Louis Cininelli v. United States of America

Petitioner Louis Ciminelli was convicted of federal wire fraud for his involvement in a scheme to rig the bid process for obtaining state-funded

development projects associated with then-New York Governor Andrew Cuomo's Buffalo Billion initiative. The Buffalo Billion initiative

was administered by the nonprofit Fort Schuyler Management Corporation. Investigations uncovered that Fort Schuyler board member

Alain Kaloyeros paid lobbyist Todd Howe $25,000 in state funds each

month to ensure that the Cuomo administration gave Kaloyeros a

prominent role in administering projects for Buffalo Billion. Ciminelli's construction company, LPCiminelli, paid Howe $100,000 to

$180,000 each year to help it obtain state-funded jobs. In 2013, Howe

and Kaloyeros devised a scheme whereby Kaloyeros would tailor Fort

Schuyler's bid process to smooth the way for LPCiminelli to receive

major Buffalo Billion contracts by designating LPCiminelli as a "preferred developer” with priority status to negotiate for specific projects.

Kaloyeros, Howe, and Ciminelli jointly developed a set of requests for

proposal (RFPs) that effectively guaranteed LPCiminelli's selection as

a preferred developer by treating unique aspects of LPCiminelli as

qualifications for preferred-developer status. With that status in

hand, LPCiminelli secured the marquee $750 million "Riverbend project” in Buffalo. After the scheme was uncovered, Ciminelli, Kaloyeros,

Howe, and others were indicted for, as relevant here, wire fraud in violation of 18 U. S. C. §1343 and conspiracy to commit the same under

§1349.

In the operative indictment and 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 that 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 Fort Schuyler of "potentially valuable economic

information.” The jury convicted Ciminelli of wire fraud and conspiracy to commit wire fraud. On appeal, Ciminelli argued that the right

to control one's assets is not "property” for purposes of §1343. The Second Circuit affirmed the convictions on the basis of its longstanding

right-to-control precedents.

Held: Because the right to valuable economic information needed to

make discretionary economic decisions is not a traditional property interest, the Second Circuit's right-to-control theory cannot form the basis for a conviction under the federal fraud statutes. Pp. 4–10.

(a) The federal wire fraud statute criminalizes the use of interstate

wires for "any scheme or artifice to defraud, or for obtaining money or

property by means of false or fraudulent pretenses, representations, or

promises.” 18 U. S. C. §1343. When the federal wire fraud statute

was enacted, the "common understanding” of the words "to defraud”

referred "to wronging one in his property rights.” Cleveland v. United

States, 531 U. S. 12, 19. This Court has therefore consistently understood the statute's "money or property” requirement as limiting the

"scheme or artifice to defraud” element. Ibid. Even so, lower federal

courts for decades interpreted the mail and wire fraud statutes to protect intangible interests unconnected to traditional property rights.

See Skilling v. United States, 561 U. S. 358, 400. This Court halted

that trend in McNally v. United States, 483 U. S. 350, which confined

the statutes to the "protect[ion of] individual property rights.” Id., at

359, n. 8.

The right-to-control theory cannot be squared with the text of the

federal fraud statutes, which are "limited in scope to the protection of

property rights.” Id., at 360. The so-called right to control is not an

interest that had "long been recognized as property” when the wire

fraud statute was enacted. Carpenter v. United States, 484 U. S. 19,

26. From the theory's inception, the Second Circuit has not grounded

the right to control in traditional property notions. The theory is also

inconsistent with the structure and history of the federal fraud statutes. Congress responded to this Court's decision in McNally by enacting §1346, which revived only the intangible right of honest services, one of many intangible rights protected by courts under the

fraud statutes pre-McNally. Congress' silence regarding other such

intangible interests forecloses the judicial expansion of the wire fraud

statute to cover the intangible right to control. Finally, by treating

mere information as the protected interest, the right-to-control theory

vastly expands federal jurisdiction to an almost limitless variety of deceptive actions traditionally left to State law. Pp. 4–9.

(b) Despite relying exclusively on the right-to-control theory before

the grand jury, District Court, and Second Circuit, the Government

now concedes that the theory as articulated below is erroneous. Yet,

the Government insists that the Court can affirm Ciminelli's convictions by applying facts presented to the jury below to the elements of

a different wire fraud theory. The Court declines the Government's

request, which would require the Court to assume not only the function of a court of first view, but also of a jury. See McCormick v. United

States, 500 U. S. 257, 270–271, n. 8. Pp. 9–10.

13 F. 4th 158, reversed and remanded.

The Supreme Court unanimously rejected the “right-to-control” theory of wire fraud, holding that potentially valuable economic information necessary to make discretionary economic decisions does not constitute “property” for purposes of the federal wire-fraud statute.