The Supreme Court Unanimously Rejects Broad Interpretation Of Wire Fraud Statute

• Jurisdiction: United States,Federal
• Law Firm: Foley Hoag LLP
• Subject Matter: Criminal Law, White Collar Crime, Anti-Corruption & Fraud
• Author: Ms Emily Nash, John Marston and Fernando Berdion-Del Valle
• Published date: 26 May 2023

Key Takeaways

• Courts are showing continued skepticism of broad use of federal fraud statutes. Last week, two decisions repudiated creative government interpretations of wire fraud's "property" requirement.
• In United States v. Ciminelli, the Supreme Court unanimously rejected the "right to control" theory holding that only "traditional property interests" can support a federal wire fraud conviction, and the right to accurate information to make an informed economic decision is not such an interest.
• In United States v. Abdelaziz, the First Circuit overturned convictions in the "Varsity Blues" college admissions scandal, rejecting prosecutors' argument that admissions slots per se qualified as property.

On May 11, the Supreme Court issued its decision in Ciminelli v. United States, its latest in a series of recent rulings reinforcing a narrow interpretation of wire fraud under federal law.¹

Ciminelli presented the Court with a question regarding the scope of what constitutes "property" under the wire fraud statute.² (For more information regarding the facts of the Ciminelli case, please see our Supreme Court Preview from last August.)

For decades, the Second Circuit has followed a "right-to-control" property theory, which contemplates that "property" under federal fraud statutes includes certain "intangible" property rights, including an entity's right to control the use of its assets. The theory is rooted in the notion that "a defining feature of most property is the right to control the asset in question." United States v. Lebedev, 932 F.3d 40, 48 (2d Cir. 2019). Accordingly, a showing that a defendant, through withholding or inaccurate reporting of information, deprived an entity of information necessary to make discretionary economic decisions pertaining to its assets amounts to a "cognizable harm" under the theory. See United States v. Binday, 804 F.3d 558, 570 (2d Cir. 2015).

Last Thursday, however, the Court rejected the "right-to-control" theory altogether. In a unanimous decision authored by Justice Thomas, the Court held that "the wire fraud statute reaches only traditional property interests," and the "right to control" is no such interest. While acknowledging that "the right to information necessary to make informed economic decisions" may be "useful for protecting and making use of one's property," the Court rejected the notion that the "right to control" itself constitutes a property interest as traditionally understood. The Court also...