SCOTUS Rejects RIGHT-To-Control
Louis Ciminelli was convicted of federal wire fraud for his involvement in a scheme to rig the bidding process for obtaining state-funded projects associated with Andrew Cuomo’s Buffalo Billion initiative. Investigations uncovered a scheme where a non-profit board member paid a lobbyist in state funds each month to ensure that Cuomo’s administration gave the board member a prominent role in administering projects for Buffalo Billion. Ciminelli’s construction company also paid the lobbyist to help it obtain state-funded jobs. The board member and lobbyist later devised a scheme that effectively guaranteed the selection of Ciminelli’s construction firm for preferred-developer status. With that status in hand, Ciminelli’s construction company secured the marquee $750 million “Riverbend project” in Buffalo. After the scheme was uncovered, Ciminelli, the lobbyist, and board member would indicted for wire fraud in violation of 18 U.S.C. 1343 and conspiracy to commit the same under § 1349.
At trial, the Government relied solely on the Second Circuit’s right-to-control theory of wire fraud, under which the Government can establish wire fraud by showing that the defendant schemed to deprive a victim of potentially valuable economic information necessary to make discretionary economic decisions. Consistent with that theory, the district court instructed the jury the term “property” in § 1343 “includes intangible interests such as the right to control the use of one’s assets,” which could be harmed by depriving the non-profit of “potentially valuable economic information.”
The Supreme Court reversed the convictions, holding that the right to valuable economic information needed to make discretionary economic decisions is not a traditional property interest and thus cannot form the basis for a conviction under the federal fraud statutes.