Marketing and Sales Practices Litigation, 295 F. Supp. 2d 148, 168 (D. Mass. 2003) (in a civil RICO case, court stated that “[n]othing in the mail and wire fraud statutes requires that the party deprived of money or property be the same party who is actually deceived”).
98 997 F.2d at 1224. Other lower federal courts have similarly required that the defendant intend to profit from the fraud. See, e.g., United States v. Alsugair, 256 F. Supp. 2d 306 (D.N.J. 2003), and cases cited therein.
99 See United States v. Hedaithy, 392 F.3d 580, 602 (3d Cir. 2004) (The defendants argue that “any violation of the mail fraud statute must involve a scheme for obtaining the victim’s property. We do not read McNally or Cleveland as providing any such requirement.”).
100 128 S. Ct. 2131, 2138 (2008). The specific issue in the case was whether first-party reliance is an element of a civil RICO case. The Court held that it is not, without ever terming the issue one of “convergence” for mail/wire fraud purposes: “[W]e hold that a plaintiff asserting a RICO claim predicated on mail fraud need not show … that it relied on the defendant’s alleged misrepresentation.” Id. See § 16.07, infra, for a discussion of issues arising in civil RICO cases.
101 Because this was a civil case seeking damages on behalf of the other potential bidders, the case did not raise the issue whether the local government may have been injured by the bid-rigging scheme by, for example, increasing the price of successful bids. If this were true, then any convergence requirement would have been met.
102 One way to reconcile Bridge with those earlier cases may be to view Bridge in light of the “scheme to defraud” requirement. Assume, for example, that a person acting with the intent to defraud makes a material, false statement made to a third party who is not the intended victim of the fraud scheme. Further assume that a mailing that satisfies the Schmuck rule was made in furtherance of that scheme. Although the third party — the deceived party — would not be deprived of money, property, or honest services if the scheme succeeded, the misstatement would be part of the scheme to defraud if it were directly related to the intended injury to the scheme’s victim. In Bridge, for example, the misstatements to the local government would produce the intended injury to the victims by depriving the other potential bidders of their opportunity to profit from the bidding. In Walters, on the other hand, the misstatements to the athletic conferences did not directly lead the universities to pay the scholarship money to the athletes.
103 130 S. Ct. 2896 (2010).
the law “restores the mail [and wire] fraud provision[s] to where [they were] before the McNally decision,” 134 Cong. Rec. H33296 (daily ed. Oct. 21, 1988) (statement of Rep. Conyers), the Supreme Court determined that § 1346 did not have that effect. In Cleveland, the Court held that fraudulent schemes to obtain licenses and permits do not fall under the mail fraud statute. As the Court stated in that case, § 1346 covers “only the intangible right of honest services even though federal courts, relying on McNally, had dismissed, for want of monetary loss to any victim, prosecutions under § 1341 for diverse forms of public corruption, including licensing fraud.” 531 U.S. 12, 20 (2000). Thus, under Cleveland, where the government alleged a scheme to deprive the victim of property, McNally operated to limit the scope of covered property interests.
105 Skilling, 130 S. Ct. at 2928 n.36 (“compare, e.g., United States v. Brumley, 116 F.3d 728, 734–735 (5th Cir.
1997) (en banc), with, e.g., United States v. Weyhrauch, 548 F.3d 1237, 1245–1246 (9th Cir. 2008), vacated and remanded, 130 S. Ct. 2971 (2010)”).
106 Id. (“compare, e.g., United States v. Sun-Diamond Growers, 138 F.3d 961, 973 (D.C. Cir. 1998), with, e.g.,
United States v. Black, 530 F.3d 596, 600–602 (7th Cir. 2008), vacated and remanded, 130 S. Ct. 2963 (2010)”).
107 Id. (“compare, e.g., United States v. Bloom, 149 F.3d 649, 655 (7th Cir. 1998), with, e.g., United States v.
Panarella, 277 F.3d 678, 692 (3d Cir. 2002)”). In his Skilling concurring opinion, Justice Scalia went into much greater depth in describing the various uncertainties and ambiguities in the honest services fraud cases. See id. at
136–39 (Scalia, J., concurring in the judgment).
108 In United States v. Handakas, 286 F.3d 92, 103 (2d Cir. 2002), abrogated in part by United States v.
Rybicki, 354 F.3d 124 (2d Cir. 2003) (en banc), a Second Circuit panel reviewed the circuits’ approaches to this issue and found that pre-McNally cases were not relevant to interpretations of § 1346. In Rybicki, the Second Circuit sitting en banc overruled Handakas on this point and employed pre-McNally law when interpreting the statute. 354 F.3d at 143. Skilling resolved this dispute by directly relying upon pre-McNally case law in its decision. 130 S. Ct. at 2933–34.
109 Skilling, 130 S. Ct. at 2930–31.
110 Id. at 2935 (Scalia, J., concurring in the judgment).
111 Justice Scalia raised several of these issues in his Skilling concurrence. See Skilling, 130 S. Ct. at 2938–39 (Scalia, J., concurring in the judgment). See also Sara Sun Beale, An Honest Services Debate, 8 Ohio St. J. Crim. L. 251 (2010) (describing uncertainties post-Skilling).
112 The Court in Skilling appeared to signal that it did not expect such issues to arise under its limited definition of honest services. 130 S. Ct. at 2931 n.41 (citations omitted). The Court stated that issues concerning whether a
fiduciary duty is required have been “rare in bribe and kickback cases. The existence of a fiduciary relationship, under any definition of that term, usually [has been] beyond dispute; examples include public official-public, employee-employer, and union official-union members.”
113 Id. at 2939 (citing United States v. Rybicki, 354 F.3d 124, 137–38 (2003) (en banc)).
114 Rybicki, 354 F.3d at 163 (Jacobs, J., dissenting).
115 627 F.3d 405 (9th Cir. 2010).
116 Id. at 412 (citing United States v. Rybicki, 354 F.3d 124, 155 (2d Cir.2003) (Raggi, J., concurring)).
117 Id. at 414 (Fernandez, J., dissenting) (quoting United States v. Kincaid-Chauncey, 556 F.3d 923, 940 (9th
Cir.2009)).
118 See United States v. Milovanovic, 627 F.3d 405 (9th Cir. 2010) (holding that no fiduciary duty is required). The dissent strongly disagreed. Id. at 413 (Fernandez, J., dissenting).
119 In United States v. Milovanovic, 627 F.3d 405 (9th Cir. 2010).
120 This issue was before the Court in United States v. Black, 530 F.3d 596, 600–602 (7th Cir. 2008), vacated and remanded, 130 S. Ct. 2963 (2010)”).
121 See Dane C. Ball, Repacking Skilling-Barred Fraud Theories: A Form of Damage Control that Goes Too Far, 5 White Collar Crim. Rep. 741 (2010).
122 See supra § 4.03. For an analysis of the statute’s reach, see United States v. Reaume, 338 F.3d 577 (6th
Cir. 2003).
123 171 F.3d 240 (5th Cir. 1999).
125 18 U.S.C. §§ 151–157.
126 Stephen A. Warnke et al., Health Care Fraud and Abuse, in White Collar Crime: Business and Regulatory Offenses §§ 19.01–05 (Otto Obermaier & Robert Morvillo, eds. 2011). For an example of a complex health care fraud prosecution, see Siddiqi v. United States, 98 F.3d 1427 (2d Cir. 1996) (prosecution for mail fraud, theft of government property, and false claims).
127 42 U.S.C. § 1320a-7b(a).
128 Private parties may also initiate actions under the false claims statutes. See Chapter 20, Civil Actions, Civil Penalties, and Parallel Proceedings, infra, § 20.07.
129 Section 1001 is discussed in detail in Chapter 10, False Statements, infra. In some respects, the false statements statute, 18 U.S.C. § 1001, is broader than the false claims statute because § 1001 does not require that (a) the statement be made to obtain money or property or (b) the statement be presented to the government. On the other hand, materiality is an element of § 1001 but not of § 287. See United States v. Irwin, 654 F.2d 671 (10th Cir. 1981).
130 582 F.2d 842 (4th Cir. 1978).
131 654 F.2d 671 (10th Cir. 1981).
132 United States v. Reitmeyer, 356 F.3d 1313, 1317 (10th Cir. 2004), citing United States v. Sain, 141 F.3d 463,
473 (3d Cir.), cert. denied, 525 U.S. 908 (1998).
133 111 F.3d 365 (4th Cir. 1997).
134 Id. at 368–69.