Overview
As Judge Rakoff explained in a January 21, 2026 opinion in United States v. Rinsch, fraud consists of obtaining a victim's money or property by lying, and if said lying is done intentionally and involves the use of mail or interstate wires, it is a federal crime. Sometimes after obtaining a victim’s money or property, a fraudster continues to lie to the victim to conceal the initial fraud. This post-fraud lying is known as "lulling." Courts regularly admit evidence of lulling as proof of the fraudster's intent. But is lulling itself an actionable form of fraud?
In United States v. Rinsch, defendant Carl Erik Rinsch, a film and television writer and director, allegedly agreed to produce a show for Netflix for $44 million. Rinsch later asked Netflix for an additional $11 million to cover production-related tasks. According to the indictment, Rinsch’s request was fraudulent: Rinsch actually intended to use the $11 million for personal expenses. After Netflix wired Rinsch the $11 million, he continued to lie to Netflix about the purposes to which he was putting the $11 million.
The Government argued that the indictment charged two alternative theories of wire fraud: (1) the initial lying to Netflix to obtain the $11 million; and (2) his later misrepresentations to retain the funds. The Government further argued that even if Rinsch had not lied to obtain the $11 million, he could be guilty of wire fraud based on the post-transfer lies to retain the money. Judge Rakoff held that the language of the wire fraud statute, its legislative history, and the Supreme Court's decision in McNally v. United States, 483 U.S. 350 (1987), limit wire fraud to efforts to obtain money or property by fraudulent means. The statute does not criminalize efforts to retain money or property by fraudulent means, as the Government argued.
Despite the Government being unable to advance its second theory of wire fraud based on retention, Rinsch was convicted of wire fraud based on his initial lying to obtain the $11 million.
Nonetheless, Rinsch clarifies a powerful potential challenge to prosecutions that do not fit squarely within the bounds of the mail and wire fraud statutes.
