Ted Cassman and Raphael Goldman, The Federal Mail and Wire Fraud Statutes - Must There be an Intent to Obtain Property, or Merely Deprive?



The federal mail and wire fraud statutes, 18 U.S.C. 1341 and 1343, proscribe "any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises." (Ibid. [emphasis supplied].) Nowhere do these statutes suggest that the offense could occur if the defendant intended only to "deprive" someone of money or property, rather than "obtain" it. Nevertheless, federal courts have often approved jury instructions that use the word "deprive" instead of "obtain." For example, the Fifth Circuits pattern jury instructions define "scheme to defraud" in the context of these statutes as "any scheme to deprive another of money, property, or of the intangible right to honest services by means of false or fraudulent pretenses, representations, or promises." Fifth Circuit Criminal Jury Instructions Nos. 2.59, 2.60. Likewise, while the Ninth Circuit Model Criminal Jury Instructions use the word "obtain," the Ninth Circuit Court of Appeals has itself sometimes carelessly used the word "deprive" in describing the required elements of a mail or wire fraud offense. See, e.g., United States v. Thomas, 32 F.3d 418, 419 (9th Cir. 1994) (stating that, in a mail fraud prosecution, the defendant "must have intended to deprive his victims of money or property").



The difference between obtaining and depriving is not merely semantic. Consider the case of an executive at a publicly-traded company accused of making false statements designed to artificially inflate the price of her companys stock. The executive in this scenario arguably intends to deprive any person who purchases the stock at the inflated price of money or property. But unless the executive also intends to sell her own stock holdings at the inflated prices, she has not hatched a scheme to obtain money or property from the stock purchasers.



Although 1341 and 1343 use the disjunctive "or" between the phrases "scheme or artifice to defraud" and "for obtaining money or property by means of false or fraudulent pretenses, representations, or promises," the Supreme Court twice has held based on the history of the mail and wire fraud statutes and the meaning of the term "defraud" that those phrases are to be read together as defining a single offense. Cleveland v. United States, 531 U.S. 12, 25-26 (2000); McNally v. United States, 483 U.S. 350, 358-359 (1987). Thus, a "deprivation is a necessary but not a sufficient condition" of mail or wire fraud because "only a scheme to obtain money or other property from the victim by fraud violates" those statutes. United States v. Walters, 997 F.2d 1219, 1227 (7th Cir. 1993); see also Monterey Plaza Hotel Ltd. Pship v. Local 483 of Hotel Employees, Rest. Employees, 215 F.3d 923, 926-27 (9th Cir. 2000) ("The purpose of the mail and wire fraud proscriptions is to punish wrongful transfers of property from the victim to the wrongdoer"); United States v. Lew, 875 F.2d 219, 221 (9th Cir. 1989) ("after McNally the elements of mail fraud remain unchanged except that the intent of the scheme must be to obtain money or property, [and] the Court made it clear that the intent must be to obtain money or property from the one who is deceived" (emphasis added)); United States v. Baldinger, 838 F.2d 176, 180 (6th Cir. 1988) (Section 1341 "was intended by the Congress only to reach schemes that have as their goal the transfer of something of economic value to the defendant."); United States v. Alsugair, 256 F. Supp. 2d 306, 312 (D.N.J. 2003) ("[I]n addition to an allegation that a defendant deprived a victim of money or property, the mail-fraud statute, 18 U.S.C. 1341, requires an allegation that the defendant obtained money or property as well."). [For obvious reasons, this analysis does not apply to fraud charges that allege a scheme to deprive the victim of "honest services" under 18 U.S.C. 1346.]



Unless defense counsel watches carefully, the subtle shift from obtain to deprive can deprive a defendant of the right to have every element of the charged offense proved beyond a reasonable doubt, permitting the government to obtain a conviction on insufficient evidence in mail and wire fraud cases. Defense counsel should consider moving to dismiss charges that allege only a scheme to deprive, as opposed obtain, money and property under 18 U.S. C. 1341 and 1343. Further, counsel should submit instructions that properly define the offense as requiring an intent to obtain money and property in all mail and wire fraud cases. Finally, counsel should make and preserve objections to any jury instructions that suggest that an intent to deprive is sufficient for a mail or wire fraud conviction.