FRAUD AND FEDERALISM: HOW THE MODERN COURT HAS USED THE MEANING OF “PROPERTY” TO RESHAPE FEDERAL FRAUD JURISPRUDENCE
For the past several decades, the Supreme Court has repeatedly sought to reinterpret the meaning of “property” within federal fraud statutes to limit the degree to which federal prosecutors can regulate state official misconduct. While the Court’s renewed interest in the federal fraud statutes has drawn varying degrees of praise and criticism from different sides of the legal community, this Note seeks to assess—in an apolitical, value-neutral fashion—whether the Court’s doctrinal approach is effective in furthering the stated goal of drawing boundaries between federal and state actors in corruption cases.
The Note first undertakes a deep-dive analysis of the evolution of the Court’s mail and wire fraud jurisprudence. It then shows how even the most faithful applications of the Court’s fraud doctrine lead to inconsistent outcomes and fail to provide lower courts or prosecutors with clear guidance on exactly what types of misconduct can fall within the purview of the fraud statutes.
Concluding that the dissonance between the Court’s clearly stated ideological objectives and the actual black-letter law of fraud jurisprudence is unsustainable, this Note explores alternative doctrinal approaches that might fix the current state of fraud jurisprudence. This Note contributes to the existing body of scholarship by not only offering a detailed accounting of the current state of fraud jurisprudence, but also providing a lens to analyze Supreme Court decisions that can be applied well beyond the fraud statutes themselves.
In federal criminal law, the meaning of “fraud” is at a crossroads. In Ciminelli v. United States, the Supreme Court considered a complex scheme to secure a billion-dollar contract with the State of New York.1 The defendants, a mix of private actors and state officials, rigged the bidding process in their favor.2 Crucially, this case did not hinge on the wrongdoing itself, but instead focused on whether the government’s theory of fraud was compatible with the Court’s conception of “property” as defined in its fraud jurisprudence.3 The government’s theory, rooted in the Second Circuit’s “right to control” conception of property fraud, was that the defendants deprived New York of the right to valuable economic information needed to make discretionary economic decisions.4 In a unanimous opinion, the Court rejected this theory of property and reversed the defendants’ convictions. This result is neither surprising nor unprecedented; Ciminelli is but the latest in a line of cases to reverse fraud convictions despite obvious “wrongdoing[,] deception, corruption, [and] abuse of power”5 by the defendants. Although predictable, this reversal continues a trend of troubling cases that have generated scholarly debate for decades.
On one hand, the federal mail and wire fraud statutes remain one of the most versatile and valued tools in the white-collar prosecutor’s arsenal.7 During much of the twentieth century,8 the Supreme Court rarely reviewed mail fraud convictions,9 and it even more rarely reversed appellate decisions for substantive error.10 During this era, the federal government found increasingly novel applications for the mail fraud statute.11 Even in recent years, prosecutors have secured fraud convictions in such varied cases as the “Dieselgate” emissions scandals,12 the use of state money for private campaign activities,13 the “Varsity Blues” college admissions scandal,14 the bribery of college athletes,15 and countless other applications.16
On the other hand, fraud prosecutions have faced intense scrutiny from the Supreme Court in recent decades, particularly in cases that implicate states.17 Since the 1980s, the Supreme Court reversed lower courts in four of the six cases in which the meaning of “property” was at issue.18 Each reversal exhibited three important characteristics: (1) the purported victim (or defendant) was a state actor;19 (2) the scheme did not have a “property interest” as its aim;20 and (3) the opinion was motivated in part by the Court’s announced desire to preserve state–federal divisions by limiting creative theories of fraud prosecution.21
The ideological considerations underlying the Supreme Court’s modern case law have sparked intense debate. Detractors have criticized these decisions as hindering the federal government’s ability to punish otherwise hard-to-reach instances of state corruption,22 while supporters have defended the Court’s decisions as a necessary prophylactic that protects against federal overreach into state affairs.23 Rather than joining the already-crowded debate as to the correctness of the Court’s ideological views, this Note critically examines the effectiveness of the modern fraud doctrine relative to the Court’s stated federalist agenda.
This Note argues that at the heart of the Court’s modern fraud doctrine lies a vague, superficially simple “property-or-not” test that leads to paradoxical outcomes.24 Originally rooted in cases that interpreted federal fraud to require property as a necessary element of the crime, the modern test defines property differently based on both the identity of the victim25 and the extent to which the right or interest at issue was considered property under early common law.26 In practice, the modern mutation of the property-or-not test creates outcomes in which the same fundamental right or interest might be a “property interest” in the hands of a private party while simultaneously constituting a nonproperty “regulatory interest” in the hands of a state. This Note argues that the doctrine’s reliance on the meaning of property is not only practically and analytically unworkable, but also fundamentally fails to further the Court’s ideal division between the federal and state balance of criminal power.
This Note proceeds in three parts: Part I first traces the expansion and contraction of mail and wire fraud jurisprudence and explains that the modern doctrinal shift toward property as a limiting principle was driven by the Supreme Court’s renewed interest in federalist principles. It then examines the incremental evolution of the Court’s property-or-not test from 1987 to the present day.
Part II explains how this doctrine fails to achieve the Court’s stated policy goals. Section II.A first demonstrates that the property-or-not test fails to provide lower courts a workable test in day-to-day applications. II.B then provides specific examples to illustrate how the modern property fraud doctrine fails to meaningfully prevent prosecutors from intervening in state misconduct, concluding that property fraud jurisprudence amounts to little more than a handful of technical pleading requirements.
Finally, Part III considers different methods to unravel the “property paradox” created by the current doctrine. This Part ultimately concludes that to develop a fraud doctrine that truly limits prosecutors’ ability to convict certain types of state-level wrongdoing, the Court must abandon its property-centric approach to fraud entirely. By systematically deconstructing the modern fraud doctrine and reimagining it from the ground up, this Note raises novel observations about the Court’s ideological and doctrinal approaches to federal criminal jurisprudence. These observations are not only immediately useful to the federal criminal practitioner but also carry implications about the Court’s jurisprudence that reach well beyond the fraud statutes themselves.
In federal criminal law, the meaning of “fraud” is at a crossroads. In Ciminelli v. United States, the Supreme Court considered a complex scheme to secure a billion-dollar contract with the State of New York.1 The defendants, a mix of private actors and state officials, rigged the bidding process in their favor.2 Crucially, this case did not hinge on the wrongdoing itself, but instead focused on whether the government’s theory of fraud was compatible with the Court’s conception of “property” as defined in its fraud jurisprudence.3 The government’s theory, rooted in the Second Circuit’s “right to control” conception of property fraud, was that the defendants deprived New York of the right to valuable economic information needed to make discretionary economic decisions.4 In a unanimous opinion, the Court rejected this theory of property and reversed the defendants’ convictions. This result is neither surprising nor unprecedented; Ciminelli is but the latest in a line of cases to reverse fraud convictions despite obvious “wrongdoing[,] deception, corruption, [and] abuse of power”5 by the defendants. Although predictable, this reversal continues a trend of troubling cases that have generated scholarly debate for decades.
On one hand, the federal mail and wire fraud statutes remain one of the most versatile and valued tools in the white-collar prosecutor’s arsenal.7 During much of the twentieth century,8 the Supreme Court rarely reviewed mail fraud convictions,9 and it even more rarely reversed appellate decisions for substantive error.10 During this era, the federal government found increasingly novel applications for the mail fraud statute.11 Even in recent years, prosecutors have secured fraud convictions in such varied cases as the “Dieselgate” emissions scandals,12 the use of state money for private campaign activities,13 the “Varsity Blues” college admissions scandal,14 the bribery of college athletes,15 and countless other applications.16
On the other hand, fraud prosecutions have faced intense scrutiny from the Supreme Court in recent decades, particularly in cases that implicate states.17 Since the 1980s, the Supreme Court reversed lower courts in four of the six cases in which the meaning of “property” was at issue.18 Each reversal exhibited three important characteristics: (1) the purported victim (or defendant) was a state actor;19 (2) the scheme did not have a “property interest” as its aim;20 and (3) the opinion was motivated in part by the Court’s announced desire to preserve state–federal divisions by limiting creative theories of fraud prosecution.21
The ideological considerations underlying the Supreme Court’s modern case law have sparked intense debate. Detractors have criticized these decisions as hindering the federal government’s ability to punish otherwise hard-to-reach instances of state corruption,22 while supporters have defended the Court’s decisions as a necessary prophylactic that protects against federal overreach into state affairs.23 Rather than joining the already-crowded debate as to the correctness of the Court’s ideological views, this Note critically examines the effectiveness of the modern fraud doctrine relative to the Court’s stated federalist agenda.
This Note argues that at the heart of the Court’s modern fraud doctrine lies a vague, superficially simple “property-or-not” test that leads to paradoxical outcomes.24 Originally rooted in cases that interpreted federal fraud to require property as a necessary element of the crime, the modern test defines property differently based on both the identity of the victim25 and the extent to which the right or interest at issue was considered property under early common law.26 In practice, the modern mutation of the property-or-not test creates outcomes in which the same fundamental right or interest might be a “property interest” in the hands of a private party while simultaneously constituting a nonproperty “regulatory interest” in the hands of a state. This Note argues that the doctrine’s reliance on the meaning of property is not only practically and analytically unworkable, but also fundamentally fails to further the Court’s ideal division between the federal and state balance of criminal power.
This Note proceeds in three parts: Part I first traces the expansion and contraction of mail and wire fraud jurisprudence and explains that the modern doctrinal shift toward property as a limiting principle was driven by the Supreme Court’s renewed interest in federalist principles. It then examines the incremental evolution of the Court’s property-or-not test from 1987 to the present day.
Part II explains how this doctrine fails to achieve the Court’s stated policy goals. Section II.A first demonstrates that the property-or-not test fails to provide lower courts a workable test in day-to-day applications. II.B then provides specific examples to illustrate how the modern property fraud doctrine fails to meaningfully prevent prosecutors from intervening in state misconduct, concluding that property fraud jurisprudence amounts to little more than a handful of technical pleading requirements.
Finally, Part III considers different methods to unravel the “property paradox” created by the current doctrine. This Part ultimately concludes that to develop a fraud doctrine that truly limits prosecutors’ ability to convict certain types of state-level wrongdoing, the Court must abandon its property-centric approach to fraud entirely. By systematically deconstructing the modern fraud doctrine and reimagining it from the ground up, this Note raises novel observations about the Court’s ideological and doctrinal approaches to federal criminal jurisprudence. These observations are not only immediately useful to the federal criminal practitioner but also carry implications about the Court’s jurisprudence that reach well beyond the fraud statutes themselves.
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