Bucking a Trend
Over the past 40 years the Supreme Court has consistently rejected the Government's broad statutory interpretations. In a recent decision, the Court went in a different direction.
Justice Briefs is a weekly newsletter devoted to federal criminal prosecution. The federal government’s evolution over the last 230 years has given federal prosecutors significant discretion. Few realize it exists and even fewer know how it is used. Justice Briefs aims to make federal prosecutions and prosecutors more accessible to the general public. Please help me in this endeavor by subscribing and sharing with others.
Justice in Brief
In the Eastern District of New York, a Russian man living in New York was charged with using his cryptocurrency company to launder more than $500 million over the course of 18 months.
In the Southern District of Ohio, a Rwandan national was charged with making false statements on his immigration documents when he denied that he participated in the 1994 genocide in Rwanda.
During the second week of June, the southwestern border districts charged more thn 1150 immigration-related cases, most of them were illegal re-entry cases.
Updates…
In the Southern District of New York, the RICO case against Sean “Diddy” Combs continues as the government is still presenting its case-in-chief.
Rep. LaMonica McIver was indicted last week on three charges connected with the incident at an immigration detention facility in New Jersey. There are two counts of forcibly interfering with federal law enforcement, both felonies, and a misdemeanor count.
The Senate confirmed John Eisenberg as head of the Justice Department’s National Security Division. During the first Trump Administration he served as a legal counsel to the National Security Council.
In Prosecutors We Trust
As the calendar turns to June, it is Supreme Court month. In June, the Supreme Court usually releases the last of its opinions for the term. Often these are the term’s most significant cases. They cover a range of legal topics such as executive power an civil rights. During the last five to ten years the Court’s opinions have routinely featured at least one case where the Court must interpret the meaning of a federal criminal statute. In these cases, often involving public corruption, the Court must decide whether to accept the prosecutor’s broad interpretation—meaning the statute’s language covers a lot of conduct—or the defendant’s narrow interpretation— meaning that the statute’s language covers a restricted amount of conduct. For nearly the past 40 years, whenever the Court has been asked to decide such a question, it has usually adopted the narrow interpretation. This is important because when the Court adopts a narrow interpretation, it restricts the ability of federal prosecutors to identify certain conduct as illegal. This year’s Court term featured another such case, Kousisis v United States. While many, including me, thought the Court would continue its trend and decide the government used an overly broad interpretation. The Court, instead, sided with the Government.
The case arose in Philadelphia when Kousisis received a contract from the Pennsylvania Department of Transportation for two painting jobs. As part of the contract, Kousisis was required to subcontract part of the work to at least one disadvantaged business. Kousisis decided he would use a paint supply business that had already been approved as a disadvantaged business by Pennsylvania. The problem occurred when Kousisis did not actually use the paint supply business for anything other than a cover for the real supplier. The disadvantaged business falsely signed forms stating that it had supplied the paint and received the funds. Ultimately, Kousisis completed the work, the Department of Transportation approved, and Kousisis received $20 million in gross profits.
Once the Government learned of the deception, criminal charges ensued. He was charged with conspiracy to commit wire fraud and wire fraud. According to the Government’s theory, the Pennsylvania Department of Transportation was induced to award the contract to Kousisis because Kousisis made the false statement that the disadvantaged business would supply the paint for the projects. A jury convicted Kousisis. He appealed claiming that the Pennsylvania Department of Transportation did not lose any money or property in the transaction. Regardless of whether Kousisis used the disadvantaged business or not, the project was completed as promised.
A unanimous Court, in an opinion written by Justice Amy Coney Barrett, upheld the conviction by deciding that a wire fraud conviction does not require proof of economic loss, only that the defendant intended to obtain money through a materially false representation. In this instance, Kousisis obtained money. He bid on the job in hopes of winning it and receiving payment for the work. A condition on winning the bid, however, was that he employ a disadvantaged business as a subcontractor. When he said he would do this and then did not, this was a false statement upon which the Pennsylvania Department of Transportation relied. Had Kousisis not made the statement, he would not have received the contract. That made the statement material. This was sufficient, according to the Court, for fraud. The Government need not prove anything further. The Government does not have to prove the victim lost money, only that the defendant wanted to obtain it.
In the third section of Justice Barrett’s opinion she addressed another argument the defense advanced. The defense argued that upholding the government’s position meant that every false statement in a contract would lead to a potential wire fraud prosecution and that to permit this meant the federal government would violate the defendant’s right to notice of illegal conduct and the state’s inherent police power. This first concern is one that the Court identified in prior statutory interpretation cases. Last year, when the Court addressed illegal gratuities, it said that broad statutory interpretations lead to unpredictable applications. This violates a fundamental notion of due process: that people must know what the law prohibits. The second concern is another one the Court had used to justify its narrow interpretations, especially in public corruption cases. Allowing prosecutors to use broad interpretations to reach the conduct of state officials allows the federal government to regulate purely local political matters. This, according to the Court, is not consistent with the Constitution’s grant of limited federal government powers.
These arguments emerged from a line of the Court’s precedent where it expressed concerns about how federal prosecutor’s used their discretion to interpret federal criminal statutes broadly. Beginning with its 1987 decision in McNally v. United States, the Court expressed concern that federal criminal law had overstepped its Constitutional bounds, especially it matters involving fraud. In 2010, when the Court decided a First Amendment case involving animal cruelty videos, the Court said that it could not uphold the Government’s view of the statute just because the prosecution promised to use it only in meritorious cases. Over the next 14 years, the Court would return to these rationales in cases involving computer fraud, identity theft, bribery, and wire fraud.
Regardless of the Court’s opinions, the Justice Department continued to advocate for broad interpretations. Eventually, these interpretations frustrated the Court. In a 2023 public corruption case involving the wire fraud statute, the Court warned prosecutors that it had to stop using the wire fraud statute as a means to establish standards of government. It had been ruling against the Government in these cases since 1987. Then, last term, in another public corruption case, the Court said, “…this Court has said time and again, the Court ‘cannot construe a criminal statute on the assumption that the Government will use it wisely.” The Court has been using this rationale since 2010 and has done so in at least four other cases. The Court has reached a point where it does not entirely trust federal prosecutors.
It was this history that the Kousisis defense drew on when making its argument to the Court. Instead, the Court bucked this trend, finding the Government’s interpretation was not overly broad. Why? The most likely reason is one the Court has used sporadically when it sides with the Government. The Court said in this case that requiring an economic loss would add an element to the statute that is not present in the statutory language. A second possible reason is that, under a Trump presidency, the Court believes federal prosecutors will not be as likely to interpret criminal statutes, especially fraud and corruption statutes, in a broad manner. This, of course, is purely speculative but it will be interesting to see how the Court treats federal prosecutors over the next few years.
I hope you enjoyed this issue and that it made you stop and think. I would love to hear any comments, questions, concerns, or criticisms that you have. Leave a comment or send a message! Also, if you enjoyed this or if it challenged your thinking, please subscribe and share with others!