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SCOTUS Continues to Issue Opinions in Fraud Cases Construing the Statutes Involved Narrowly in Ruling for Defense

James M Beck and Sheena Ann Foye

SCOTUS Continues to Issue Opinions in Fraud Cases Construing the Statutes Involved Narrowly in Ruling for Defense
Dobrila Vignjevic via Getty Images

The Supreme Court this term has narrowed the scope of three federal criminal statutes in three different cases.

In Ciminelli v. U.S., 143 S.Ct. 1121 (2023), the Court, in construing 18 U.S.C. § 1343 (wire fraud) held that the right-to-control theory cannot form the basis for a conviction under this statute because the right to control one’s assets is not property for purposes of the statute. The government’s theory in this case was that the defendant deprived a governmental entity of potentially valuable economic information necessary to make a discretionary economic decision. The court held that the right to control is not grounded in a traditional property interest and reversed and remanded.

In Perrocco v. U.S., 143 S.Ct. 1130 (2023), the Court held that jury instructions—which stated that the defendant owed a duty of honest services in violation of 18 U.S.C. § 1346 if he dominated and controlled any government business, and, if people working in the government relied on him due to his special relationship with the government—were too vague, and reversed the conviction. Over Perrocco’s objection, the trial court instructed the jury that Perrocco could be found to have had a duty to provide honest services to the public during the time when he was not serving as a public official if the jury concluded, first, that he “dominated and controlled any governmental business” and, second, that people “working in the government actually relied on him because of his special relationship he had with the government.” The Supreme Court found that this instruction was too vague and reversed the conviction.

Justice Gorsuch, in an opinion concurring in the judgment and joined by Justice Thomas stated that honest-services fraud was an impermissibly vague law. Justice Gorsuch concluded: “Perhaps Congress will someday set things right by revising Section 1346 to provide the clarity it desperately needs. Until then, this Court should decline further invitations to invent rather than interpret this law.”

The third case decided by the Court was Dubin v. U.S., 599 U.S. ____, 2023, US Lexis 2420 (June 8, 2023) in an opinion authored by Justice Sotomayor. The defendant in this case was convicted of healthcare fraud under 18 U.S.C. § 1347 after he overbilled Medicaid for psychological testing performed by the company he helped manage. The question in the case was whether he also committed “[a]ggravated identity theft” under 18 U.S.C. § 1028A(a)(1) because he misused another person’s means of identification or whether this act was not the crux of what made the underlying offense criminal. The Court held it was not. (Justice Sotomayor’s opinion in Dubin provides a tutorial in statutory interpretation. See Daniel Horawa, “Supreme Court cabins reach of aggravated identity theft statute;” Scotus Blog (June 9, 2023).)

Justice Gorsuch again filed an opinion concerning the judgment of the Court. He concluded that section 1028A(a)(1) is a vague statute that “does not satisfactorily define the prescribed conduct at all.”

Attorneys defending white-collar federal cases should consider using these recent Supreme Court decisions to attack questionable theories of prosecution (Ciminelli), “vague” jury instructions regarding finding a defendant guilty (Perrocco), and questionable interpretations of criminal statutes (Dubin). Also, the concurring opinions of Justice Gorsuch (and Thomas) in the Perrocco case and the opinion of Justice Gorsuch in the Dubin case should be used where appropriate to challenge vague criminal statutes.