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In the Supreme Court of the United States
CARL W. CLEVELAND, PETITIONER
UNITED STATES OF AMERICA
ON WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
BRIEF FOR THE UNITED STATES
SETH P. WAXMAN
Counsel of Record
JAMES K. ROBINSON
Assistant Attorney General
MICHAEL R. DREEBEN
Deputy Solicitor General
Assistant to the Solicitor
JOEL M. GERSHOWITZ
Department of Justice
Washington, D.C. 20530-0001
Whether the federal mail fraud statute, 18 U.S.C. 1341, reaches a schemeto obtain a video poker license from the State of Louisiana by means offalse representations.
In the Supreme Court of the United States
CARL W. CLEVELAND, PETITIONER
UNITED STATES OF AMERICA
ON WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
BRIEF FOR THE UNITED STATES
The opinion of the court of appeals (Pet. App. 1a-44a) is reported at 182F.3d 296. The opinion of the district court (Pet. App. 52a-86a) is reportedat 951 F. Supp. 1249.
The judgment of the court of appeals was entered on July 21, 1999. The petitionfor rehearing was denied on September 2, 1999 (Pet. App. 45a-47a). The petitionfor a writ of certiorari was filed on November 9, 1999, and was grantedon March 20, 2000, limited to the first question presented. The jurisdictionof this Court rests on 28 U.S.C. 1254(1).
Section 1341 of Title 18 of the United States Code is set forth in AppendixA to this brief.
This case arises out of a scheme to obtain a lucrative video poker licensefrom the State of Louisiana by submitting false information to the Stateabout the prospective licensee's true owners. Petitioner challenges thecourt of appeals' holding that such a scheme violates the federal mail fraudstatute, 18 U.S.C. 1341.
1. In 1992, Fred Goodson and his family formed Truck Stop Gaming, Ltd. (TSG,Ltd.) and its corporate partner, Truck Stop Gaming, Inc. (TSG, Inc.), inorder to participate in the video poker business at their truck stop inSlidell, Louisiana. Petitioner Carl Cleveland, a lawyer, assisted the Goodsonsin preparing applications for a video poker license for TSG, Ltd., and submittingthose applications to the State. The applications required a partnershipseeking a gaming license to identify its partners, to submit personal financialstatements for all partners, to affirm that the listed partners were thesole beneficial owners of the business, and to affirm that no partner hadan arrangement to hold his interest as "an agent, nominee or otherwise,"or a present intention to transfer any interest in the partnership at afuture time. Pet. App. 2a-3a.
The initial application submitted on behalf of TSG, Ltd., identified Mariaand Alex Goodson, Fred Goodson's adult children, as the limited partnersand TSG, Inc., as the general partner. The application listed no other personsor entities as having any ownership interest in TSG, Ltd. In 1993, 1994,and 1995, TSG, Ltd., submitted renewal applications that likewise listedno additional ownership interests. In fact, the true owners of TSG, Ltd.,at all times were petitioner and Fred Goodson, both of whom concealed theirownership interests from state regulators to avoid an inquiry into theirsuitability as owners of a licensee. Pet. App. 5a-6a; see La. Rev. Stat.Ann. § 27:310(B) (West 1989 & Supp. 2000) (enumerating suitabilityrequirements for video poker licensees).1
2. In 1996, a federal grand jury in the Eastern District of Louisiana indictedpetitioner, Fred and Maria Goodson, and others on multiple counts of mailfraud, racketeering, and various other offenses. The indictment alleged,among other things, that the defendants committed mail fraud, in violationof 18 U.S.C. 1341, by obtaining a video poker license for TSG, Ltd., in1992 and renewing the license in 1993, 1994, and 1995, by fraudulently concealingthat petitioner and Fred Goodson were the true owners of TSG, Ltd. Pet.App. 5a.
Before trial, petitioner moved to dismiss the mail fraud counts of the indictmenton the ground that state licenses to operate video poker machines do notconstitute "property" within the meaning of Section 1341, whichmakes it a crime to use the mails in connection with "any scheme orartifice to defraud, or for obtaining money or property by means of falseor fraudulent pretenses, representations, or promises." 18 U.S.C. 1341.Petitioner claimed that a scheme to acquire a video poker license throughfalse representations does not implicate any property interest of the State,arguing that such licenses have no value to the State and, consequently,do not become property until they are issued by the State to a private party.
The district court rejected that contention. Pet. App. 73a-86a. The courtconcluded that "licenses constitute property even before they are issued,"agreeing with the position of the First Circuit and the Third Circuit onthat question. Id. at 79a; see also id. at 75a-77a (citing United Statesv. Bucuvalas, 970 F.2d 937 (1st Cir. 1992), cert. denied, 507 U.S. 959 (1993),and United States v. Martinez, 905 F.2d 709 (3d Cir.), cert. denied, 498U.S. 1017 (1990)). The court distinguished cases involving other sorts oflicenses, such as taxi licenses, pilot's licenses, and arms export licenses,in which a government was held to have only a regulatory interest, and nota property interest. Id. at 83a. The court reasoned that the State of Louisianaclearly has a property interest in video poker licenses because the State"receives a significant percentage of revenue" from the licensesand "continues to exercise a great deal of control" over them.Id. at 83a.
After a jury trial, petitioner was convicted on two counts of mail fraud.He was also convicted of conducting an enterprise through a pattern of racketeeringactivity, in violation of 18 U.S.C. 1962(c); conspiring to commit that offense,in violation of 18 U.S.C. 1962(d); money laundering, in violation of 18U.S.C. 1956 (1994 & Supp. II 1996); tax conspiracy, in violation of18 U.S.C. 371; and filing a false tax return, in violation of 26 U.S.C.7206(2). He was sentenced to 121 months' imprisonment.
3. The Fifth Circuit affirmed petitioners' conviction and sentences. Pet.App. 1a-44a.
The court of appeals rejected petitioner's contention that a video pokerlicense does not constitute property for purposes of the mail fraud statute.Pet. App. 19a. The court relied on its earlier decision in United Statesv. Salvatore, 110 F.3d 1131 (5th Cir.), cert. denied, 522 U.S. 981 (1997),which held that Louisiana had a property interest in the video poker licensesthat it issues.
In Salvatore, the court of appeals explained that "property" isdefined as "a legal 'bundle of rights'" that one possesses inconnection with a particular object. 110 F.3d at 1140. The court reasonedthat, because the State has the right to control whether and to whom videopoker licenses are issued, the State has a property interest in the licenses.Ibid. The court rejected the defendants' argument that a video poker licensehas no value to the State, and thus cannot constitute property. It explainedthat "(1) the State expects to collect an up-front fee (before issuance)and a percentage of net revenues (in the future) from the putative licenseeand (2) the State values its rights to control the licenses and to choosethe parties to whom it issues the licenses." Id. at 1141. The courtalso rejected the defendants' contention that the State's interest in thevideo poker licenses is a regulatory interest, rather than a property interest,noting the State's "direct and significant financial stake * * * asissuer of the licenses" that continues throughout the term of the licenses.Id. at 1142. The court thus concluded that "a video poker license doesnot merely signify government approval of an individual's right to takepart in a particular industry," but "also evinces the State'sintent to participate in that industry." Id. at 1141.
SUMMARY OF THE ARGUMENT
The federal mail fraud statute, 18 U.S.C. 1341, reaches "any schemeor artifice to defraud, or for obtaining money or property by means of falseor fraudulent pretenses, representations, or promises" that involvesthe use of the mails. The court of appeals held in this case that petitionerviolated the mail fraud statute by engaging in a scheme to obtain and renewa Louisiana video poker license by making false representations to the Stateabout the ownership of the licensee. Petitioner contends that the schemedoes not come within the scope of the mail fraud statute, arguing that thevideo poker license was not "money or property" in the hands ofthe State. Petitioner is mistaken for two independent reasons. First, becausethe government proved that petitioner violated the second clause of themail fraud statute by engaging in a "scheme * * * for obtaining moneyor property" by false or fraudulent means, the government did not alsohave to prove that the scheme sought to deprive the State of money or property.Second, whether or not the government was required under the mail fraudstatute to prove that petitioner deprived the State of money or property,the State had a property interest in the video poker license at issue here.
1. The second clause of the mail fraud statute, which proscribes "anyscheme * * * for obtaining money or property by means of false or fraudulentpretenses, representations, or promises," does not require that thescheme be one for depriving a victim of money or property. Nothing in thecommon understanding of the word "obtain" suggests that such adeprivation is required. Although Congress could have narrowed the secondclause by including the words "from another" at the end of thephrase "for obtaining money or property," Congress did not doso. The second clause thus encompasses cases in which a defendant, throughfalse or fraudulent means, obtains something that might not be "moneyor property" in the hands of the victim, but that becomes "moneyor property" in the defendant's own hands.
In McNally v. United States, 483 U.S. 350 (1987), the Court construed thefirst clause of the mail fraud statute to hold that a "scheme or artificeto defraud" must be aimed at depriving a victim of a right to moneyor property, as opposed to "intangible rights, such as the right tohave public officials perform their duties honestly." Id. at 358. TheCourt rested that conclusion on the contemporaneous understanding of thephase "to defraud" in the first clause. The Court's decision thusdid not turn on the "money or property" language of the secondclause. Indeed, the Court observed that, "because the two [clauses]identifying the proscribed schemes appear in the disjunctive, it is arguablethat they are to be construed independently." Ibid.
The scheme in this case was indisputably one "for obtaining money orproperty" under the second clause of the mail fraud statute. A videopoker license, whether or not property in the hands of the State, is propertyin the hands of the licensee. Such a license enables the holder to engagein a lucrative business, which would otherwise be illegal, and is protectedunder state law against arbitrary suspension or revocation. This Court andthe lower federal courts have recognized, in a variety of contexts, thata person has a property interest in a government-issued license that enableshim to engage in an occupation, a business, or another money-making activity.See, e.g., Barry v. Barchi, 443 U.S. 55, 64 (1979); Mackey v. Montrym, 443U.S. 1, 10 (1979); Bell v. Burson, 402 U.S. 535, 542 (1971).
2. In any event, the State of Louisiana has a property interest in the videopoker licenses that it issues. A video poker license is plainly "somethingof value," McNally, 483 U.S. at 358, to the State. The State receivesa substantial up-front payment for each video poker license, an annual licenseefee throughout the term of each license, and a percentage of the net proceedsfrom each licensed video poker device. In addition, the State retains asignificant degree of control over each license, including over its renewal,transfer, and revocation. As the court of appeals recognized in an earliercase on this issue, "[o]ne of the main reasons for the * * * legalizationof video poker [in Louisiana] was that it was considered an ongoing sourceof revenue for the State." United States v. Salvatore, 110 F.3d 1131,1141 (5th Cir.), cert. denied, 522 U.S. 981 (1997). Indeed, since institutinglicensed video poker in 1991, the State has reaped hundreds of millionsof dollars in fees and payments from licensees.
Moreover, whether or not the State has a property interest in an unissuedvideo poker license, this case involves a scheme not only to obtain a license,but also to renew that license, after its issuance, for three subsequentperiods. The State has a property interest in a video poker license afterit has been issued-and thus has become property in the hands of the licensee-because the State retains the right to payments from the licensee and theright to monitor and control the licensed activity. The State retains authorityover renewal, suspension, or revocation of a license, and the State prohibitsthe transfer of a license to another person. One of the rights that is oftenassociated with the ownership or possession of property is the right tocontrol its alienation. See Loretto v. Teleprompter Manhattan CATV Corp.,458 U.S. 419, 435 (1982).
Finally, petitioner contends that the State has merely a regulatory interest,not a property interest in a video poker license, relying primarily on casesinvolving other sorts of government licenses, such as driver's licenses,medical licenses, and arms export licenses. But the Court need not decidein this case whether a State has a property interest in all of the varietiesof licenses that it issues. The Court need conclude only that the Statehas a property interest in the particular variety of license at issue here-alicense under which the State retains a substantial economic stake in thelicensed activity.
PETITIONER'S SCHEME TO OBTAIN A VIDEO POKER LICENSE BY PROVIDING FALSE INFORMATIONTO THE STATE THROUGH THE MAILS VIOLATED THE MAIL FRAUD STATUTE
The mail fraud statute prohibits (1) "any scheme or artifice to defraud"and (2) "any scheme or artifice * * * for obtaining money or property by means of false or fraudulent pretenses,representations, or promises." A scheme to acquire a Louisiana videopoker license by false representations violates the second clause of thestatute, whether or not the license constitutes "property" inthe hands of the State. The object of the scheme is to "obtain"the license, and the license indisputably constitutes "property"in the hands of the licensee. The scheme also violates the first clauseof the statute. While the words "to defraud" refer to "wrongingone in his property rights by dishonest methods or schemes," McNallyv. United States, 483 U.S. 350, 358 (1987), the State's financial stakein and control over video poker licenses qualify as a property right protectedby the mail fraud statute.
I. A SCHEME TO OBTAIN PROPERTY THROUGH FRAUDULENT MEANS VIOLATES THE MAILFRAUD STATUTE, WHETHER OR NOT THE SCHEME WAS ONE TO DEPRIVE A VICTIM OFPROPERTY
A. The Second Clause Of 18 U.S.C. 1341 Does Not Require That A Victim BeDeprived Of Money Or Property, So Long As The Defendant Obtained Money OrProperty
1. Congress enacted three prohibitions in the mail fraud statute, 18 U.S.C.1341, and each clause of the statute proscribes a distinct sort of "schemeor artifice." The first clause, which prohibits "any scheme orartifice to defraud," derives from the original mail fraud statuteenacted in 1872. Act of June 8, 1872, ch. 335, § 301, 17 Stat. 323.The second clause, which prohibits schemes "for obtaining money orproperty by means of false or fraudulent pretenses, representations, orpromises," was added in 1909. Act of Mar. 4, 1909, ch. 321, §215, 35 Stat. 1130. The third clause, which prohibits schemes to use themails to distribute counterfeit money, was enacted in 1889. Act of Mar.2, 1889, ch. 393, § 1, 25 Stat. 873. See Jed S. Rakoff, The FederalMail Fraud Statute (Part I), 18 Duq. L. Rev. 771, 779-821 (1980) (Rakoff).
In McNally v. United States, 483 U.S. 350 (1987), this Court was concernedwith the first clause of Section 1341. McNally held that a "schemeor artifice to defraud," within the meaning of the statute, must beaimed at depriving a victim of a right to money or property, as opposedto "intangible rights, such as the right to have public officials performtheir duties honestly." Id. at 358. The Court rested that conclusionon the common understanding of the term "to defraud" at the timethat the original mail fraud statute was enacted. Id. at 358-359.2
McNally did not construe the second clause of Section 1341, which prohibitsschemes "for obtaining money or property" by false or fraudulentmeans. The second clause does not contain the words "to defraud"or any other textual limitation requiring the deprivation of a victim'smoney or property. Nothing in the common understanding of the word "obtain,"either today or when the second clause was enacted in 1909, suggests thatsuch a deprivation is required. See, e.g., Webster's New International Dictionary1485 (1917) (defining "obtain" as "[t]o get hold of by effort;to gain possession of; to procure; to acquire, in any way") (firstdefinition).3
Although Congress could easily have narrowed the second clause of Section1341 by including the words "from another" at the end of the phrase"for obtaining money or property," Congress did not do so. Congressthereby departed from the otherwise similar wording of the original Englishfalse pretenses statute, which made it a crime "by false pretence orpretences, [to] obtain from any person * * * money, goods, wares, or merchandizes,with intent to cheat or defraud any person." 30 Geo. II, ch. 24 (1757)(emphasis added). Congress, like the English Parliament, knew how to restrictsuch crimes to those in which money or property was obtained from a victim.
The second clause of Section 1341 thus encompasses those cases in whichthe defendant, through false or fraudulent pretenses, representations, orpromises, obtains something that might not be "money or property"in the hands of the victim, but that beomes "money or property"in the defendant's own hands. As the Third Circuit has put it, the secondclause "is broad enough to cover a scheme to defraud a victim of somethingthat takes on value only in the hands of the acquirer." United Statesv. Martinez, 905 F.2d 709, 713, cert. denied, 498 U.S. 1017 (1990); cf.Whitson v. United States, 122 F.2d 1016, 1017 (9th Cir. 1941) (mail fraudstatute reached scheme to persuade charitable organizations to enter intocontract under which defendant would be their exclusive fund-raiser; courtexplained that under the statute "the scheme need not be one to securemoneys from others, but may be 'to defraud, or for obtaining money or propertyby means of false or fraudulent pretenses'").
McNally did not address the argument (see U.S. Br. at 17-22 in McNally,supra (No. 86-234)), that the second clause of the mail fraud statutes appliesto any scheme to "obtain" money or property, even when the schemedoes not seek to deprive a victim of money or property. Rather, the Courtdeclined to address the applicability of the second clause because the juryinstructions did not require a finding that the defendants obtained propertyby fraudulent means. See McNally, 483 U.S. at 361.4 McNally thus leavesopen the proper construction of the second clause of Section 1341. In accordancewith its plain language, that clause encompasses any scheme "for obtainingmoney or property by means of false or fraudulent pretenses, representations,or promises," whether or not the scheme is one for depriving a victimof money or property.
2. The conclusion that the second clause of Section 1341, unlike the firstclause at the time of McNally (see note 2, supra), is not limited to schemesto deprive a victim of money or property finds support in the structureof the statute. The two clauses were, as noted above, enacted at differenttimes. The clauses are separated, moreover, by the disjunctive "or."This Court has stated, reflecting common English usage, that "[c]anonsof construction ordinarily suggest that terms connected by a disjunctivebe given separate meanings." Reiter v. Sonotone Corp., 442 U.S. 330,339 (1979); accord Garcia v. United States, 469 U.S. 70, 73 (1984); FCCv. Pacifica Found., 438 U.S. 726, 739-740 (1978). Accordingly, this Court,construing an earlier version of the mail fraud statute, concluded thatan indictment that charged a scheme to sell counterfeit money, a violationof what is now the third clause, did not have to include a charge that thedefendant devised a scheme "to defraud," a violation of the firstclause, because the statutory prohibitions were listed separately and appliedto different conduct. Streep v. United States, 160 U.S. 128, 132-133 (1895).
In McNally, this Court acknowledged that the first and second clauses ofSection 1341 may likewise have separate meanings. The Court observed that"[b]ecause the two phrases identifying the proscribed schemes appearin the disjunctive, it is arguable that they are to be construed independently."McNally, 483 U.S. at 358. Thus, the Court did not rest its holding in McNallythat the first clause of Section 1341 requires a deprivation of money orproperty, as opposed to "intangible rights," on the "moneyor property" language of the second clause. Rather, the Court derivedthat requirement from the common understanding of the words "to defraud"in the first clause. See id. at 358.
The lower federal courts have recognized, both before and after McNally,that the first and second clauses of Section 1341 have independent significance.See, e.g., United States v. Martinez, 905 F.2d at 713 (second clause ofSection 1341, but not first clause, reaches schemes that do not involvea deprivation of a victim's money or property); United States v. Cronic,900 F.2d 1511, 1513-1514 (10th Cir. 1990) (first clause of Section 1341,but not second clause, reaches schemes to defraud that do not involve falsepretenses, representations, or promises); United States v Clausen, 792 F.2d102, 104-105 (8th Cir.) (same), cert. denied, 479 U.S. 858 (1986); UnitedStates v. Halbert, 640 F.2d 1000, 1007 (9th Cir. 1981) (same).
3. The background of the mail fraud statute does not require a narrowerreading than its language suggests. It is well settled that "[o]nlythe most extraordinary showing of contrary intentions in the legislativehistory will justify a departure" from the "plain and unambiguousmeaning of the statutory language." Salinas v. United States, 522 U.S.52, 57 (1997) (internal quotation marks omitted). Nothing in the scant legislativehistory of the second clause of Section 1341 suggests, let alone clearlyexpresses, any intention that the clause be construed other than in accordancewith its plain language, which encompasses "any scheme or artifice * * * for obtaining money or property" by the specified fraudulentmeans, without limitation to those schemes involving a deprivation of avictim's money or property.
In 1909, Congress enacted a comprehensive revision of the federal criminallaws that included a number of changes in the mail fraud statute. One ofthose changes was the insertion in the statute, after the phrase "[w]hoever,having devised or intending to devise any scheme or artifice to defraud,"of the phrase "or for obtaining money or property by means of falseor fraudulent pretenses, representations, or promises."5
The mail fraud amendments were enacted by the 61st Congress without anycommittee report or floor debate. See Rakoff, 18 Duq. L. Rev. at 816 n.205(noting that "there is virtually no direct legislative history"of the 1909 amendments); see also McNally, 483 U.S. at 357-358 & n.7.The only explanations of the mail fraud amendments, which reflect the earlierviews of their sponsor and of the commission that originally proposed them,do not specifically address the provision at issue here.
In explaining the mail fraud amendments during the 60th Congress, SenatorHeyburn, the sponsor, dealt only with a change in the statute that involvedmailings made from outside the United States, noting that the other changeswere self-explanatory. See 42 Cong. Rec. 1026 (1908) (remarks of Sen. Heyburn)("I do not think there is any other change, which is not obvious uponthe face of the bill, that needs any further explanation.") (citedin McNally, 483 U.S. at 358 n.7). Senator Heyburn's remark suggests thatthe second clause should be read in accordance with common usage, for otherwiseits meaning would not be self-explanatory.
The only other legislative history of the 1909 amendments is the Reportof the Commission to Revise and Codify the Criminal and Penal Laws of theUnited States, which in 1901 proposed to the Attorney General and Congressa number of changes in the federal criminal statutes, including the additionof the language that became the second clause of the mail fraud statute.See S. Doc. No. 68, 57th Cong., 1st Sess. Pt. 2 (1901) (S. Doc. 68) (citedin McNally, 483 U.S. at 357-358 n.7). In the portion of the Report describingthe proposed changes in the mail fraud statute, the Commission did not mentionthe language that became the second clause. See id. at xvii.6 In the portionof the Report setting forth the text of the revised mail fraud statute,the Commission cited, in the margin, five decisions of this Court, 29 decisionsof the lower federal courts, and two Attorney General opinions that hadconstrued the existing mail fraud statute. See id. at 63. The Commissiondid not, however, explain the significance, if any, of those citations.7
The Court stated in McNally that the addition of the second clause in 1909codified the holding in Durland v. United States, 161 U.S. 306, 313 (1896),that the mail fraud statute encompasses not only false statements of existingfact, but also false promises with respect to the future. See McNally, 483U.S. at 357. The Court also stated that the language of the second clause"is based on the statement in Durland that the statute reaches 'everythingdesigned to defraud by representations as to the past or present, or suggestionsand promises as to the future.'" McNally, 483 U.S. at 358 (quotingDurland, 161 U.S. at 313). In fact, however, the language of the secondclause is virtually identical to language added to the federal lottery statutesix years before Durland.8 And the legislative history of the 1909 amendmentsdoes not reveal an intent to codify Durland. No member of Congress, theExecutive Branch, or the Commission to Revise and Codify the Criminal andPenal Laws described the second clause as a codification of Durland. Theonly reference to Durland in the legislative history is in the string citationof 36 mail fraud decisions and Attorney General opinions in the Commission'sReport. If Congress had intended merely to codify the holding in Durland,its most natural course would have been to amend the first clause by insertingthe words "whether by false pretenses, representations or promises"after the phrase "scheme or artifice to defraud." But Congressdid not choose that approach. Instead, Congress added a new clause employingthe disjunctive "or"-a strong indication that it intended to createan independent way of violating the statute.
The absence of any legislative history of the 1909 amendments addressingwhether the second clause, like the first clause, contains a requirementthat a victim be deprived of money or property-a requirement that is notevident on the face of the second clause-cannot constitute the requisite"extraordinary showing" of congressional intent needed to departfrom the plain meaning of the statutory text. See Salinas, 522 U.S. at 57;see also Standefer v. United States, 447 U.S. 10, 20 n.12 (1980) ("anomission in the legislative history [cannot] nullify the plain meaning ofa statute"). Indeed, the 1909 amendments included other significantchanges in the mail fraud statute that likewise went unremarked upon byCongress, including the elimination of the requirement that the defendantintended the fraudulent scheme to be effected through use of the mails.Compare 25 Stat. 873 with 35 Stat. 1130; see Rakoff, 18 Duq. L. Rev. at816.
* * *
In sum, while the second clause of Section 1341 includes schemes to deprivea victim of his money or property, the second clause is not limited to suchschemes. The plain language of the second clause authorizes convictionswhere the defendant acted to "obtain money or property by means offalse or fraudulent premises, representations, or promises," whetheror not he also acted to deprive a victim of money or property.9
B. The Scheme In This Case Violated The Second Clause Of Section 1341 BecausePetitioner Sought To "Obtain Property" In The Form Of A StateVideo Poker License
As explained above, in order to establish a violation of the second clauseof Section 1341, the government must prove, inter alia, that the defendant'sfraudulent scheme was one "for obtaining money or property." Here,the government charged petitioner with engaging in a scheme to obtain avideo poker license for TSG, Ltd., a partnership in which petitioner hadan undisclosed interest. A state video poker license, which has significanteconomic value to a licensee and which is protected against arbitrary suspensionor revocation under state law, clearly constitutes property to the licensee.
1. Section 1341 does not define the term "property." Nor has theCourt articulated any comprehensive definition of that term for purposesof Section 1341. The Court has recognized in other contexts, however, thatthe term "property" has "a naturally broad and inclusivemeaning" that, according to its dictionary definition and "commonusage," comprehends "anything of material value owned or possessed."Reiter v. Sonotone Corp., 442 U.S. at 338. No reason exists to construethe term "property" in Section 1341 any more restrictively. SeeMcNally, 483 U.S. at 358 (equating "property rights" with "somethingof value") (quoting Hammerschmidt v. United States, 265 U.S. 182, 188(1924)); see also Carpenter v. United States, 484 U.S. 19, 25 (1987) (holdingthat the first clause of Section 1341 applies to schemes to defraud a victimof both tangible and intangible property rights).
This Court and other courts have recognized, in a variety of contexts, thata license that permits a person to engage in an occupation, a business,or another money-making activity may constitute a form of property. Forexample, the Court held that an individual had a "property interest"in his state horse trainer's license that was "sufficient to invokethe protection of the Due Process Clause." Barry v. Barchi, 443 U.S.55, 64 (1979); see also, e.g., Mackey v. Montrym, 443 U.S. 1, 10 (1979)(driver's license); Bell v. Burson, 402 U.S. 535, 542 (1971) (same); Beauchampv. De Abadia, 779 F.2d 773, 775 (1st Cir. 1985) (license to practice medicine);Keney v. Derbyshire, 718 F.2d 352, 354 (10th Cir. 1983) (same). Those decisionsrest, in part, on the recognition that "[o]nce licenses are issued,* * * their continued possession may become essential in the pursuit ofa livelihood." Bell, 402 U.S. at 539.
In addition, the courts have held that licenses to engage in a businessor profession have sufficient indicia of property so as to be subject toa federal tax lien,10 that they qualify as property to which a securityinterest may be attached under the Uniform Commercial Code,11 and that theyconstitute property of a bankrupt's estate under the Bankruptcy Code, 11U.S.C. 541.12 The dispositive factor in those cases was whether the license"has pecuniary value to its holder." In re Terwilliger's CateringPlus, Inc., 911 F.2d 1168, 1171 (6th Cir. 1990), cert. denied, 501 U.S.1212 (1991); accord 21 W. Lancaster Corp. v. Main Line Restaurant, Inc.,790 F.2d 354 (3d Cir. 1986). While courts have also considered whether thelicense was transferrable for value, see, e.g., Terwilliger's Catering Plus,911 F.2d at 1172, the inability to transfer a particular right does notdeprive it of the character of property. See Drye v. United States, 120S. Ct. 474, 482-483 n.7 (1999) ("In recognizing that state-law rightsthat have pecuniary value and are transferable fall within [the federaltax lien statute], we do not mean to suggest that transferability is essentialto the existence of 'property' or 'rights to property' under that section.").Even those courts that have held that an unissued license does not constituteproperty for purposes of the mail fraud statute acknowledge that a licensemay well be property in the hands of the licensee.13
2. A Louisiana video poker license, once obtained by the licensee, fitscomfortably within the common definition of property. It is clearly something"of material value owned or possessed" by the licensee. Reiterv. Sonotone, Inc., 442 U.S. at 338.
A license issued pursuant to the Louisiana Video Draw Poker Devices ControlLaw, La. Rev. Stat. Ann. § 27:301 et seq. (West 1989 & Supp. 2000),14permits the licensee to engage in the video poker business at its truckstop, restaurant, hotel, or other authorized establishment. See id. §27:301(B)(8)). The licensee may thereby enhance substantially its financialreturn from the establishment. Indeed, because the operation of a licensedvideo poker establishment is so lucrative, licensees are willing to incurthe thousands of dollars in application fees and annual license fees thatthe State imposes upon them. See id. § 27:311(A)-(D) and (H).15 Althougha licensee cannot transfer a video poker license, see id. § 27:311(G),a licensee that owns or operates a truck stop, as in this case, may leaseor sublease any restaurant, convenience store, or other business on thepremises, see id. § 27:306(A)(5)(b)). The location of licensed videopoker devices at the truck stop may increase the value of such leases orsubleases. Although the Video Gaming Division of the Louisiana State Policemay revoke or suspend a video poker license on enumerated grounds, see id.§ 27:308(B) and (C), the licensee has the right to challenge the revocationor suspension in a hearing before the Video Gaming Division and to judicialreview by a state court, see id. § 27:310(E).
In short, a video poker license, as created under Louisiana law, has economicvalue for its holder and is protected against arbitrary suspension or revocation.It therefore qualifies as property under the federal mail fraud statute.See United States v. Salvatore, 110 F.3d 1131, 1141 (5th Cir.) (observingthat "[i]n the hands of the licensee, the [video poker] license is'something of value,' for it allows the licensee to operate the video pokermachines and collect significant revenue from their use"), cert. denied,522 U.S. 981 (1997).
No contrary conclusion is required by the provision of the Louisiana VideoDraw Poker Devices Control Law that states that a video poker license "isnot property or a protected interest under the constitutions of either theUnited States or the state of Louisiana." La. Rev. Stat. Ann. §27:301(D). The question whether rights arising under state law constitute"money or property" within the meaning of Section 1341 is ultimatelyone of federal law. This Court recently considered the similar questionof whether a taxpayer's right to a decedent's estate, which was not propertyunder state law, nonetheless was "property" or an "interestin property" under the federal tax lien statute, 26 U.S.C. 6321. Dryev. United States, 120 S. Ct. at 481-483. The Court concluded that "[t]hequestion whether a state-law right constitutes 'property' or 'rights toproperty' is a matter of federal law." Id. at 481. The Court explainedthat "[w]e look initially to state law to determine what rights thetaxpayer has in the property the Government seeks to reach, then to federallaw to determine whether the taxpayer's state-delineated rights qualifyas 'property' or 'rights to property' within the compass of the federaltax lien legislation." Ibid.; accord, e.g., In re Kimura, 969 F.2d806, 810 (9th Cir. 1992) (a State cannot "defeat the federal tax lienby declaring an interest not to be property, even though the beneficialincidents of property belie its classification").
That is precisely the analysis that applies here. As explained above, avideo poker license, as created under Louisiana law, has substantial economicvalue to the licensee. In addition, the licensee enjoys a degree of protectionunder Louisiana law against the arbitrary suspension or revocation of thelicense. The license therefore qualifies as property under the federal mailfraud statute.
C. The Indictment Charged And The Jury Necessarily Found That PetitionerEngaged In A Scheme To Obtain Property In Violation Of The Second ClauseOf Section 1341
The mail fraud counts in the indictment in this case charged petitionerunder both the first and second clauses of Section 1341-that is, with having"willfully devised and intended to devise a scheme and artifice todefraud, and to obtain property by means of false and fraudulent pretensesand representations." Superseding Indictment 26 (emphasis added).16The indictment then proceeded to describe the alleged scheme as one "todefraud the State of Louisiana and its citizens by fraudulently obtainingand renewing, through the submission of false and incomplete information,state licenses to operate video poker sites for Truck Stop Gaming, Ltd."Ibid. (emphasis added).
The district court's jury instructions referred the jury to the indictment'sdescription of the alleged scheme. Jury Instructions 27 (directing the juryto pages 26-28 of the indictment). The court had already advised the jurythat a copy of the indictment would be available during its deliberations.Id. at 16. The court paraphrased the indictment by stating that the defendantswere charged with having "knowingly devised a scheme to defraud theState of Louisiana and its citizens by fraudulently obtaining and renewing,through the submission of false and incomplete information, state licensesto operate video poker sites for Truck Stop Gaming, Ltd." Id. at 27(capitalization omitted). The court then instructed the jury that, in orderto find the defendants guilty of mail fraud, the jury must find, among otherthings, that the defendants engaged in the scheme "as charged,"i.e., in the scheme to obtain and renew video poker licenses fraudulently.Ibid.
The district court went on to conflate the separate requirements of thetwo clauses by instructing the jury that a "'scheme to defraud' includesany scheme to deprive another of money or property by means of false orfraudulent pretenses, representations, or promises." Jury Instructions28. But that instruction does not alter the fact that the jury was requiredto find all the elements of a violation of the second clause-that is, thatpetitioner engaged in a fraudulent scheme to obtain property in the formof the license.
Thus, given the district court's instructions, the jury necessarily foundthat the petitioner engaged in a mail fraud scheme in violation of the secondclause of Section 1341. On the facts of this case, the jury could not haveconvicted petitioner of scheming to deprive the State of the license inviolation of the first clause without concluding that he schemed to obtainthe license in violation of the second clause. The government's proof establishedthat petitioner deprived the State of the license by obtaining it for anentity in which he had an undisclosed ownership interest.
II. PETITIONER VIOLATED THE MAIL FRAUD STATUTE BY ENGAGING IN A SCHEME TODEPRIVE THE STATE OF AN INTEREST IN PROPERTY
Even if, contrary to our argument in Part I above, the government were requiredto prove that petitioner engaged in a scheme to deprive the State of Louisianaof money or property, that requirement was satisfied in this case. The Stateof Louisiana has a property interest in the video poker licenses that itissues. The licenses indisputably constitute "something of value,"McNally, 483 U.S. at 358, to the State. The State receives a substantialsum of money in exchange for a video poker license, continues to receivepayments from the licensee for so long as the license remains in effect,and retains a significant degree of control over the license, includingover the renewal, transfer, or revocation of the license. Accordingly, whetheror not a government has a property interest in the other sorts of licensesthat it issues (e.g., driver's licenses, medical licenses, export licenses),Louisiana does have a property interest in the particular license at issuehere.
We will begin with a discussion of the relevant provisions of the LouisianaVideo Draw Poker Device Control Law. We will then explain why those provisionsare sufficient to create a property interest on the part of the State inboth unissued and issued video poker licenses.
A. The Louisiana Video Draw Poker Device Control Law Vests The State WithA Financial Stake In Video Poker Licenses And With Control Over How TheLicenses Are Used
Until the enactment of the Louisiana Video Draw Poker Device Control Lawin 1991, video poker was illegal in Louisiana, as it remains in many Statestoday. As the Fifth Circuit observed, "[o]ne of the main reasons forthe * * * legalization of video poker [in Louisiana] was that it was consideredan ongoing source of revenue for the State." Salvatore, 110 F.3d at1141; accord Pet. App. 82a.
The State profits from the licensing of video poker in several ways. First,an applicant for a video poker license must pay a sizable initial "processingfee," which is $10,000 in the case of a truck stop owner; to renewa license, the State charges an additional "processing fee," whichis $1,000 in the case of a truck stop owner. La. Rev. Stat. Ann. §27:311(H)(2) and (4). In addition, the State charges each holder of a videopoker license an annual fee, the amount of which depends upon the type oflicense held; for example, the holder of a manufacturer's license is assessedan annual fee of $20,000, the holder of a device owner's license is assessedan annual fee of $2,000, and the holder of an establishment license is assessedan annual fee of $100. Id. § 27:311(A). The State also assesses anannual video poker device operation fee, imposed on the owner of the device,which amounts to $1,000 per device in the case of truck stops. Id. §27:311(A)(5)(c) and (B). A truck stop may have as many as 50 video pokerdevices, depending on the amount of fuel sold at the truck stop. Id. § 27:306(A)(4)(b). In 1995, the year in which petitioner and his co-defendantssubmitted the final license renewal application for TSG, Ltd., the Statereceived a total of $10.8 million from those various fees. See LouisianaLegislative Fiscal Office, State Gaming Revenue-Sources and Uses 1 (Dec.20, 1999) (State Gaming Revenue).
The State's chief source of revenue from video poker, however, is the quarterly"franchise payment," which consists of a percentage of the netrevenue from each licensed video poker device operated in the State. La.Rev. Stat. Ann. § 27:311(D). During the period at issue in this case(1992-1995), the State received between 22.5% and 27.8% of the net revenuefrom each video poker device. State Gaming Revenue 1. Under current law,the State receives as much as 32.5% of the net revenue from video pokerdevices at truck stops and as much as 26% of the net revenue from videopoker devices at restaurants, hotels, bars, and other such establishments.La. Rev. Stat. Ann. § 27:311(D). In 1995, the State received a totalof $141.5 million in such franchise payments; by 1999, the State's annualreceipts from franchise payments had grown to $188.6 million. State GamingRevenue 1. While some of the State's video poker revenue is allocated togaming enforcement and related activity, the vast majority goes to the StateGeneral Fund ($109.6 million in 1995; $142.1 million in 1999) and to localgovernment ($30.3 million in 1995; $43.4 million in 1999). Ibid.; see La.Rev. Stat. Ann. § 27:312 (specifying division of funds received bythe State from video poker).17
The State, through the Video Gaming Division of the Louisiana State Police,exercises significant control over virtually every aspect of the video poker industry. The Stateregulates, for example, how the game of video poker is played (La. Rev.Stat. Ann. § 27:302(A)(5)(a)-(g)); the amount of money that may be played andthe value of prizes (id. § 27:304); the expected payback (id. §27:305(A)); the specifications of video poker devices (id. § 27:302(A)(1)-(4)and (5)(h)-(o)); the sorts of establishments that may be licensed for videopoker (id. § 27:306(A)(2)-(4)); the physical placement and number ofdevices permitted within a licensed establishment (id. §§ 27:302(D),27:306(A)(2) and (4)(a)); and physical security at licensed establishments(id. § 27:308(E)(5)).
The licensing requirements that the State has imposed on those who seekto participate in the video poker industry in Louisiana are specificallydesigned to protect the economic viability of the industry. The sectionof the Louisiana Video Draw Poker Device Control Law dealing with licensequalifications recognizes "the importance of a controlled gaming industryto the development of the economy of the state of Louisiana." La. Rev.Stat. Ann. § 27:306(A)(1). It further recognizes that "the successand growth of gaming are dependent upon public confidence and trust that* * * video draw poker gaming activities are conducted honestly and arefree from criminal and corruptive elements." Ibid. Accordingly, thecentral requirement of the video poker licensing scheme is that applicantsdemonstrate their "suitability"-that is, that the applicant isa person of "good character, honesty, and integrity"; that theapplicant's "prior activities, arrest or criminal record if any, reputation,habits, and associations do not pose a threat to the public interest of[Louisiana] or to the effective regulation of video draw poker"; thatthe applicant is likely to conduct the video gaming business "in completecompliance" with state law; and that the applicant is not delinquentin tax or other financial obligations to the State or a local government.Id. § 27:310(B).
The State retains a significant degree of control over video poker licensesafter they have been issued. The State may revoke or suspend the licenseof any person who violates a provision of the Louisiana Video Draw PokerDevice Control Law or the regulations promulgated by the Video Gaming Division.La. Rev. Stat. Ann. § 27:308(B). The State also may revoke or suspendthe license of any person who "did not meet, at the time of application,or does not continue to meet the suitability or other requirements"for a license. Id. § 27:308(C). The State prohibits the transfer of a video gaming licenseto another person except in limited circumstances with the approval of theState. Id. § 27:311(G); cf. id. § 27:306(D)(2) (permitting transfer of licensefrom one truck stop to another in limited circumstances).
B. The State Has A Property Interest In Video Poker Licenses
A video poker license has economic value to the State. As explained above,a video poker license represents the State's right, under the LouisianaVideo Draw Poker Device Control Law, to a stream of payments from the licensee.Those payments consist of the initial fees payable at the time of the applicationfor the license, the annual license fees, and, where the licensee is theowner of video poker devices, quarterly franchise payments based on a percentageof the net proceeds from each device. See La. Rev. Stat. Ann. § 27:311(A)-(D). The State controls who receives a video poker license,whether the license may be renewed, whether the license may be transferred,and, if a violation of state law is suspected, whether the license is suspendedor revoked. See id. §§ 27:306, 27:308(B) and (C), 27:311(G)
1. The State has a property interest in a video poker license even beforethe license has been issued because, as the court of appeals put it, "theState expects to collect an up-front fee (before issuance) and a percentageof net revenues (in the future) from the putative licensee." Salvatore,110 F.3d at 1141. Indeed, the State receives the first installment of revenue-theapplication fee and the initial annual license fee-at the time that theapplication for the license is filed.18 The license continues to generaterevenue for the State until the license expires or until the State suspendsor revokes the license for cause. The State projects its anticipated revenuefrom video poker licenses into the future, see, e.g., State Gaming Revenue1, and thus is in a position to plan its future spending based on thoseprojections.
When the State issues a video poker license, it is effectively "selling"the license to the applicant, in return for the payments that the Statehas already received and the right to additional payments over the termof the license. The State is thus receiving "money or property"in exchange for the license. And the applicant is receiving something that,as explained above (see pp. 20-25, supra), indisputably constitutes propertyas to him. It would be curious to conclude that, although the transactioninvolves an exchange by the applicant of one form of property (i.e., money)for another form of property (i.e., the license), the transaction does notalso involve an exchange of property for property by the State. See UnitedStates v. Frost, 125 F.3d 346, 367 (6th Cir. 1997) (holding that a stateuniversity has a property interest in an unissued degree because, interalia, "in return for tuition money and scholarly effort, [the university]agrees to provide an education and a degree"), cert. denied, 525 U.S.810 (1998); cf. United States v. Novod, 923 F.2d 970, 974 (2d Cir.) (dicta)(two judges suggest that the license award process "is tantamount toa contractual transaction where a buyer and seller agree on a mutually satisfactoryexchange of consideration"), cert. denied, 500 U.S. 919 (1991).
The State's interest in a video poker license that it has not yet issuedalso resembles, in certain respects, a patent holder's interest in a patentthat it has not yet licensed. It is well established that patents are a"species of property." Florida Prepaid Postsecondary Educ. ExpenseBd. v. College Sav. Bank, 527 U.S. 627, 642 (1999); see Consolidated FruitJar Co. v. Wright, 94 U.S. 92, 96 (1877) ("A patent for an inventionis as much property as a patent for land."). "'A patent,' saidMr. Justice Holmes, 'is property carried to the highest degree of abstraction-aright in rem to exclude, without a physical object or content.'" MercoidCorp. v. Mid-Continent Inv. Co., 320 U.S. 661, 678 (1944) (Jackson, J.,dissenting) (quoting 1 Holmes-Pollock Letters 53); accord Transparent-WrapMach. Corp. v. Stokes & Smith Co., 329 U.S. 637, 643 (1947) (describinga patent as "the exclusive right to make, use, and vend the inventionor discovery for a limited period") (internal quotation marks omitted);see also Kaiser Aetna v. United States, 444 U.S. 164, 176 (1979) (the rightof exclusion is among "the most essential sticks in the bundle of rightsthat are commonly characterized as property"). Similarly, the State'srights with respect to video poker in Louisiana include the right to excludeothers from that business. The State has an exclusive right (subject toany previously issued licenses) to operate the video poker business itself;the State also has the right to prohibit all other persons within the Statefrom engaging in that business, or to condition participation on compliancewith whatever requirements the State imposes. See pp. 37-39, infra. And,just as one of the most important attributes of a patent is the abilityto exploit it for commercial gain through licensing, one of the most importantattributes of Louisiana's authority over video poker is the ability to exploitit financially through licensing. In both cases, the power to license othersto participate in a particular economic activity, which they could not engagein absent the license, furthers economic interests that qualify as property.
2. In any event, the indictment in this case charged that petitioner andhis co-defendants committed mail fraud by engaging in a scheme not onlyto obtain the video poker license for TSG, Ltd., initially in 1992, butalso to obtain renewals of the license in 1993, 1994, and 1995. SupersedingIndictment 26-28. The jury was instructed accordingly. Jury Instructions27. Whether or not the State had a property interest in the license beforeits issuance, the State did have a property interest in the license onceit had been issued, and thus became property as to the licensee.
The State has an ongoing economic stake in a video poker license issuedunder the Louisiana Video Draw Poker Device Control Law. As explained above,the State is entitled to an annual license fee from each video poker licensee,which ranges from $20,000 to $100 depending on the category of license,and to quarterly franchise payments based on a percentage of the net revenuesfrom each licensed video poker device. See La. Rev. Stat. Ann. § 27:311(A)and (D). The State is thus essentially in business with the licensee solong as the license remains in effect. The State protects its interest inthe business through extensive regulation and monitoring of the licensedactivity, including, for example, requiring that all licensed video pokerdevices be linked to a central state computer so that a record can be maintainedof all money taken in and paid out in winnings. See id. § 27:302(A)(5)(o).
Moreover, the State, not the licensee, controls the alienation of a videopoker license. See La. Rev. Stat. Ann. § 27:311(G) (a video poker license"shall be personal to the licensee to whom it was issued and shallnot be transferable").19 The State also may suspend or revoke a licenseat any time, if the State determines that the licensee has violated thestatute or failed to satisfy the suitability requirements. Id. § 27:308(B)and (C). It is well settled that a right often associated with the ownershipof property is the right to control its alienation. See Loretto v. TeleprompterManhattan CATV Corp., 458 U.S. 419, 435 (1982) (describing "propertyrights" as including the right to "dispose of" property);accord Salvatore, 110 F.3d at 1140; cf. Carpenter, 484 U.S. at 26 (concludingthat the Wall Street Journal had a property right in controlling the disseminationof its confidential business information).
In United States v. Bucuvalas, 970 F.2d 937, 945 (1st Cir. 1992), cert.denied, 507 U.S. 959 (1993), the court of appeals held that, once the Cityof Boston issued liquor and entertainment licenses to the defendants, theCity had a property interest in those licenses for purposes of the mailfraud statute, because the licenses had to be renewed annually, could berevoked by the City based on the occurrence of prescribed contingencies,and could be transferred only with the City's approval. "[A]t the veryleast," the court explained, "defendants repeatedly deprived theCity of Boston of its reversionary interest in the fraudulently obtainedlicenses by renewing and transferring the licenses in the names of strawowners." Ibid. Similarly, here, even if the video poker license didnot become property until the State issued the license to TSG, Ltd., theState thereafter possessed a property interest in the license, because theState, not TSG, Ltd., retained control over whether, and in what circumstances,the license could be retained, revoked, transferred, or renewed. Petitionerand his co-defendants, by submitting license renewal applications that concealedthe true owners of TSG, Ltd., deprived the State of that right.
3. A video poker license, as created under Louisiana law, may also be viewedas a franchise-that is, a right held exclusively by the government to engagein a particular business activity, which the government may exercise directlyor delegate to private parties "acting under such conditions and regulationsas the government may impose." California v. Central Pac. R.R., 127U.S. 1, 40-41 (1888); see id. at 40 (reciting traditional definition ofa "franchise" as "a royal privilege, or branch of the king'sprerogative, subsisting in the hands of a subject") (quoting 2 W. Blackstone,Commentaries 37).20 As the Court has explained, a franchise "belong[s]to the State," which "could carry on the business itself or selectone or several agents to do so." New Orleans Gas Co. v. Louisiana LightCo., 115 U.S. 650, 660 (1885). A franchise, "when conferred upon thecitizen," thus remains "[a] right which belongs to the government."Borre v. United States, 940 F.2d 215, 220 (7th Cir. 1991); accord Maestriv. Board of Assessors, 34 So. 658, 661 (La. 1903) ("a franchise isdefined to be a royal privilege in the hands of a subject").21 TheCourt has recognized, albeit in addressing the rights of franchisees, thatfranchises "have elements of property." Tennessee Elec. PowerCo. v. TVA, 306 U.S. 118, 139 (1939); accord Frost v. Corporation Comm'n,278 U.S. 515, 521 (1929).
In Borre, the court of appeals held that a municipality had a property interestin a cable television franchise, which the court described as "a delegationof a governmental function to private entities to be performed in the furtheranceof the public welfare." 940 F.2d at 220 (quoting 1 D. Ferris et al.,Cable Television Law § 13.13, at 13-68.11 (1990)). The court noted that the municipalitycould have chosen to operate the cable television franchise itself ratherthan award it to a private party. Id. at 220-221; see also United Statesv. Italiano, 894 F.2d 1280, 1285 n.6 (11th Cir. 1990) ("Clearly thecable television franchise held by the County of Hillsborough for the peopleof that county to be awarded to some commercial entity is 'property,' andthe attempt by appellant to secure the cable television franchise by briberyis a scheme to deprive the county and its people of that property.").
The right to engage in the video poker business, like the right to engagein the cable television business, is a "right which belongs to thegovernment," to be exercised by the government alone or "conferredon a citizen." Borre, 940 F.2d at 220. The State of Louisiana could,of course, have chosen to operate the video poker business itself. It isnot unusual for States to conduct their own gaming operations-such as lotteries,keno games,22 and sports wagering23-as a means of raising public revenues.Indeed, in Oregon, video poker is run by the State, which owns the videopoker devices and licenses them to proprietors in return for a share ofthe profits. See Or. Rev. Stat. § 461.215 (1997). By contrast, Louisianachose to confer the authority to operate video poker devices on suitableprivate parties. In return, the State receives valuable consideration, inthe forms of initial and annual license fees and a continuing share in therevenue generated by video poker within the State, and retains a significantdegree of control over the video poker industry. Indeed, by characterizingthe State's share of the net proceeds from a licensed video poker deviceas a "franchise payment," see La. Rev. Stat. Ann. § 27:311(D),the State has indicated that it views video poker as a government franchise.
4. Petitioner contends (Br. 17-22) that the State of Louisiana has merelya regulatory interest, not a property interest, in a video poker license.He relies primarily on cases involving other sorts of government licenses,such as driver's licenses, medical licenses, and export licenses. But theCourt need not decide in this case whether a State has a property interestin all of the varieties of licenses that it issues. The Court need concludeonly that the State of Louisiana has an interest in the particular varietyof license at issue here -a license under which the State retains a substantialeconomic stake in the licensed activity. None of the cases on which petitionerrelies involved such a license. See United States v. Shotts, 145 F.3d 1289,1294 (11th Cir. 1998) (concluding that "[a] particular license maysignify nothing more than an intent to regulate, while another type of licensemay signify the state's intent to participate in that industry") (citingSalvatore, 110 F.3d at 1141).
A video poker license does not constitute a mere "promise not to interfere"with the licensee's conduct of a business, profession, or other activity,as may the sorts of licenses that have been described as reflecting "aregulatory rather than property interest" on the part of the government.E.g., Toulabi v. United States, 875 F.2d 122, 125 (7th Cir. 1989). As thecourt of appeals explained in Salvatore, "Louisiana has much more thana regulatory interest in the video poker licenses; it has a direct and significantfinancial stake in its role as issuer of the licenses." 110 F.3d at1142. Indeed, the Seventh Circuit, after concluding in Toulabi that a municipalitydid not have a property interest in a taxi driver's license, concluded thata municipality did have a property interest in the cable television franchise,which the court found to "represent far more than a mere 'promisenot to interfere' by the government." Borre, 940 F.2d at 219-221. Asexplained above, a video poker license is analogous to a franchise: a privilegeconferred on a private party to operate a particular business in returnfor valuable consideration.
5. Petitioner also argues (Br. 22-26) that the Court should construe themail fraud statute to exclude schemes to obtain a state license by fraudulentmeans, invoking the Court's statement in United States v. Bass, 404 U.S.336, 349 (1971), that "unless Congress conveys its purpose clearly,it will not be deemed to have significantly changed the federal-state balance."Congress has left no doubt, however, that Section 1341 "reach[es] anyscheme to deprive another of money or property by means of false or fraudulentpretenses, representations, or promises." Carpenter, 484 U.S. at 27(emphasis added); see also United States v. Gonzales, 520 U.S. 1, 5 (1997)("Read naturally, 'any' has an expansive meaning."). In McNally,the Court recognized that "[t]he mail fraud statute clearly protectsproperty rights," 483 U.S. at 356, and "is to be interpreted broadlyinsofar as property rights are concerned," ibid. Accordingly, to theextent that Louisiana has a property right in a video poker license, ascreated under state law, Congress has clearly expressed its purpose to protectthat right under Section 1341. Cf. Salinas, 522 U.S. at 59-60.
Nothing in the text or history of the mail fraud statute provides any justificationfor varying the scope of protected property rights depending on the identityof the victim. Indeed, given that schemes to defraud a State of money orproperty rights often involve powerful state officials (as the indictmentcharged in this case), the State may not be well positioned to investigateor prosecute the fraud itself. Section 1341 is particularly necessary insuch cases to protect against frauds involving the use of the U.S. mails,which have historically been an area of particular federal concern. See,e.g., In re Rapier, 143 U.S. 110, 134 (1892) ("It is not necessarythat Congress should have the power to deal with crime or immorality withinthe States in order to maintain that it possesses the power to forbid theuse of the mails in aid of the perpetration of crime or immorality.");see also Badders v. United States, 240 U.S. 391, 393 (1916); Ex parte Jackson,96 U.S. 727 (1877).
C. Congress's Enactment Of 18 U.S.C. 1346 Has No Bearing On Any Issue PresentedIn This Case
Petitioner finally contends (Br. 37) that the post-McNally enactment of18 U.S.C. 1346-which expanded the definition of a "scheme or artificeto defraud" under the mail, wire, and bank fraud statutes to include"a scheme or artifice to deprive another of the intangible right ofhonest services"-"demonstrates that [Congress] did not intendthe mail fraud statute to cover deceptions in state license applications."But the intent of the Congress that enacted Section 1346 in 1988 is irrelevantto any issue in this case. This case was not charged under Section 1346as involving a scheme to deprive Louisiana or its citizens of an intangibleright. The case was instead charged as involving "a scheme and artificeto defraud, and to obtain property by means of false and fraudulent pretensesand representations" in violation of 18 U.S.C. 1341 and 18 U.S.C. 2.Superseding Indictment 26, 28. The property at issue was specifically identifiedin the indictment as "state licenses to operate video poker sites forTruck Stop Gaming, Ltd." Id. at 26. The indictment nowhere mentionedSection 1346 or "intangible rights."
Congress did not purport in the post-McNally legislation to restrict thedefinition of property rights under the existing mail, wire, and bank fraudstatutes. Rather, Congress included an additional category of rights, whichthe Court had held in McNally could not be the object of a "schemeto defraud" as then understood, within the protection of those statutes.See 134 Cong. Rec. 33,297 (1988) (statement of Rep. Conyers) (Section 1346"is intended merely to overturn the McNally decision. No other changein the law is intended.").24
Petitioner argues (Br. 37) that Congress would have included in Section1346 an "intangible right * * * to run a licensing program based onfull and complete information" if Congress had intended that the mailfraud statute reach schemes to obtain a government license by fraud. Petitionerreads too much into Congress's silence. Congress may have anticipated thatmost schemes involving fraud in license applications could be reached withoutfurther statutory addition- either under the existing mail and wire fraudstatutes, at least to the extent that the scheme involved a license in whichthe government had a property interest, or under the new "honest services"provision, to the extent that the scheme involved the corruption of governmentofficials. See, e.g., United States v. Alkins, 925 F.2d 541, 549 (2d Cir.1991 (affirming mail fraud conviction of state employees and others underSection 1346 for engaging in a scheme to issue fraudulent vehicle registrations).Or Congress may (if it even recognized that any question existed) simplyhave chosen to address license procurement schemes at a later time, or toleave the question to the courts in the first instance.
The judgment of the court of appeals should be affirmed.
SETH P. WAXMAN
JAMES K. ROBINSON
Assistant Attorney General
MICHAEL R. DREEBEN
Deputy Solicitor General
Assistant to the Solicitor
JOEL M. GERSHOWITZ
1 The evidence at trial indicated that petitioner and Fred Goodson had taxand financial problems that could have interfered with or delayed approvalof the license if their interests in TSG, Ltd., had been disclosed. SeeGov't C.A. Br. 11.
2 In response to McNally, Congress enacted 18 U.S.C. 1346, which providesthat "the term 'scheme or artifice to defraud' includes a scheme orartifice to deprive another of the intangible right of honest services."Pub. L. No. 100-690, Title VII, § 7603(a), 102 Stat. 4508. As modifiedby Section 1346, the first clause of Section 1341 now encompasses certainschemes to deprive a victim of something other than money or property.
3 See also, e.g., American Heritage Dictionary 575 (3d ed. 1994) ("[t]osucceed in gaining possession of; acquire"); Random House Dictionaryof the English Language 1338 (2d. ed. 1987) ("[t]o come into possessionof; get, acquire, or procure, as through an effort or by a request");Black's Law Dictionary 972 (5th ed. 1979) ("[t]o get hold of by effort;to get possession of; to procure; to acquire, in any way"); Webster'sNew Collegiate Dictionary 793 (1977) ("[t]o gain or attain usu. byplanned action or effort"); VII James A.H. Murray, New English Dictionary37 (1909) ("[t]o come into the possession or enjoyment of (something)by one's own effort, or by request; to procure or gain, as the result ofpurpose and effort; hence, generally, to acquire, get").
4 The jury charge in this case did not suffer from that deficiency. Seepp. 25-27, infra.
5 The 1909 amendments included other significant changes in the mail fraudstatute. Those changes included the elimination of language characterizingthe offense conduct as "misusing the post-office establishment,"the elimination of the penalty provision by which courts were required to"proportion the punishment especially to the degree in which the abuseof the post-office establishment enters as an instrument into such fraudulentscheme or device," and, most notably, the elimination of the requirementthat the defendant intended the fraudulent scheme to be effected throughuse of the mails. Compare 25 Stat. 873 with 35 Stat. 1130; see Rakoff, 18Duq. L. Rev. at 816.
6 The Commission appeared to allude to that provision, however, in the portionof the Report discussing the lottery statute. The Commission stated thatcertain words added to the lottery statute in 1890 that prohibited mailings"concerning schemes devised for the purpose of obtaining money or propertyunder false pretenses" were being omitted "as they have respectto an offense which is fully covered by another section, and are not essentiallygermane here." S. Doc. 68, at xvii.
7 The Commission may simply have been identifying all of the reported mailfraud decisions. Some of those decisions took inconsistent positions withrespect to the reach of the statute, which suggests that their mere citationdoes not indicate an intent to codify them. See Rakoff, 18 Duq. L. Rev.at 795-816 (contrasting the lower courts' "broad constructionist"and "strict constructionist" approaches to the pre-1909 mail fraudstatute).
8 See Act of Sept. 19, 1890, ch. 908, §§ 1-3, 26 Stat. 465-466(prohibiting the use of the mails in connection with, inter alia, "schemesdevised for the purpose of obtaining money or property under false pretenses";authorizing the Postmaster General to direct the return of registered mailinvolved in, inter alia, "any * * * scheme or device for obtaining money or property of any kind throughthe mails by means of false or fraudulent pretenses, representations, orpromises"; authorizing the Postmaster General to forbid the paymentof postal money orders in connection with, inter alia, "any * * * schemefor obtaining money or property of any kind through the mails by means offalse or fraudulent pretenses, representations, or promises").
9 Although the first question presented by the petition focuses on whether"a license that has not yet been issued constitutes 'property' of theState," Pet. i, the Court has the authority to affirm the court ofappeals' judgment on the alternative ground that the second clause of Section1341 requires a scheme "for obtaining money or property" for thedefendant (or another person), and does not require a scheme for deprivinga victim of money or property. See Dayton Bd. of Educ. v. Brinkman, 433U.S. 406, 419 (1977) ("respondents * * * are entitled under our precedentsto urge any grounds which would lend support to the judgment below");see also Northwest Airlines, Inc. v. County of Kent, 510 U.S. 355, 364 (1994)(respondent may "defend a judgment on any ground properly raised below").Although the government did not expressly raise that argument in the districtcourt, the government did direct the district court's attention to the ThirdCircuit's decision in United States v. Martinez, 905 F.2d at 712-714, whichheld, inter alia, that the second clause of Section 1341 "is broadenough to cover a scheme to defraud a victim of something that takes onvalue only in the hands of the acquirer," id. at 713. See Pet. App.77a (noting the government's reliance on Martinez). The district court quotedthat language from Martinez with approval. Id. at 78a. And, on appeal, thegovernment had no need to rely on the second clause because the Fifth Circuithad already held that Section 1341 reaches schemes to obtain a video pokerlicenses from the State of Louisiana before the present case was briefedand argued. See United States v. Salvatore, 110 F.3d 1131, cert. denied,522 U.S. 981 (1997). In these circumstances, and particularly given thatthe question is essentially one of pure statutory construction, the Courtmay affirm the conviction based on the second clause of Section 1314.
10 See, e.g., In re Kimura, 969 F.2d 806, 811 (9th Cir. 1992); In re Terwilliger'sCatering Plus, Inc., 911 F.2d 1168, 1170-1172 (6th Cir. 1990), cert. denied,501 U.S. 1212 (1991); 21 W. Lancaster Corp. v. Main Line Restaurant, Inc.,790 F.2d 354, 356-358 (3d Cir. 1986).
11 See, e.g., In re O'Neill's Shannon Village, 750 F.2d 679, 682- 683 (8thCir. 1984); Bogus v. American Nat'l Bank of Cheyenne, 401 F.2d 458, 461(10th Cir. 1968).
12 See, e.g., Terwilliger's Catering Plus, 911 F.2d at 1172; In re RainboExpress, 179 F.2d 1, 5 (7th Cir.), cert. denied, 339 U.S. 981 (1950); Inre Fugazy Express, Inc., 114 B.R. 865, 869-871 (Bankr. S.D.N.Y. 1990).
13 See, e.g., United States v. Granberry, 908 F.2d 278, 280 (8th Cir. 1990),cert. denied, 500 U.S. 921 (1991); United States v. Kato, 878 F.2d 267,269 (9th Cir. 1989); Toulabi v. United States, 875 F.2d 122, 125 (7th Cir.1989); United States v. Murphy, 836 F.2d 248, 253-254 (6th Cir.), cert.denied, 488 U.S. 924 (1988); United States v. Ferrara, 701 F. Supp. 39,42 (E.D.N.Y.), aff'd without opinion, 868 F.2d 1268 (2d Cir. 1988). Petitionerlikewise acknowledges (Br. 10) that "a license may constitute propertyto the licensee."
14 Since the events at issue, the Louisiana Video Draw Poker Devices ControlLaw has been recodified. All citations are to the current codification (West1989 & Supp. 2000).
15 For example, a new applicant for a video poker license for a truck stopmust pay a $10,000 "processing fee" to the State. See La. Rev.Stat. Ann. § 27:311(H)(2). Once the license is obtained, the licenseemust pay an annual license fee to the state and, if the licensee is alsothe owner of the video poker devices, a quarterly "franchise payment"based on a percentage of the net proceeds from the devices. See id. §27:311(A)-(D).
16 The relevant paragraphs of the indictment and jury instructions are setforth in appendices to this brief.
17 On July 1, 1999, video poker was discontinued in 33 of Louisiana's 64parishes, in accordance with the results of local referenda conducted in1996. See Gambling: The Trouble Is, It Makes Money, The Economist, July31, 1999. Immediately before the shutdown, there were 15,914 video pokerdevices operating in Louisiana, 11,040 of which remained operating the nextday. As of January 30, 2000, the number of operating video poker devicesin Louisiana had risen to 11,792. Alan Sayre, Video Poker Edges Back InLa., The Charleston Gazette, Feb. 28, 2000.
18 See La. Admin. Code title 42, § 2405(A)(2) (2000) (application fora video poker license "is not complete nor is it considered filed withthe division unless it is submitted with the appropriate fee"); id.§ 2409(A)(1) and (2) (requiring applicants for video poker licensesto pay, "[u]pon application, a nonrefundable annual [licensing] fee,"as specified in La. Rev. Stat. Ann. § 27:311(A)).
19 See also, e.g., La. Rev. Stat. Ann. § 27:306(E) (if an establishmentlicensed for video poker is sold, the purchaser must apply for a new license,although the establishment may continue to offer video poker in the interim);id. § 27:306(D)(2)(b) (authorizing truck stop operators that have losttheir leases to transfer video poker licenses to other establishments inlimited circumstances).
20 In Frost v. Corporation Commission, 278 U.S. 515, 520 (1929), the Courtoffered various examples of franchises: "the right to supply gas orwater to a municipality and its inhabitants, the right to carry on the businessof a telephone system, to operate a railroad, a street railway, city waterworks or gas works, to build a bridge, operate a ferry, and to collect tollstherefor." The Court added that "these are but illustrations ofa more comprehensive list," ibid., which the Court held to includethe right to operate a cotton gin at issue in that case, id. at 520-521.
21 Thus, the government retains authority over whether a franchise may betransferred. See Louisiana v. Morgan, 28 La. Ann. 482, 488 ("[T]hefranchises of a railroad corporation cannot be alienated without the consentof the State which granted them. As all franchises belong exclusively tothe State, no one will be permitted to possess and administer any of themwithout the consent of the State."), aff'd, 93 U.S. 217 (1876); accordBranch v. Jesup, 106 U.S. 468, 478 (1883) (observing that franchises "aregenerally inalienable" unless the government has provided otherwise).
22 See, e.g., Md. Regs. Code title 14, § 14.01.03.12 (2000); 77 Md.Op. Att'y Gen. 82 (1992).
23 See, e.g., N.Y. Rac. Pari-Mut. Wag. & Breed. Law § 502 (McKinney2000) (off-tracking betting); Or. Rev. Stat. §§ 461.213, 461.543(1997) (sports wagering).
24 Section 1346 was adopted as part of the Anti-Drug Abuse Act of 1988,Pub. L. No. 100-690, Title VII, Subtitle O, § 7603(a), 102 Stat. 4508.The provision was not discussed in a committee report or debated on thefloor of either House. See Adam H. Kurland, The Guarantee Clause as a Basisfor Federal Prosecutions of State and Local Officials, 62 So. Cal. L. Rev.367, 488-489 nn.450-452 (1989) (discussing legislative history of Section1346). The first statement quoted in the text is from Representative Conyers,the chairman of the Subcommittee on Criminal Justice of the House JudiciaryCommittee, which had held hearings on the impact of McNally on federal criminalprosecutions. See 134 Cong. Rec. at 33,296-33,297. Representative Conyers,while supporting the provision that became Section 1346, voted against theAnti-Drug Abuse Act. Id. at 33,318. No other member of Congress expressedany disagreement with Representative Conyers' statement that Section 1346was not intended to effect any change in the law other than the overturningof McNally. See id. at 32,708 (statement of Senator Biden) (Section 1346"overturns the decision in McNally").
Section 1341 of Title 18 of the United States Code provides:
Whoever, having devised or intending to devise any scheme or artifice todefraud, or for obtaining money or property by means of false or fraudulentpretenses, representations, or promises, or to sell, dispose of, loan, exchange,alter, give away, distribute, supply, or furnish or procure for unlawfuluse any counterfeit or spurious coin, obligation, security, or other article,or anything represented to be or intimated or held out to be such counterfeitor spurious article, for the purpose of executing such scheme or artificeor attempting so to do, places in any post office or authorized depositoryfor mail matter, any matter or thing whatever to be sent or delivered bythe Postal Service, or deposits or causes to be deposited any matter orthing whatever to be sent or delivered by any private or commercial interstatecarrier, or takes or receives therefrom, any such matter or thing, or knowinglycauses to be delivered by mail or such carrier according to the directionthereon, or at the place at which it is directed to be delivered by theperson to whom it is addressed, any such matter or thing, shall be finedunder this title or imprisoned not more than five years, or both. If theviolation affects a financial institution, such person shall be fined notmore than $1,000,000 or imprisoned not more than 30 years, or both.
The mail fraud count of the superseding indictment alleged as follows:
COUNTS 3 THROUGH 6
A. THE SCHEME:
Beginning on an exact date unknown, but in or before February 1992, andcontinuing until the date of this indictment, in the Eastern District ofLouisiana, and elsewhere, the listed defendants, and others, known and unknownto the Grand Jury, knowingly and willfully devised and intended to devisea scheme and artifice to defraud, and to obtain property by means of falseand fraudulent pretenses and representations; that is, to defraud the Stateof Louisiana and its citizens by fraudulently obtaining and renewing, throughthe submission of false and incomplete information, state licenses to operatevideo poker sites for Truck Stop Gaming, Ltd.
It was part of the scheme and artifice to defraud, that, in connection withattempts to obtain licenses and license renewals for Truck Stop Gaming,Ltd., the defendants filed, and caused to be filed, with the Louisiana StatePolice applications, affidavits, and other documents which concealed andfailed to disclose:
1. Understandings and agreements with unreported parties:
a. pledging and assigning interests in Truck Stop Gaming, Ltd;
b. agreeing to hold interests in Truck Stop Gaming, Ltd., as an "agent,nominee or otherwise" on behalf of said unreported party; and
c. agreeing to transfer said interests, on some future date, to said unreportedparty; and
2. other factors that could impact the ability of the true owners to obtainlicenses.
It was further part of the scheme and artifice to defraud that the defendantsfiled income tax returns which listed the GOODSON children as owning, directlyand indirectly, 100% of Truck Stop Gaming, Ltd.
On or about the dates listed below, in the Eastern District of Louisianaand elsewhere, the listed defendants, for the purpose of executing the schemeset forth above in Part A, and attempting to do so, did knowingly causeto be delivered by the United States Postal Service according to the directionsthereon, and did take and receive, and cause to be taken and received froman authorized depository for mail matter, the following items having beenmailed from the Department of Public Safety and Corrections, Office of LouisianaState Police, Baton Rouge, Louisiana, toTruck Stop Gaming, Ltd., P.O. Box 1361, Slidell, Louisiana, to wit:
COUNT DATE DEFENDANTS ITEM MAILED FROM/TO3 05/18/92 CARL CLEVELAND FRED GOODSON MARIA GOODSONLicense No. 5207600111, Office Tracking No. 000142, issued to Truck Stop Gaming, Ltd.4 07/07/93 CARL CLEVELAND FRED GOODSON MARIA GOODSON JOE MORGANLicense No. 5207600111, Office Tracking No. 013616, issued to Truck Stop Gaming, Ltd.5 06/02/94 CARL CLEVELAND FRED GOODSON MARIA GOODSON JOE MORGANLicense No. 5207600111, Office Tracking No. 020606, issued to Truck Stop Gaming, Ltd.6 05/25/95 CARL CLEVELAND FRED GOODSON MARIA GOODSON JOE MORGAN License No. 5207600111, Office Tracking No. 014718, issued to Truck Stop Gaming, Ltd.
All in violation of Title 18, United States Code, Sections 1341 and 2.
The district court's instructions to the jury on the mail fraud count statedas follows:
MAIL FRAUD: COUNTS 3 THROUGH 6 AND
"RACKETEERING ACTS" 1a THROUGH 1d
TITLE 18, UNITED STATES CODE, SECTION 1341, MAKES IT A CRIME FOR ANYONETO USE THE UNITED STATES MAILS IN CARRYING OUT A SCHEME TO DEFRAUD. FOUROF THE SIX DEFENDANTS ARE CHARGED WITH MAIL FRAUD IN VIOLATION OF TITLE18, UNITED STATES CODE, SECTION 1341. DEFENDANTS CARL CLEVELAND, FRED GOODSON,AND MARIA GOODSON ARE EACH CHARGED WITH MAIL FRAUD IN COUNTS 3, 4, 5, AND6 AND "RACKETEERING ACTS" 1(a), 1(b), 1(c), AND 1(d). JOE MORGANIS CHARGED WITH MAIL FRAUD IN COUNTS 5 AND 6 AND RICO PREDICATE ACTS 1(c)AND 1(d). THE SUPERSEDING INDICTMENT CHARGES THAT THE LISTED DEFENDANTSKNOWINGLY DEVISED A SCHEME TO DEFRAUD THE STATE OF LOUISIANA AND ITS CITIZENSBY FRAUDULENTLY OBTAINING AND RENEWING, THROUGH THE SUBMISSION OF FALSEAND INCOMPLETE INFORMATION, STATE LICENSES TO OPERATE VIDEO POKER SITESFOR TRUCK STOP GAMING, LTD. THE MAIL FRAUD CHARGES ARE SET FORTH ON PAGES26-28 OF THE SUPERSEDING INDICTMENT.
FOR YOU TO FIND A DEFENDANT GUILTY OF THE CRIME OF MAIL FRAUD, YOU MUSTBE CONVINCED THAT THE GOVERNMENT HAS PROVED EACH OF THE FOLLOWING ELEMENTSBEYOND A REASONABLE DOUBT AS TO THAT DEFENDANT:
FIRST, THAT THE DEFENDANT UNDER CONSIDERATION KNOWINGLY CREATED A SCHEMETO DEFRAUD, AS CHARGED IN THE INDICTMENT;
SECOND, THAT THE DEFENDANT UNDER CONSIDERATION ACTED WITH A SPECIFIC INTENTTO COMMIT FRAUD;
THIRD, THAT THE DEFENDANT UNDER CONSIDERATION MAILED SOMETHING OR CAUSEDANOTHER PERSON TO MAIL SOMETHING FOR THE PURPOSE OF CARRYING OUT THE SCHEME.
A "SCHEME TO DEFRAUD" INCLUDES ANY SCHEME TO DEPRIVE ANOTHER OFMONEY OR PROPERTY BY MEANS OF FALSE OR FRAUDULENT PRETENSES, REPRESENTATIONS,OR PROMISES. THE SCHEME MUST INVOLVE FALSE OR FRAUDULENT REPRESENTATIONSOR OMISSIONS REASONABLY CALCULATED TO DECEIVE PERSONS OF ORDINARY PRUDENCEAND COMPREHENSION.
FOR THE PURPOSES OF MAIL FRAUD, A REPRESENTATION MAY BE "FALSE"WHEN IT CONSTITUTES A HALF TRUTH, OR EFFECTIVELY CONCEALS A MATERIAL FACT,PROVIDED IT IS MADE WITH INTENT TO DEFRAUD.
IT IS NOT NECESSARY THAT THE GOVERNMENT PROVE ALL OF THE DETAILS ALLEGEDIN THE INDICTMENT CONCERNING THE PRECISE NATURE AND PURPOSE OF THE SCHEME,OR THAT THE MATERIAL MAILED WAS ITSELF FALSE OR FRAUDULENT, OR THAT THEALLEGED SCHEME ACTUALLY SUCCEEDED IN DEFRAUDING ANYONE, OR THAT THE USEOF THE MAIL WAS INTENDED AS THE SPECIFIC OR EXCLUSIVE MEANS OF ACCOMPLISHINGTHE ALLEGED FRAUD.
WHAT MUST BE PROVED BEYOND A REASONABLE DOUBT IS THAT THE DEFENDANT KNOWINGLYDEVISED OR INTENDED TO DEVISE A SCHEME TO DEFRAUD THAT WAS SUBSTANTIALLYTHE SAME AS THE ONE ALLEGED IN THE INDICTMENT AND THAT THE USE OF THE U.S.MAILS WAS CLOSELY RELATED TO THE SCHEME, IN THAT THE DEFENDANT EITHER MAILEDSOMETHING OR CAUSED IT TO BE MAILED IN AN ATTEMPT TO EXECUTE OR CARRY OUTTHE SCHEME. TO "CAUSE" THE MAILS TO BE USED IS TO DO AN ACT WITHKNOWLEDGE THAT THE USE OF THE MAILS WILL FOLLOW IN THE ORDINARY COURSE OFBUSINESS OR WHERE SUCH USE CAN REASONABLY BE FORESEEN. EACH SEPARATE USEOF THE MAILS IN FURTHERANCE OF A SCHEME TO DEFRAUD CONSTITUTES A SEPARATEOFFENSE.
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