Ciminelli v. United States
598 U.S. 306 (2023)
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Rule of Law:
The federal wire fraud statute, 18 U.S.C. § 1343, is limited to the protection of traditional property rights and does not criminalize schemes that deprive a victim solely of economically valuable information needed to make discretionary economic decisions, as the 'right to control' one's assets is not a cognizable property interest under the statute.
Facts:
- The 'Buffalo Billion' initiative was created to invest $1 billion in development projects in upstate New York, administered by the nonprofit Fort Schuyler Management Corporation.
- Louis Ciminelli's construction company, LPCiminelli, paid lobbyist Todd Howe between $100,000 and $180,000 annually to help it obtain state-funded jobs.
- Alain Kaloyeros, a board member of Fort Schuyler, paid Howe $25,000 per month in state funds to ensure he had a prominent role in administering Buffalo Billion projects.
- In 2013, Howe and Kaloyeros devised a bid-rigging scheme to steer major contracts to LPCiminelli.
- As part of the scheme, Kaloyeros directed Fort Schuyler to create a 'preferred developer' status, which gave certain companies priority in negotiating for projects.
- Kaloyeros, Howe, and Ciminelli collaborated to draft Requests for Proposal (RFPs) that contained qualifications tailored specifically to LPCiminelli.
- This process ensured LPCiminelli was selected as a preferred developer for projects in Buffalo.
- As a direct result of its preferred developer status, LPCiminelli secured a $750 million contract for the 'Riverbend project'.
Procedural Posture:
- A federal grand jury indicted Louis Ciminelli and others for wire fraud in violation of 18 U.S.C. § 1343 and conspiracy to commit the same.
- The Government prosecuted the case against Ciminelli in the U.S. District Court (trial court) solely on the Second Circuit's 'right-to-control' theory of wire fraud.
- The District Court instructed the jury consistent with the right-to-control theory, defining property to include the 'right to control the use of one's assets'.
- The jury found Ciminelli guilty of wire fraud and conspiracy to commit wire fraud.
- Ciminelli (appellant) appealed to the U.S. Court of Appeals for the Second Circuit, challenging the legal validity of the right-to-control theory.
- The Second Circuit, with the United States as appellee, affirmed Ciminelli's convictions based on its long-standing precedents.
- The U.S. Supreme Court granted certiorari to review the Second Circuit's decision.
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Issue:
Does the Second Circuit's 'right-to-control' theory, which defines property as the right to economically valuable information necessary to make discretionary economic decisions, state a valid basis for a wire fraud conviction under 18 U.S.C. § 1343?
Opinions:
Majority - Justice Thomas
No. The Second Circuit's 'right-to-control' theory is not a valid basis for liability under the federal wire fraud statute because the statute is limited in scope to the protection of traditional property rights. The 'right to control,' defined as the right to valuable economic information needed to make discretionary economic decisions, is not an interest that has long been recognized as property at common law. The Court's precedent, beginning with McNally v. United States, has consistently confined the fraud statutes to their original purpose of protecting property. When Congress responded to McNally, it enacted § 1346 to revive only the 'intangible right of honest services,' and its silence regarding other intangible rights, like the 'right to control,' forecloses judicial expansion of the statute. Furthermore, this theory improperly expands federal jurisdiction into areas of deceptive conduct traditionally governed by state tort and contract law. The Court declined the government's request to affirm the conviction on an alternative theory, as doing so would require the Court to improperly assume the roles of a jury and a court of first view.
Concurring - Justice Alito
Yes, I agree that the 'right-to-control' theory is not a valid basis for a wire fraud conviction. I write separately to clarify that this opinion only answers the specific question presented and does not address other fact-specific issues that may arise on remand. These issues include the sufficiency of the indictment, whether harmless error analysis applies, and whether the Government may retry the petitioner on a valid theory that he conspired to fraudulently obtain a traditional form of property, such as the valuable construction contract itself.
Analysis:
This unanimous decision invalidates a theory of fraud that has been a cornerstone of federal prosecutions in the Second Circuit for over three decades, particularly in public corruption and complex commercial cases. By reinforcing that federal fraud statutes protect only traditional property rights, the Court significantly narrows the scope of what constitutes wire fraud. The ruling forces prosecutors to prove that a scheme aimed to deprive a victim of actual money or property, rather than merely the intangible right to make an informed decision. This will likely make it more difficult to prosecute certain white-collar crimes where the harm is informational or procedural, rather than a direct financial loss, continuing the Court's trend of reining in expansive interpretations of federal criminal statutes.
