United States Court of Appeals for the Third Circuit · 1994-07-12
Case and law context
Role: background; posture: criminal; government appeal from dismissal of a 21-count indictment (18 U.S.C. 371 conspiracy to commit mail, wire and bank fraud; ten 1344 counts; ten 1343 counts) arising from rigged bidding for a bridge commission's deposits; no substantive 1341 count; the McNally money-or-property requirement is decided once for all three fraud statutes; divided panel; result: claimant-lost; claim:
Instances and excluded annotation blocks
| Case | Element | Holding and scope | Variant | Exact source quotations |
|---|---|---|---|---|
| /f3d/29/0112-01 — United States Court of Appeals for the Third Circuit · 1994 | Mailing for execution of the scheme | not_reached Excluded from merits counts background / merits | Unspecified variant | No source quotation recorded for this block. |
| /f3d/29/0112-01 — United States Court of Appeals for the Third Circuit · 1994 | Separate section 1346 theory; outside property-fraud claim | not_reached Excluded from merits counts background / procedural party: Henry (Commission comptroller) and Mike (state official); theory: breach of a public official's duties to the public and the Commission; opinion: majority; subject: party=Henry (Commission comptroller) and Mike (state official); theory=breach of a public official's duties to the public and the Commission; opinion=majority Real ruling: NON-RETROACTIVITY of the honest-services amendment (printed "18 U.S.C. § 1364" in the source; § 1346 is meant) - it took effect on 18 November 1988, after the 1986-88 conduct, so the indictment must meet McNally and the fiduciary-breach allegations cannot carry it. A temporal-reach ruling, not a decision on whether the conduct would be honest-services fraud (bribery or kickbacks are never examined); hence not-reached, scope procedural. The fact polarities only mark which way each line cuts on the availability of the 1346 route. | temporal-reach/conduct-before-section-1346-effective-date | The indictment asserted that in rigging the bids, “Henry violatefd] his fiduciary duty and Commission custom, practices and policies”Source: docroot/ir/caselaw/f3d_29.jsonl#/f3d/29/0112-01; Unicode character offsets [3293:3426] (end exclusive); SHA-256 48585ad0417a32453271cc5776b9db324b357461b0bf6490d7a01c321bf3cda2.It did not become effective until November 18, 1988, well after the bid-rigging alleged in the indictment ceased, and it is not retroactive.Source: docroot/ir/caselaw/f3d_29.jsonl#/f3d/29/0112-01; Unicode character offsets [5297:5437] (end exclusive); SHA-256 48585ad0417a32453271cc5776b9db324b357461b0bf6490d7a01c321bf3cda2.Under McNally and Carpenter, a government official’s breach of his or her obligations to the public or an employee’s breach of his or her obligations to an employer cannot violate the fraud statutes.Source: docroot/ir/caselaw/f3d_29.jsonl#/f3d/29/0112-01; Unicode character offsets [5904:6103] (end exclusive); SHA-256 48585ad0417a32453271cc5776b9db324b357461b0bf6490d7a01c321bf3cda2.Therefore, to state an offense under the federal fraud statutes, the indictment against Henry and Mike must allege a scheme that meets McNally’s standards.Source: docroot/ir/caselaw/f3d_29.jsonl#/f3d/29/0112-01; Unicode character offsets [5587:5742] (end exclusive); SHA-256 48585ad0417a32453271cc5776b9db324b357461b0bf6490d7a01c321bf3cda2. |
| /f3d/29/0112-01 — United States Court of Appeals for the Third Circuit · 1994 | Knowing participation with intent to defraud | not_reached Excluded from merits counts background / merits | Unspecified variant | No source quotation recorded for this block. |
| /f3d/29/0112-01 — United States Court of Appeals for the Third Circuit · 1994 | Statutory mailing or carrier act | not_reached Excluded from merits counts background / meritsNo substantive mail fraud count; mail fraud appears only as an object of the 371 conspiracy, and no mailing is described. | Unspecified variant | No source quotation recorded for this block. |
| /f3d/29/0112-01 — United States Court of Appeals for the Third Circuit · 1994 | Material deception | not_reached Excluded from merits counts background / merits | Unspecified variant | No source quotation recorded for this block. |
| /f3d/29/0112-01 — United States Court of Appeals for the Third Circuit · 1994 | Traditional money or property as an object | not Excluded from merits counts background / merits basis: pleaded; party: competing bidding banks (alleged victims); count: all counts (conspiracy with mail fraud as an object; wire fraud; bank fraud); theory: losing bidders' interest in a fair and honest opportunity to bid; opinion: majority; subject: party=competing bidding banks (alleged victims); count=all counts (conspiracy with mail fraud as an object; wire fraud; bank fraud); theory=losing bidders' interest in a fair and honest opportunity to bid; opinion=majority CHARGED: 18 U.S.C. 371 (conspiracy whose objects were mail, wire and bank fraud), ten 1344 bank fraud counts and ten 1343 wire fraud counts; there is NO substantive 1341 count. The court construes the money-or-property requirement common to "the federal fraud statutes" and applies it to those counts, so this block is a cross-statute construction (case-level role background), not a 1341 instance; the holding is kept as the court's ruling on the indictment actually before it. A fair bidding process is a valuable condition but not a traditionally recognized, enforceable property right (no right of exclusion). Tangible gains to the schemers (deposits, a car loan, campaign contributions) are irrelevant because they did not come from the alleged victims. Ashman's open-outcry ruling is treated as indistinguishable. | intangible-expectancy/fair-opportunity-to-bid-for-contract-not-yet-awarded | According to the indictment, on ten occasions Henry disclosed bid information to Mike and another individual in the Auditor General’s office, who in turn disclosed it to a representative of one bank, Bank A.Source: docroot/ir/caselaw/f3d_29.jsonl#/f3d/29/0112-01; Unicode character offsets [2255:2462] (end exclusive); SHA-256 48585ad0417a32453271cc5776b9db324b357461b0bf6490d7a01c321bf3cda2.Bank A was thus allegedly able to narrowly outbid the other banks by offering a slightly higher rate of interest and, as a result, received deposits of $34,278,000 in Commission funds.Source: docroot/ir/caselaw/f3d_29.jsonl#/f3d/29/0112-01; Unicode character offsets [2463:2647] (end exclusive); SHA-256 48585ad0417a32453271cc5776b9db324b357461b0bf6490d7a01c321bf3cda2.Here, however, the money had not yet been deposited, and there is no way of knowing to which, if any, of the bidding banks it would have gone. Even in a fair process, Bank A might still have won the deposits.Source: docroot/ir/caselaw/f3d_29.jsonl#/f3d/29/0112-01; Unicode character offsets [8008:8216] (end exclusive); SHA-256 48585ad0417a32453271cc5776b9db324b357461b0bf6490d7a01c321bf3cda2.Just as the insurance commissions in McNally were not from the Commonwealth, the benefits Bank A and Mike received were not from the competing banks, and therefore those benefits cannot save the indictment here.Source: docroot/ir/caselaw/f3d_29.jsonl#/f3d/29/0112-01; Unicode character offsets [15618:15829] (end exclusive); SHA-256 48585ad0417a32453271cc5776b9db324b357461b0bf6490d7a01c321bf3cda2.Thus, to determine whether a particular interest is property for purposes of the fraud statutes, we look to whether the law traditionally has recognized and enforced it as a property right.Source: docroot/ir/caselaw/f3d_29.jsonl#/f3d/29/0112-01; Unicode character offsets [8995:9184] (end exclusive); SHA-256 48585ad0417a32453271cc5776b9db324b357461b0bf6490d7a01c321bf3cda2.Violation of this condition may have affected each bidding bank’s possible future receipt of property, but that does not make the condition property.Source: docroot/ir/caselaw/f3d_29.jsonl#/f3d/29/0112-01; Unicode character offsets [10241:10390] (end exclusive); SHA-256 48585ad0417a32453271cc5776b9db324b357461b0bf6490d7a01c321bf3cda2.The issue, therefore, is whether the competing banks’ interest in having a fair opportunity to bid for something that would become their property if and when it were received is in itself property. We conclude that it is not.Source: docroot/ir/caselaw/f3d_29.jsonl#/f3d/29/0112-01; Unicode character offsets [8217:8442] (end exclusive); SHA-256 48585ad0417a32453271cc5776b9db324b357461b0bf6490d7a01c321bf3cda2.In sum, we conclude that the indictment against Henry and Mike does not allege a scheme to defraud its victims of a property right and therefore does not state offenses under the federal fraud statutes.Source: docroot/ir/caselaw/f3d_29.jsonl#/f3d/29/0112-01; Unicode character offsets [15835:16037] (end exclusive); SHA-256 48585ad0417a32453271cc5776b9db324b357461b0bf6490d7a01c321bf3cda2. |
| /f3d/29/0112-01 — United States Court of Appeals for the Third Circuit · 1994 | Traditional money or property as an object | satisfied Excluded from merits counts background / dissent basis: pleaded; party: competing bidding banks (alleged victims); theory: reasonable expectancy of a prospective contract (tortious-interference analogy); opinion: Weis, J., dissenting; subject: party=competing bidding banks (alleged victims); theory=reasonable expectancy of a prospective contract (tortious-interference analogy); opinion=Weis, J., dissenting | intangible-expectancy/fair-opportunity-to-bid-for-contract-not-yet-awarded | The allegations in the indictment make it clear that in each instance the bank that submitted the highest legitimate bid would have received the Commission’s money, but for the defendants’ fraud.Source: docroot/ir/caselaw/f3d_29.jsonl#/f3d/29/0112-01; Unicode character offsets [27036:27231] (end exclusive); SHA-256 48585ad0417a32453271cc5776b9db324b357461b0bf6490d7a01c321bf3cda2.This is demonstrated by the fact that the unsuccessful bidder would have had a civil remedy against these defendants and Bank A for the tortious interference with prospective contractual relationships.Source: docroot/ir/caselaw/f3d_29.jsonl#/f3d/29/0112-01; Unicode character offsets [24735:24936] (end exclusive); SHA-256 48585ad0417a32453271cc5776b9db324b357461b0bf6490d7a01c321bf3cda2.The fraudulent deprivation of a reasonable expectation to secure an economic advantage falls within the proscriptions of the federal fraud statutes.Source: docroot/ir/caselaw/f3d_29.jsonl#/f3d/29/0112-01; Unicode character offsets [28996:29144] (end exclusive); SHA-256 48585ad0417a32453271cc5776b9db324b357461b0bf6490d7a01c321bf3cda2.Unlike the majority, I believe that the unsuccessful banks had a sufficient property interest in a legitimate bidding process to support the fraud charges here.Source: docroot/ir/caselaw/f3d_29.jsonl#/f3d/29/0112-01; Unicode character offsets [23637:23797] (end exclusive); SHA-256 48585ad0417a32453271cc5776b9db324b357461b0bf6490d7a01c321bf3cda2. |
| /f3d/29/0112-01 — United States Court of Appeals for the Third Circuit · 1994 | Traditional money or property as an object | not_reached Excluded from merits counts background / procedural party: the Commission (alternative victim urged on appeal); theory: Commission's confidential business information; Commission's right to control how its money is invested; opinion: majority; subject: party=the Commission (alternative victim urged on appeal); theory=Commission's confidential business information; Commission's right to control how its money is invested; opinion=majority Not decided: property theories absent from the indictment cannot be raised on appeal. The court expressly reserves whether loss of the right to control money satisfies McNally. | right-to-control/theory-not-charged-in-indictment | Bid-rigging by public officials typically results in a government entity paying more than it otherwise would have for goods or services, see, e.g., United States v. Osser, 864 F.2d 1056, 1062-63 (3d Cir.1988), United States v. Asher, 854 F.2d 1483, 1495-96 (3d Cir.1988), cert. denied, 488 U.S. 1029, 109 S.Ct. 836, 102 L.Ed.2d 969 (1989), but the Commission allegedly made money here, receiving a higher interest rate on its deposits as a result of the scheme.Source: docroot/ir/caselaw/f3d_29.jsonl#/f3d/29/0112-01; Unicode character offsets [16659:17120] (end exclusive); SHA-256 48585ad0417a32453271cc5776b9db324b357461b0bf6490d7a01c321bf3cda2.The government now argues that Henry’s and Mike’s scheme also defrauded the Commission of.its confidential business information and the right to control how its money was invested, but these theories were not advanced in the indictment and cannot save it on appeal.Source: docroot/ir/caselaw/f3d_29.jsonl#/f3d/29/0112-01; Unicode character offsets [6764:7029] (end exclusive); SHA-256 48585ad0417a32453271cc5776b9db324b357461b0bf6490d7a01c321bf3cda2..Because the loss of control theory was not alleged, we need not decide whether such a deprivation satisfies McNally.Source: docroot/ir/caselaw/f3d_29.jsonl#/f3d/29/0112-01; Unicode character offsets [17121:17238] (end exclusive); SHA-256 48585ad0417a32453271cc5776b9db324b357461b0bf6490d7a01c321bf3cda2. |
| /f3d/29/0112-01 — United States Court of Appeals for the Third Circuit · 1994 | Scheme or artifice to defraud | not_reached Excluded from merits counts background / meritsThe bid-rigging plan is taken as alleged ("although unethical"); only its object was in issue. | Unspecified variant | No source quotation recorded for this block. |