities and the need to conceal losses from investors.
  • Trading-mechanics concealment logic: using only closed P&L reporting enabled “handpicking” profitable results while leaving massive floating losses undisclosed—functionally rendering investor account balances illusory.
  • Marketing knowledge and participation: evidence that Sewall attended calls/meetings and encouraged marketing messages touting an “unbroken” track record, including explicit statements that “people are greedy” and extraordinary results drive fundraising.

Importantly, the court treated the trader’s role as enhancing—rather than diminishing—the inference of knowledge and intent. In a forex scheme premised on the optics of profitability, the person controlling trading and aware of open exposure is uniquely positioned to understand that marketing claims about “never a losing month” are materially false when floating losses are ignored.

2. The “deceive one, cheat another” theory and the definition of intent to defraud

A key instructional issue was the government’s concern that defining intent to defraud as “an intent to deceive and cheat someone” might wrongly suggest the same person must be both deceived and cheated. The district court adopted the government’s proposed definition: “an intent to cheat someone out of money or property by means of deception.”

The Tenth Circuit approved that phrasing and the rationale behind it, effectively endorsing a fraud architecture common in complex schemes: defendants may deceive a partner, agent, or intermediary (here, potentially the marketing partner) with the purpose and result that investors are cheated out of money. This framing prevents a defendant from exploiting multi-layer organizational structures to argue that because the deceived party and the financially harmed party differ, the fraud element fails.

The court’s reasoning also neutralized Sewall’s “burden-lowering” argument: both sides agreed intent must encompass both deception and cheating; the dispute was only how to phrase it to avoid jury confusion. Under United States v. Thomas, the district court had discretion in phrasing so long as the instruction remained legally accurate.

3. Evidentiary exclusions: avoiding doctrinal entanglement through harmlessness

The evidentiary issue involved excluded Rule 1006 summary exhibits (A60/A61) derived from the Grant Thornton report and an asserted “flash crash reimbursement.” The panel expressly declined to resolve several difficult evidentiary questions, including:

  • whether Rule 1006 summaries can be admitted for their truth when underlying records were admitted for a limited purpose;
  • whether a newly created trial summary can be admitted for “effect on the listener”;
  • when summarization becomes expert opinion rather than permissible calculation.

Instead, the court affirmed on harmless-error grounds, emphasizing that:

  • the Grant Thornton materials were in evidence (at least for effect on Young), and defense counsel argued the jury could refer to them;
  • the defense accountant (Porter) testified that monthly closed P&L was positive except certain months and a graph reflecting that was admitted;
  • testimony already conveyed the defense theme that an alleged reimbursement occurred and was believed by some participants;
  • the evidence of intent against Sewall was overwhelming given his own communications.

The court also questioned the plausibility of Sewall’s “effect on the listener” claim: as the trading principal, it strained credulity that he would not know of a purported $5.1 million reimbursement deposit for two years.

4. No standalone good-faith instruction required

Applying United States v. Bowling, the panel held that where the jury is properly instructed that wire fraud and conspiracy require specific intent to defraud, a separate good-faith instruction is unnecessary. In other words, the mens rea instruction already obliges the jury to reject good faith before convicting.

C. Impact

1. Clarifying “intent to defraud” for multi-actor fraud enterprises

The most practically significant aspect of the decision is its approval of an “intent to defraud” definition that prevents a formalistic identity requirement between the deceived party and the cheated party. This matters for:

  • schemes using salesforces, affiliates, “introducing brokers,” influencers, or investor-relations teams;
  • organizations where internal participants are themselves deceived or kept “walled off” from operational truth, yet investors are the ultimate victims;
  • fraud structures designed to create plausible deniability by segmenting functions across personnel and jurisdictions.

2. Harmless-error as a strategic appellate barrier in document-heavy fraud cases

The opinion is also a reminder that in complex financial prosecutions, appellate courts may bypass difficult evidence-law disputes if the record otherwise conveyed the defense theory and the incriminating evidence is strong. In practical terms, defendants seeking reversal based on exclusion of “summary” exhibits must show not merely that the evidence mattered, but that its exclusion likely changed the outcome—an especially high bar when the defendant’s own communications evidence knowledge and concealment.

3. Preservation doctrine: evidentiary objections are not constitutional objections

The decision reinforces a preservation lesson: raising hearsay, Rule 1006, or similar objections does not preserve a distinct constitutional “complete defense” theory. Counsel must articulate the constitutional ground in the district court or accept plain-error review on appeal (and must actually argue plain error).

IV. Complex Concepts Simplified

  • Wire fraud / conspiracy to commit wire fraud: Federal crimes involving a scheme to obtain money or property through materially false or fraudulent pretenses, using interstate wires (emails, phone calls, wire transfers). Conspiracy adds agreement plus an overt act (depending on instruction/statute charged) and shared intent.
  • Specific intent to defraud: Not just intending to do the acts, but intending to cheat someone out of money or property through deception. The court-approved definition captures that fraud can operate through intermediaries.
  • Closed P&L vs. floating P&L: Closed P&L reflects gains/losses on trades that have been closed. Floating P&L reflects unrealized gains/losses on open positions. Reporting only closed P&L can conceal massive unrealized losses.
  • Rule 1006 summary exhibits: A method of presenting voluminous records through summaries/charts/calculations rather than dumping thousands of pages on the jury, but the summary must accurately reflect admissible underlying material and cannot smuggle in expert opinions.
  • Harmless error: Even if a trial court made a mistake, the conviction stands unless the error likely affected the verdict.
  • Forfeiture vs. waiver (appellate context): If you fail to raise an argument below, it is forfeited (reviewable only for plain error). If you also fail to argue plain error on appeal, courts often treat the issue as waived and do not consider it.

V. Conclusion

United States v. Sewall affirms wire-fraud convictions by tying fraudulent intent to operational knowledge and communications that reveal awareness of hidden liabilities and investor-facing misrepresentations. The decision’s most durable doctrinal contribution is its endorsement of an “intent to defraud” instruction that does not require the same person be both deceived and cheated—an important clarification for modern, multi-layer financial frauds. It also underscores two recurring appellate realities: evidentiary disputes often rise or fall on harmlessness when the defense theory reached the jury through other means, and constitutional arguments must be clearly preserved rather than assumed to ride along with routine evidentiary objections.