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| 2 minutes read

Text, history, and structure: Powerful tools in the white-collar practitioner's toolkit

Much has been written about the U.S. Supreme Court's recent decision in Ciminelli v. United States, which rejected the Second Circuit's "right to control" theory of wire and mail fraud.  The right-to-control theory criminalized schemes to deprive victims of "potentially valuable economic information" that victims "would consider valuable in deciding how to use [their] assets."  So, for example, person X who conceals a conflict of interest from Y could be found guilty of wire fraud, even if Y never parted with money.  That is because, as the Second Circuit had held, a "cognizable harm occurs where the defendant's scheme denies the victim of the right to control its assets by depriving it of information necessary to make discretionary economic decisions."

On the books for over 30 years, that is the law no more.  In a unanimous decision, the Supreme Court made clear that wire and mail fraud "criminalize only schemes to deprive people of traditional property interests"; and because "potentially valuable economic information" is not a traditional property interest, it cannot serve as a valid basis for liability.

Equally instructive, though, is the Court's reasoning, because it reminds us of - and gives us insight into - three powerful advocacy tools at our disposal.

First, the Ciminelli Court focused on the "original meaning of the text" of the wire fraud statute, which criminalizes schemes "to defraud, or for obtaining money or property."  18 U.S.C. § 1343.  Analyzing the meaning of these terms "when the statute was enacted," the Court held that "the wire fraud statute reaches only traditional property interests."  Theories, like the right-to-control theory, that "stray from traditional concepts of property" are ultra vires.  Thus, when interpreting a statute, not any dictionary will do (a commonly used source to discern meaning).  Instead, contemporaneous dictionaries should be consulted.  If courts are concerned with prosecutors taking an unduly expansive reading of criminal statutes, then an argument that seeks to limit the scope of such statutes to their historic meaning, per Ciminelli, may find a receptive audience.

Second, and relatedly, consider the meaning of the statutory term at issue by reference to the common law or a similar source of law during the relevant time.  "[I]f a word is obviously transplanted from another legal source, whether the common law or other legislation, it brings the old soil with it."  Sekhar v. United States, 570 U.S. 729, 733 (2013).  So, was the "right to control" grounded in "old soil?"  The Ciminelli Court said no: the "so-called 'right to control' is not an interest that had long been recognized as property when the wire fraud statute was enacted."  Consider whether the adverse doctrinal theory in your case was articulated long after the underlying statute was enacted, as was the case in Ciminelli.  If so, that would seem to be fertile ground for exploration.

Third, the Court observed that the right-to-control theory "vastly expands federal jurisdiction without statutory authorization."  This observation is in line with past pronouncements of the Court noting concern with the federalization of criminal law.  See, e.g., Cleveland v. United States, 531 U.S. 12, 27 (2000).  As the Court said in Ciminelli, the right-to-control theory "makes a federal crime of an almost limitless variety of deceptive actions traditionally left to state contract and tort law."  Or put differently, it "criminalizes traditionally civil matters and federalizes traditionally state matters."  Accordingly, consider the structural and federalism implications of your case.  For example, a prosecutorial theory may be more than simply "aggressive"; it may also intrude upon areas traditionally policed by the states.

Toppling a 30-year-old doctrinal edifice is no mean feat, but these tools were up to the task.  Ciminelli reminds us that the white-collar practitioner's toolkit is powerful indeed.


white collar defense