Supreme Court Preview: The Supreme Court Poised To Address Key Federal Wire Fraud Issue

Published date01 September 2022
Subject MatterLitigation, Mediation & Arbitration, Criminal Law, Trials & Appeals & Compensation, White Collar Crime, Anti-Corruption & Fraud
Law FirmFoley Hoag LLP
AuthorMr John Marston, Emily Nash and Fernando Berdion-Del Valle

In the 2022-2023 term, the Supreme Court will address the definition of "property" under the federal wire fraud statute, which prohibits a person from "obtaining money or property by means of false pretenses." 18 U.S.C. ' 1343. The definition of "property" for the purposes of this statute has been much debated'need "property" be economic in nature? Must it be tangible? Can one's admission to a university constitute "property"? Now, the Supreme Court may answer some of these questions in Ciminelli v. United States (Docket No. 21-1170).1

Mr. Ciminelli was convicted of wire fraud in connection with a bid-rigging scheme in the "Buffalo Billion" program, an economic development initiative in Buffalo, New York. The program was facilitated by Fort Schuyler, a nonprofit entity affiliated with the SUNY system, which issued requests for proposals ("RFPs") to solicit and accept bids for each project. The government argued that Mr. Ciminelli and others rigged this process by secretly tailoring certain RFPs to favor their companies on projects worth $750 million.

To demonstrate that this bid-rigging scheme constituted wire fraud, the government relied on the "right-to-control" theory of property. This theory of property'embraced by the U.S. Court of Appeals for the Second Circuit and certain other circuits'protects not only tangible property, but also certain "intangible" property rights. Among those is the right of an entity to control the use of its assets. See United States v. Finazzo, 850 F.3d 94 (2d Cir. 2017). Withholding information or reporting inaccurate information that could affect an entity's economic decisions may jeopardize this right. Id. Thus, under the "right-to-control" theory, a person may be guilty of wire fraud if they have deprived another individual or entity of the ability to make an informed economic decision. In Ciminelli, following this framework, the government argued that the bid-rigging scheme deprived Fort Schuyler of economic information necessary to make its bid determinations. The jury accepted the argument and convicted Mr. Ciminelli of wire fraud, among other charges.

The Second Circuit affirmed the conviction, applying a broad interpretation of the "right-to-control" theory of property. United States v. Percoco, 13 F.4th 158, 172 (2d Cir. 2021).2 The Second Circuit acknowledged that "[t]he right-to-control theory requires proof that 'misrepresentations or non-disclosures can or do result in tangible economic harm,'" id. at 170...

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