United States v. Evans

844 F.2d 36 (1988) United States Court of Appeals for the Second Circuit 1988-04-07

criminal; pretrial dismissal of 44 wire fraud and 2 mail fraud counts of an indictment (scheme to sell U.S.-origin arms to Iran using false end-user certificates); government interlocutory appeal under 18 U.S.C. 3731 (result: claimant-lost)

Facts

  1. 2 Traditional money or property as an object not pleaded
    Specifically, defendants pointed out that the “property” involved— the weapons — is not alleged to belong to the United States; evidently, some of the weapons were sold directly by their manufacturers to foreign governments, and even those that may have once belonged to the United States are now owned by foreign countries.
  2. 2 Traditional money or property as an object not pleaded
    Moreover, the “money” involved — the commissions — was to be paid by the recipient governments, not by the United States.
  3. 2 Traditional money or property as an object not law
    These restrictions are created either by a statutorily-required clause in the contract between the United States seller and the original foreign buyer, see 22 U.S.C. § 2753(a)(2), or by regulation, see, e.g., 22 C.F.R. §§ 123.9(a), 123.10(d).
  4. 2 Traditional money or property as an object not pleaded
    The point is not that the defendant must receive the same money or property that the deceived party lost, but only that the party deceived must lose money or property.
  5. 2 Traditional money or property as an object not pleaded
    To win, the government must show that it had some property interest in the arms.
  6. 2 Traditional money or property as an object not pleaded
    The closest it comes is when it half-heartedly argues that the indictment implies that the United States owned all of the rights in at least some of the weapons at some point, since certain types of weapons legally may be sold only by the government.
  7. 2 Traditional money or property as an object not pleaded
    However, the government also stated at oral argument that it would not attempt to prove its ownership at trial.
  8. 2 Traditional money or property as an object not pleaded
    Thus, unless we accept the alienation theory, the judgment below should be affirmed under the interpretation of the federal fraud statutes previously set out.
  9. 2 Traditional money or property as an object not law
    That the right at issue here has not been treated as a property right in other contexts, and that there are many basic differences between it and common-law property are relevant considerations in deciding whether the right is property under the federal fraud statutes.
  10. 2 Traditional money or property as an object not law
    However, the United States will never have the right to possess the weapons involved in this case, even if a foreign government violates the resale restrictions.
  11. 2 Traditional money or property as an object not law
    The government concedes that the violations have no effect on the purchaser’s title or on the seller’s right to profits from the illegal sale.
  12. 2 Traditional money or property as an object not law
    A law prohibiting a particular use of a commodity that the government does not use or possess ordinarily does not create a property right.
  13. 2 Traditional money or property as an object not law
    Because of the substantial differences between international arms sales and common-law property transactions, we conclude that the United States’s interest in regulating foreign resales of arms is not a property right for wire and mail fraud purposes.