On May 11, 2023, the Supreme Court issued two opinions limiting the reach of the federal fraud statutes and eliminating often-used theories from the government’s arsenal.
In Ciminelli v. US, 598 U. S. __ (2023), the Supreme Court decided that the “right to control” theory—long used by prosecutors in the Second Circuit—can no longer be used to support wire fraud convictions. The Court overturned the conviction of Louis Ciminelli, a participant in a scheme to rig bids for New York state-funded projects, known as the “Buffalo Billion” initiative. As part of the scheme, requests for proposals were strategically drafted to give preferential treatment to Ciminelli’s company. At trial, the government argued that Ciminelli and his co-defendants were guilty of wire fraud under the right-to-control theory because they deprived the entity responsible for awarding the state-funded projects of certain information necessary to make an informed decision about the bid awards. The Second Circuit affirmed the conviction and the government’s use of the right-to-control theory.
Writing on behalf of a unanimous court, Justice Clarence Thomas held that the wire fraud statue only reaches traditional property interests and the right to valuable economic information needed to make discretionary economic decisions—known as the “right to control”—is not a traditional property interest. The right-to-control theory, therefore, “cannot form the basis for a conviction under the federal fraud statutes.”
Continue Reading In Control: Supreme Court Reigns-In Second Circuit Fraud Theories