CIMINELLI v. UNITED STATES et al.
No. 21–1170
SUPREME COURT OF THE UNITED STATES
Argued November 28, 2022—Decided May 11, 2023
598 U. S. 306 (2023)
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 designаting 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 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
In the operative indictment and at trial, the Government relied solely on the
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 undеr the federal fraud statutes. Pp. 312–317.
(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.”
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
(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
13 F. 4th 158, reversed and remanded.
THOMAS, J., delivered the opinion for a unanimous Court. ALITO, J., filed a concurring opinion, post, p. 317.
Michael R. Dreeben argued the cause for petitioner. With him on the briefs were Jenya Godina, Jason Zarrow, and L. Nicole Allan. Briefs in support of petitioner were filed for Alain Kaloyeros by Michael C. Miller, Reid H. Weingarten, Michael G. Scavelli, and Bruce C. Bishop, and for Steven Aiello et al. by Alexandra A. E. Shapiro, Ted Sampsell-Jones, and Daniel J. O‘Neill, all respondents under this Court‘s Rule 12.6.
Deputy Solicitor General Feigin argued the cause for the United States. With him on the brief were Solicitor General Prelogar, Assistant Attorney General Polite, Austin L. Raynor, and William A. Glaser.*
Opinion of the Court
JUSTICE THOMAS delivered the opinion of the Court.
In this case, wе must decide whether the Second Circuit‘s longstanding “right to control” theory of fraud describes a valid basis for liability under the federal wire fraud statute, which 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, representa-
tions, or promises.”
We have held, however, that the federal fraud statutes criminalize only schemes to deprive people of traditional property interests. Cleveland v. United States, 531 U. S. 12, 24 (2000). Because “potentially valuable economic information” “necessary to make discretionary economic decisions” is not a traditional property interest, we now hold that the right-to-control theory is not a valid basis for liability under
This case begins with then-New York Governor Andrew Cuomo‘s “Buffalo Billion” initiative. On its face, the initiative was administered through Fort Schuyler Management Corporation, a nonprofit affiliated with thе State University of New York (SUNY) and the SUNY Research Foundation. It aimed to invest $1 billion in development projects in upstate New York. Later investigations, however, uncovered a wide-ranging scheme that involved several of former Governor Cuomo‘s associates, most notably Alain Kaloyeros and Todd Howe. Kaloyeros was a member of Fort Schuyler‘s board of directors and was in charge of developing project prоposals for Buffalo Billion; Howe was a lobbyist who had deep ties to the Cuomo administration. Each month, Kaloyeros paid Howe $25,000 in state funds to ensure that the Cuomo administration gave Kaloyeros a prominent position in Buffalo Billion.
Ciminelli had a similar arrangement. His 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. First, on Kaloyeros’ suggestion, Fort Schuyler established a process for selecting “preferred developers” that would be given the first opportunity to negotiate with Fort Schuyler for specific projects. Then, Kaloyeros, Howe, and Ciminelli jointly developed a set of requests for proposal (RFPs) that treated unique aspects of LPCiminelli as qualifications for preferred-developer status. Those RFPs effectively guaranteed that LPCiminelli would be (and was) selected as a preferred developer for the Buffalo projects. With that status in hand, LPCiminelli secured the marquee $750 million “Riverbend project” in Buffalo.
After an investigation revealed their scheme, Ciminelli, Howe, Kaloyeros, and several others were indicted by a federal grand jury on 18 counts including, as relevant here, wire fraud in violation of
Throughout the grand jury proceedings, trial, and appeal, the Government relied on the Second Circuit‘s “right to control” theory, 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. The Gоvernment‘s indictment and trial strategy rested solely on that theory.1 And, it successfully defeated Ciminelli and his co-
defendants’ motion to dismiss by relying on that theory. In addition, it successfully moved the District Court to exclude certain defense evidence as irrelevant to that theory. The Government also relied on that theory in its summation to the jury.
Consistent with the right-to-control theory, the District Court instructed the jury that the term “property” in
On appeal, Ciminelli challenged the right-to-control theory, arguing that the right to control one‘s assets is not “property” for purposes of the wire fraud statute. Defending the wire fraud convictions, the Government reliеd solely on the right-to-control theory. The Second Circuit affirmed the convictions based on its longstanding right-to-control precedents, holding that, by “rigging the RFPs to favor their companies, defendants deprived Fort Schuyler of potentially valuable economic information.” 13 F. 4th, at 171 (internal quotation marks omitted).
We granted certiorari to determine whether the Second Circuit‘s right-to-control theory of wire fraud is a valid basis for liability under
II
A
The wire fraud statute criminalizes “scheme[s] or artifice[s] to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises.”
Despite these limitations, lоwer 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 (2010) (recounting how “the Courts of Appeals, one after the other,
interpreted the term `scheme or artifice to defraud’ to include deprivations not only of money or property, but also of intangible rights”). For example, federal courts held the fraud statutеs reached such intangible interests as the right to “honest services,” ibid. (internal quotation marks omitted);
The right-to-control theory applied below first arose after McNally prevented the Government from basing federal fraud convictions on harms to intangible intеrests unconnected to property. See United States v. Wallach, 935 F. 2d 445, 461–464 (CA2 1991). As developed by the Second Circuit, the theory holds that, “[s]ince a defining feature of most property is the right to control the asset in question,” “the property interests protected by the wire fraud statute include the interest of a victim in controlling his or her own assets.” United States v. Lebedev, 932 F. 3d 40, 48 (2019) (alterations omitted). Thus, a “cognizable harm occurs where the defendant‘s scheme denies the victim the right to control its assets by depriving it of information necessary to make discretionary economic decisions.” United States v. Binday, 804 F. 3d 558, 570 (CA2 2015) (alterations omitted).3
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.” McNally, 483 U. S., 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 (1987). Significantly, when the Second Circuit first rеcognized the right-to-control theory in 1991—decades after the wire fraud statute was enacted and over a century after the mail fraud statute was enacted—it could cite no authority that established “potentially valuable economic information” as a traditionally recognized property interest. See Wallach, 935 F. 2d, at 462–463.4 And, the Second Circuit has
ently rejected such federal fraud theories that “stray from traditional concepts of property.” Cleveland, 531 U. S., at 24. For its part, the Government—despite relying upon the right-to-control theory for decades, including in this very case—now concedes that if “the right to make informed decisions about the disposition of one‘s assets, without more, were treated as the sort of `property’ giving rise to wire fraud, it would risk expanding the federal fraud statutes beyond property fraud as defined at common law and as Congress would have understood it.” Brief for United States 25–26. Thus, even the Government now agrees that the Second Circuit‘s right-to-control theory is unmoored from the federal fraud statutes’ text.
The right-to-control theory is also inconsistent with the structure and history of the federal fraud statutes. As recounted above, after McNally put an end to federal courts’ use of mail and wire fraud to protect an ever-growing swath of intangible interests unconnected to property, Congress responded by enacting
Finally, the right-to-control theory vastly expаnds federal jurisdiction without statutory authorization. Because the theory treats mere information as the protected interest, almost any deceptive act could be criminal. See, e. g., United States v. Viloski, 557 Fed. Appx. 28 (CA2 2014) (affirming right-to-control conviction based on an employee‘s undisclosed conflict of interest). The theory thus makes a federal crime of an almost limitless variety of deceptive actions traditionally left to state contract and tort law—in flat contradiction with our caution that, “[a]bsent [a] clear statement by
Congress,” courts should “not read the mail [and wire] fraud statute[s] to place under federal superintendence a vast array of conduct traditionally policed by the States.” Cleveland, 531 U. S., at 27. And, as it did below, the Second Circuit has employed the theory to affirm federal convictions regulating the ethics (or lack thereof) of state employees and contractors—despite our admonition that “[f]ederal prosecutors may not use property fraud statutes to set standards of disclosure and good government for local and state officials.” Kelly, 590 U. S., at — (alterations omitted). The right-to-control theory thus criminalizes traditionally civil matters and federalizes traditionally state matters.
In sum, the wire fraud statute reaches only traditional property interests. The right to valuable economic information needed to make discretionary economic decisions is not a traditional property interest. Accordingly, the right-to-control theory cannot form the basis for a conviction under the federal fraud statutes.
B
Despite indicting, obtaining convictions, and prevailing on appeal based solely on the right-to-control theory, the Government
Yet, the Government insists that its concession does not require reversal because we can affirm Ciminelli‘s convictions on the alternative ground that the evidence was sufficient to establish wire fraud under a traditional property-fraud theory. Id., at 31–32. With profuse citations to the records below, the Government asks us to cherry-pick facts presented to a jury charged on the right-to-control theory
and apply them to the elements of a different wire fraud theory in the first instance. In other words, the Government asks us to assume not only the function of a court of first view, but also of a jury. That is not our role. See, e. g., McCormick v. United States, 500 U. S. 257, 270–271, n. 8 (1991) (“Appellate courts are not permitted to affirm convictions on any theory they please simply because the facts necessary to support the theory were presented to the jury”); Chiarella v. United States, 445 U. S. 222, 236 (1980). Accordingly, we decline the Government‘s request to affirm Ciminelli‘s convictions on alternative grounds.
III
The right-to-control theory is invalid under the federal fraud statutes. We, therefore, reverse the judgment of the Court of Appeals and remand the cаse for further proceedings consistent with this opinion.
It is so ordered.
JUSTICE ALITO, concurring.
The opinion of the Court correctly answers the sole question posed to us: whether the right-to-control theory supports liability under the federal wire fraud statute. The jury instructions embody that theory, and therefore this error, unless harmless, requires the reversal of the judgment below. I do not understand the Court‘s opinion to address fact-specific issues on remedy outside the question presеnted, including: (1) petitioner‘s ability to challenge the indictment at this stage of proceedings, see
ment‘s ability to retry petitioner on the theory that he conspired to obtain, and did in fact obtain, by frаud, a traditional form of property, viz., valuable contracts. On this understanding, I join the Court‘s opinion.