Fraud
Mark Johnson v. United States
Date: July 17, 2025
Issue: Whether the jury received improper instructions on the right-to-control theory during the fraud conviction of a former HSBC executive, Mark Johnson.
Case Summary: In a unanimous 3-0 decision, a Second Circuit panel overturned former HSBC executive Mark Johnson’s fraud conviction, ruling that the jury received improper instructions based on the now-invalid right-to-control theory of fraud.
According to prosecutors, Cairn Energy retained Mark Johnson in 2011 to convert $3.5 billion into British pounds sterling to sell its Indian subsidiary. Prosecutors claimed Johnson quietly bought pounds for HSBC’s own accounts before completing Cairn’s trade, generating a $7 million profit.
At trial, the government advanced two theories of wire fraud. The misappropriation theory refers to the intentional use of confidential information for one’s own benefit, causing harm to the source of the information. Prosecutors argued Johnson violated his duty to Cairn by using confidential information to place proprietary trades before the benchmark fix. The right-to-control theory refers to one’s right to control their assets as property, and thus, defendants may be convicted for withholding potentially valuable economic information without intending harm. Prosecutors argued Johnson falsely assured Cairn that HSBC would not manipulate the price, but then intentionally inflated the fix, depriving Cairn of essential pricing information.
A jury found Johnson guilty of conspiracy and wire fraud through a general verdict that did not specify which wire fraud theory it relied on. The district court sentenced him to two years in prison. On appeal, the Second Circuit upheld Johnson’s conviction under the right-to-control theory but declined to evaluate the misappropriation theory. After Johnson served his sentence, the U.S. Supreme Court struck down the right-to-control theory in Ciminelli v. United States.
Johnson then filed a petition for a writ of coram nobis in the district court, seeking to dispose his wire fraud conviction and the return of the $300,000 fine he paid as part of his sentence. The district court rejected his petition, concluding that including the right-to-control theory was harmless because the jury would have found Johnson liable under the misappropriation theory.
The Second Circuit, however, reversed. After the Ciminelli decision, the panel explained Johnson could not be convicted of denying Cairn a right to control its assets by reneging on a promise not to ramp up the pound’s price. The panel examined whether including the invalid right-to-control theory in the jury instructions affected the verdict, despite the presence of a valid misappropriation theory.
The panel determined the government’s evidence on two elements of the misappropriation theory — a fiduciary relationship and misappropriation of confidential information — was so weak that it expressed “grave doubt” Johnson could be convicted under that theory alone. “As a result, we doubt that a properly instructed jury would have found the government satisfied its burden of showing that Johnson misappropriated Cairn’s information,” the panel noted.
Bottom Line: The panel overturned Johnson’s conviction and remanded for the district court to grant his petition.
Document: Opinion
