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IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA - page 26 / 38

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a. The Scheme to Defraud.

A scheme to defraud means any deliberate plan of action or course of conduct by which

someone intends to deceive or cheat another or by which someone intends to deprive another of

something of value. Plaintiffs may satisfy the burden by showing a scheme to defraud involving

“some sort of fraudulent misrepresentation or omissions reasonably calculated to deceive persons

of ordinary prudence and comprehension.” Kehr Packages, Inc. v. Fidelcor, Inc., 926 F.2d 1406,

1415 (3d Cir. 1991). Deceitful statements, half truths, or the knowing concealment of material facts

are all actionable under the mail and wire fraud statutes. United States v. Townley, 665 F.2d 579,

585 (5th Cir. 1982).

The statements need not be false or fraudulent on their face, and the accused need not misrepresent any fact, since all that is necessary is that the scheme be reasonably calculated to deceive person of ordinary prudence and comprehension, and that the mail service of the United States be used in the execution of the scheme.

Id. Additionally, Plaintiffs must allege that Defendant acted with an intent to defraud, which is to

act knowingly and with the intention to deceive or to cheat. United States v. Hoffecker, 530 F.3d

137, 181 (3d Cir. 2008). “An intent to defraud is ordinarily accompanied by a desire or a purpose

to bring about some gain or benefit to oneself or some other person or by a desire or a purpose to

cause some loss to some person.” United States v. Leahy, 445 F.3d 634, 644 (3d Cir. 2006) (quoting

the District Court’s jury instructions).

Here, the dispute centers around the role and effect of the allegedly fraudulent HUD-1

settlement statements used in these transactions. The questions before the Court include: whether

the HUD-1 statement is a misrepresentation or simply an accurate statement of the amount paid; and

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