USA V Sidoo (Defense Motion To Dismiss)
USA V Sidoo (Defense Motion To Dismiss)
TABLE OF CONTENTS
Page
INTRODUCTION ...........................................................................................................................1
BACKGROUND .............................................................................................................................3
ARGUMENT ...................................................................................................................................4
CONCLUSION ..............................................................................................................................25
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TABLE OF AUTHORITIES
Page(s)
CASES
Commonwealth v. McCray,
242 A.2d 229 (Pa. 1968) ..........................................................................................................20
De Lima v. Sessions,
867 F.3d 260 (1st Cir. 2017) ................................................................................................3, 21
Gleason v. Thaw,
236 U.S. 558 (1915) .............................................................................................................3, 19
Kolender v. Lawson,
461 U.S. 352 (1983) .................................................................................................................25
Matter of Lombard,
739 F.2d 499 (10th Cir. 1984) .................................................................................................20
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Palmer v. Colladay,
18 App. D.C. 426 (D.C. Cir. 1901) ..........................................................................................13
State v. Dixon,
553 A.2d 1 (N.J. 1989).............................................................................................................20
State v. Eicher,
140 So. 498 (La. 1932) ............................................................................................................20
State v. Frusha,
91 So. 430 (La. 1922) ..............................................................................................................20
State v. Smith,
197 So. 429 (La. 1940) ............................................................................................................19
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In re Wright,
584 F.2d 83 (5th Cir. 1978) .....................................................................................................20
STATUTES
18 U.S.C.
§ 371...................................................................................................................................11, 21
§ 1029(e)(1) .............................................................................................................................22
§ 1341.........................................................................................................................4, 5, 21, 25
§ 1343.....................................................................................................................................4, 5
§ 1346.......................................................................................................................................21
3 Compiled Statutes of the United States tit. 70 ch. 5 §§ 5418, 5440 (John. A.
Mallory ed. 1902).....................................................................................................................11
Rev. Stat.
§ 5418...........................................................................................................................11, 12, 14
§ 5440...........................................................................................................................11, 12, 13
RULES
OTHER AUTHORITIES
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Paul Mogin, The Property-Rights Limitation in Mail and Wire Fraud Cases, 32-
APR Champion 24, 26-27 (2008) ............................................................................................10
Wayne R. LaFave, 3 Subst. Crim. L. § 19.7(e) (3d ed. Oct. 2019) ...............................................20
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INTRODUCTION
Federal criminal law is not an all-purpose tool for policing every form of unethical conduct.
Rather, it is reserved for only the most serious wrongs that Congress has clearly determined
warrant federal sanction. In recent years, prosecutors have repeatedly pushed the boundaries of
what counts as a federal criminal offense, across a variety of contexts. But the Supreme Court has
repeatedly pushed back, consistently enforcing a strict construction of penal statutes and not
This case presents the latest example of an overzealous prosecution for conduct that—even
if it occurred just as the Government alleges—does not violate the law. At its core, the
Government’s theory in Count One of the indictment is that Defendants made misrepresentations
to help their children obtain offers of admission to certain universities. That alleged misconduct
may be unethical and improper, but it does not violate the federal mail or wire fraud statutes.
Accepting the Government’s theory would massively expand criminal fraud liability beyond
The Supreme Court has repeatedly held that the mail and wire fraud statutes are limited to
schemes to obtain “money or property.” See, e.g., Cleveland v. United States, 531 U.S. 12, 19
(2000) (quoting McNally v. United States, 483 U.S. 350, 357 (1987)). It has further clarified that
the latter term encompasses only “traditional concepts of property,” as established by judicial
precedents, treatises, and the common law. Id. at 24 (emphasis added). Here, however, the only
1
See, e.g., Marinello v. United States, 138 S. Ct. 1101 (2018); McDonnell v. United States,
136 S. Ct. 2355 (2016); Yates v. United States, 574 U.S. 528 (2015); Sekhar v. United States, 570
U.S. 729 (2013); Bond v. United States, 572 U.S. 844 (2014); Skilling v. United States, 561 U.S.
358 (2010); Cleveland v. United States, 531 U.S. 12 (2000); McNally v. United States, 483 U.S.
350 (1987); see also Kelly v. United States, 139 S. Ct. 2777 (Mem.) (2019) (cert. granted June 28,
2019); United States v. Bonds, 784 F.3d 582 (9th Cir. 2015) (en banc).
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“property” allegedly at issue are offers of admission to universities. Such offers do not qualify as
First, the Government has presented no evidence that an offer of admission has ever been
considered a form of property. As best we can tell, its novel property theory has never been
advanced to—or accepted by—any court, anywhere, ever. Nor is there any other historical basis
for treating admission offers as property. The unprecedented nature of the Government’s theory
Second, to the extent the historical record addresses anything analogous to “admission
slots,” it shows that they do not count as property. In United States v. Plyler, 222 U.S. 15 (1911),
the Supreme Court recognized that telling lies in an application to gain admission to the federal
civil service does not deprive the government of “property.” That decision was handed down at
almost the exact same time Congress added the “money or property” limitation to the mail fraud
statute in 1909, and it reflects the contemporaneous understanding of what counts as “property.”
For present purposes, there is no relevant distinction between a fraudulently obtained “admission
slot” in the civil service or at a competitive college. Neither is “property” under the fraud statutes.
subsequent transaction in which the person making the misrepresentation pays full price for the
goods or services at issue. See, e.g., United States v. Sadler, 750 F.3d 585, 590-91 (6th Cir. 2014);
United States v. Takhalov, 827 F.3d 1307, 1313 (11th Cir. 2016). Here, even if the alleged
misrepresentations prompted offers of admission from the universities, Defendants ultimately paid
full tuition for their children. The universities received the benefit of that tuition in exchange for
Fourth, the educational services at issue here do not constitute a traditional form of
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property. At common law, services were generally not considered property. See, e.g., Gleason v.
Thaw, 236 U.S. 558, 561 (1915) (noting that the “meaning [of property] as employed in ordinary
speech and business” does not include “professional services”); De Lima v. Sessions, 867 F.3d
260, 266 (1st Cir. 2017). Indeed, the distinction between services and property is why common-
to prohibit the theft of professional services. To this day, multiple federal statutes—and the
Supreme Court’s decision in McNally—show that when Congress wants to criminalize deprivation
effort to deprive the college of “property” leads to absurd results that would massively expand
criminal liability beyond anything Congress intended. Under the Government’s theory, it is a
plagiarize a high-school term paper; overstate the emergency of a plumbing problem to secure an
celebration. None of those activities is praiseworthy, but no one (except maybe the Government)
thinks they violate federal criminal law. Numerous canons of statutory construction—including
those addressing absurdity, lenity, federalism, and constitutional avoidance—confirm that the
For all of these reasons, the Court should reject the Government’s novel theory and dismiss
Count One of the indictment to the extent it alleges that Defendants conspired to obtain “property”
BACKGROUND
Count One of the indictment charges Defendants with conspiracy to commit mail and wire
fraud. See Fourth Superseding Indictment ¶¶ 369-70, ECF No. 732 (“FSI”). The mail and wire
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fraud statutes prohibit knowingly using the mail or wires to obtain “money or property” by
fraudulent means. See 18 U.S.C. §§ 1341, 1343. According to the Government, Defendants
violated those statutes by submitting untruthful applications for their children to various
universities and by bribing certain university officials. See FSI ¶¶ 369-70; see generally id. ¶¶ 1-
278.
The Government alleges this conduct violates the mail and wire fraud statutes in two ways.
First, it contends that Defendants fraudulently obtained “property” in the form of “admission to
the Universities.” Id. ¶ 370(a), (b). The Government considers a university’s “admission slots”—
i.e., offers of admission made to prospective students—to constitute the university’s property.2
Second, the Government claims that Defendants fraudulently deprived universities of the “honest
services” of their employees. See id. ¶¶ 369-70. Although both of these theories are legally and
ARGUMENT
Count One of the Fourth Superseding Indictment is defective because it fails to allege a
deprivation of “property” as required by the mail and wire fraud statutes. 18 U.S.C. §§ 1341, 1343.
It thus “fail[s] to state an offense” and should be dismissed as a matter of law. Fed. R. Crim. P.
12(b)(3)(B)(v). For purposes of this motion only, the Court takes the facts alleged in the indictment
as true. See United States v. Ngige, 780 F.3d 497, 502 (1st Cir. 2015).
2
See, e.g., Waiver of Indictment & Plea to Information Hr’g Tr. 25, United States v.
Isackson, No. 19-cr-10115 (D. Mass. May 1, 2019), ECF No. 325 (Government: “In this case, we
would consider the property to be . . . the admission slots that they have a right to control and use
how they see fit.”); id. at 26 (Court: “So your view is, in any event, that the admissions slot is the
property you’re talking about?” Government: “Yes, your Honor.”); Gov’t’s Resp. to Ct.’s Mar.
14, 2019 Or. at 3, United States v. Meredith, No. 19-cr-10075, (D. Mass. Mar. 15, 2019), ECF No.
18 (“Here, the term ‘property’ refers to a place in the incoming class at Yale University, and Yale’s
right to control the composition of that class.”).
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The mail and wire fraud statutes prohibit knowingly using mail or wire communication to
carry out “any scheme or artifice to defraud” in order to “obtain[] money or property by means of
added). Congress first enacted the mail fraud statute in 1872, and it added the express “money or
property” limitation in 1909. See 3 Act of June 8, 1872, ch. 335, § 302, 17 Stat. 323; Act of Mar.
4, 1909, ch. 321, § 215, 35 Stat. 1130. The wire fraud statute was enacted in 1952, and because it
was “patterned on the mail fraud law,” courts interpret both statutes the same way. United States
v. Fermin Castillo, 829 F.2d 1194, 1198 (1st Cir. 1987); see United States v. Berroa, 856 F.3d
Since 1987, the Supreme Court has issued a series of rulings defining the statutes’ property
limitation. As the Court has explained, that limitation must be strictly enforced to avoid
overcriminalization and to take account of federalism and due process concerns. Those rulings
have emphasized that the scope of the fraud statutes is limited to traditional forms of property.
First, in McNally v. United States, 483 U.S. 350, 360 (1987), the Supreme Court held that
the mail fraud statute is “limited in scope to the protection of property rights.” As it later explained,
“[a]t the time McNally was decided, federal prosecutors had been using § 1341 to attack various
forms of corruption that deprived victims of ‘intangible rights’ unrelated to money or property,”
such as the intangible right to honest government services. Cleveland, 531 U.S. at 18. McNally
“stopped the development of the intangible-rights doctrine in its tracks.” Skilling v. United States,
561 U.S. 358, 401 (2010). It held that the right to intangible services—namely, the honest services
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Shortly thereafter, the Supreme Court in Carpenter v. United States, 484 U.S. 19, 26 (1987)
once again emphasized that the mail and wire fraud statutes are limited to the protection of property
rights. Carpenter went on to explain, moreover, that the property right at stake must be one that
has “long been recognized as property.” Id. at 26 (emphasis added). There, the property in
question was the confidential business information of a newspaper. To assess whether such
information constituted “property” under the statutes, the Court relied on historical cases, statutes,
and legal treatises establishing that confidential business information is a traditional concept of
property. See id. That historical pedigree separated confidential business information from the
“ethereal” right to “honest and faithful service,” which had been at issue in McNally. Id. at 25.
Then, in Cleveland v. United States, the Supreme Court again reiterated that the fraud
statutes must not “stray from traditional concepts of property.” 531 U.S. at 24. There, the
Government had argued that a state’s unissued video poker licenses constituted “property” because
they were economically valuable and because, like a patent, they involved the “right to exclude.”
Id. at 21-23. The Court did not dispute that such issued licenses were valuable or that unissued
licenses involved the right to exclude. But it nonetheless rejected the Government’s theory as a
departure from “traditional concepts of property.” Id. at 24. The Court explained that the State’s
interest in the licenses was principally “regulatory,” and it dismissed the economic value of
unissued licenses because “the State receives the lion’s share of its expected revenue not while the
licenses remain in its own hands, but only after they have been issued to licensees.” Id. at 22.
3
After McNally, the First Circuit criticized other courts for “stretch[ing] to find more
ingenious theories of property loss which purportedly satisfy McNally,” and it refused to “let in
through the back door the very prosecution theory that the Supreme Court tossed out the front.”
United States v. Ochs, 842 F.2d 515, 523, 527 (1st Cir. 1988).
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Cleveland thus makes clear that stringing together various proprietary features—like
economic value and the right to exclude—cannot transform novel conceptions of property into
traditional forms of property cognizable under the fraud statutes. And to resolve whether a
traditional form of property is at stake, courts must turn to historical sources to determine if the
purported property has long been recognized as property at common law. In the decades since
Cleveland, the Supreme Court and courts of appeals have continued to apply that historical analysis
For at least four reasons, an “admission slot” is not a traditional form of property cognizable
under the mail and wire fraud statutes. First, the relevant historical record is bereft of any
affirmative evidence that an admission slot has ever been considered property. Second, to the
extent the historical record addresses anything analogous to admission slots, it shows that lying on
an application was not considered a deprivation of property. Third, fraudulent statements made to
induce a subsequent transaction in which the fraudster then pays full price is not fraud to obtain
property. And fourth, the universities here provided Defendants’ children with educational
services—but services were not classified as property under the common law.
4
See, e.g., Pasquantino v. United States, 544 U.S. 349, 356 (2005) (conducting historical
analysis into common law sources); United States v. Berroa, 856 F.3d 141, 149 (1st Cir. 2017)
(discussing Cleveland’s application of “traditional concepts of property”); United States v. Henry,
29 F.3d 112, 115 (3d Cir. 1994) (“[T]o determine whether a particular interest is property for
purposes of the fraud statutes, we look to whether the law traditionally has recognized and enforced
it as a property right.”); United States v. Baldinger, 838 F.2d 176, 179 (6th Cir. 1988) (“[W]hile
the Supreme Court recognized both tangible and intangible property interests, they nonetheless
clearly intended to exclude from the reach of the mail fraud statute claims which did not involve a
direct intention to deprive another of a recognized and traditional property right.”).
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The Government asserts only one form of property that Defendants allegedly obtained by
fraud: “admission to the Universit[y].” FSI ¶ 370(a), (b). But under the Supreme Court’s historical
The Government has not yet identified a single historical source that suggests an admission
slot has “long been recognized” as property, as required by Carpenter and Cleveland. See, e.g.,
Gov’t’s Mem. in Opp’n to Defs.’ Mots. to Dismiss at 41-43, United States v. Ernst, No. 19-10081,
(D. Mass. Jan. 17, 2020), ECF No. 367 (“Gov’t Ernst Opposition”). Nor do Defendants know of
any such source. The treatises relied on by the Supreme Court in Pasquantino, for instance,
contain extensive discussions of property rights, but include nothing akin to an admission slot. See
544 U.S. at 356 (citing 3 W. Blackstone, Commentaries on the Laws of England 153-55 (1768); 2
J. Kent, Commentaries on American Law *351). That is unsurprising, because an admission slot
is intangible, and there were relatively few well-recognized forms of intangible property at
common law. That is why the volume of Blackstone’s Commentaries addressing “The Rights of
Things” is devoted almost entirely to real property and personal property in the form of chattels,
and recognizes few forms of intangible property—none of which are remotely analogous to college
hereditaments,” which are “advowsons, tithes, commons, ways, offices, dignities, franchises,
prevailing when Congress added the property element to the fraud statute. See, e.g., Property,
Black’s Law Dictionary 955 (2d ed. 1910) (defining property as “[r]ightful dominion over external
objects; ownership; the unrestricted and exclusive right to a thing” and “the highest right a man
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can have to anything; being used for that right which one has to lands or tenements, goods or
chattels, which noway depends on another man’s courtesy”). To be sure, the common law
recognized some intangible personal property, such as stocks and intellectual property. See id. at
956. But an admission slot has little in common with such property. Unlike stocks or intellectual
property—but like the unissued video poker licenses in Cleveland—admission slots lack intrinsic
value “in the hands of the victim.” 531 U.S. at 15. No one thinks that a university somehow
becomes richer simply by extending more admissions offers—nor poorer when it admits full-
Because admission slots have no inherent economic value to universities, sentencing courts
in this case have rightly concluded that the alleged scheme did not inflict “pecuniary harm” on
them for purposes of the Sentencing Guidelines.5 By definition, that means whatever harm was
suffered was “non-economic” and therefore a property interest was not at stake. See generally
U.S.S.G. § 2B1.1 cmt. n.3(A)(iii) (defining “pecuniary harm” as “harm that is monetary or that
otherwise is readily measurable in money,” and stating that “[a]ccordingly, pecuniary harm does
In its briefing thus far, the Government has rested its property theory on the Sixth Circuit’s
decision in United States v. Frost, 125 F.3d 346 (6th Cir. 1997). See Gov’t Ernst Opposition at
41-43. There, the court reviewed the mail and wire fraud convictions of five defendants who were
professors or graduate students at the University of Tennessee Space Institute. 125 F.3d at 352.
According to the Government, the defendants had operated a scheme in which the professors
5
See Sentencing Hr’g Tr. 5-7, United States v. MacFarlane, No. 19-cr-10131 (D. Mass.
Nov. 13, 2019), ECF No. 340 (Gorton, J.); Mem. & Or. at 4-6, United States v. Abbott, No. 19-cr-
10117 (D. Mass. Sept. 13, 2019), ECF No. 443; Sentencing Hr’g Tr. 21, 32, United States v.
Vandemoer, No. 19-cr-10079 (D. Mass. June 12, 2019), ECF No. 26; Sentencing Hr’g Tr. 56-57,
61-63, United States v. Bizzack, No. 19-cr-10222 (D. Mass. Oct. 30, 2019), ECF No. 34.
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traded academic degrees for help securing lucrative federal grants by the graduate students who
had military connections. Id. at 353-54. The defendants were charged with depriving the federal
government of property in the form of contracts and tuition money, id. at 353-63, and depriving
Frost does not come close to establishing that admission slots are “traditional” forms of
property. Most significantly, Frost discussed a property interest with respect to unissued
university. Id. at 367. In reaching its conclusion, the court relied on Sixth Circuit cases that “have
recognized that a degree is a property interest of the graduate” for constitutional due process
purposes. Id. (emphasis added). The court’s brief analysis held that unissued degrees can count
as property when awarded to “inept students” or those who “have not earned” those degrees,
insofar as such awards can harm the university’s reputation and impair its fundraising and
recruitment of tuition-paying students. Id. But such considerations are not sufficient to qualify
analysis of any relevant history or tradition at all. Moreover, the mere potential for spillover
economic consequences does not transform unissued degrees (or admission slots) into property.
If it did, then a deprivation of “honest services”—which can likewise devalue an institution’s brand
in the marketplace—would necessarily count as property too. And Frost’s reliance on cases
applying broad and evolving concepts of “property” for purposes of constitutional due process has
Cleveland, 531 U.S. at 24 (emphasis added); see generally Paul Mogin, The Property-Rights
Limitation in Mail and Wire Fraud Cases, 32-APR Champion 24, 26-27 (2008) (explaining that
“new property” theories recognized under Due Process Clause are not cognizable under mail and
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wire fraud statutes). If Frost is the Government’s best evidence that an admission slot is a
The Court need go no further than this. Because the alleged property at issue here—
university admission slots—is not a “traditional” form of property, the Court should dismiss Count
To the extent the historical record addresses anything akin to “admission slots,” it suggests
that they are not traditional forms of property. Indeed, the Supreme Court’s decision in Plyler
makes clear that a fraudulent application submitted to obtain a slot in the federal civil service does
Plyler arose from a line of early-twentieth century cases addressing several new specialized
fraud statutes that Congress enacted to protect the government: Revised Statute § 5418, which
prohibited “forg[ing]” documents “for the purpose of defrauding the United States,” and Revised
Statute § 5440, which prohibited “conspir[ing] . . . to defraud the United States in any manner or
for any purpose” (3 Compiled Statutes of the United States tit. 70 ch. 5 §§ 5418, 5440 (John. A.
Mallory ed. 1902) (predecessor to what is now 18 U.S.C. § 371)). Unlike prior statutes prohibiting
fraud more generally, these government-focused statutes were broadly worded and not expressly
limited to frauds depriving victims of money or property. At the time, the question arose whether
6
Frost is inapposite for other reasons as well. Its analysis of unissued degrees relied on
pre-Cleveland case law about unissued government licenses, and its conclusion was thus
uninformed by the Supreme Court’s subsequent explanation that the property must have value “in
the hands of the victim.” 531 U.S. at 15. Its property discussion also related to an honest-services
fraud conviction, not a fraud conviction for depriving the victim of property. 125 F.3d at 363-65.
And the Sixth Circuit’s case law required a lesser showing to find “property” for purposes of honest
services fraud. Id. at 368-69. Indeed, it is notable that in Frost the Government did not even try
to argue that the unissued degrees qualified as property for purposes of money-or-property fraud.
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the traditional fraud statutes. See Abraham S. Goldstein, Conspiracy to Defraud the United States,
68 Yale L.J. 405, 417-30 (1959); Joshua A. Kobrin, Betraying Honest Services: Theories of Trust
and Betrayal Applied to the Mail Fraud Statute and § 1346, 61 N.Y.U. Ann. Surv. Am. L. 779,
This open question mattered only when the fraud did not deprive the government of
property. Otherwise the crime would fall comfortably within traditional fraud and the issue would
not arise. Thus, test cases emerged in a variety of situations where fraudulent schemes were not
directed at obtaining property. See, e.g., United States v. Barnow, 239 U.S. 74 (1915)
(impersonating a federal officer); McGregor v. United States, 134 F. 187, 195 (4th Cir. 1904)
One such situation that arose many times involved fraudulent applications submitted to the
Civil Service Commission to obtain positions in the federal civil service. Various applicants
provided inaccurate information on their applications and were charged with forgery and
conspiring to defraud the United States under Revised Statutes §§ 5418 and 5440. See Tyner v.
United States, 23 App. D.C. 324, 350-51 (D.C. Cir. 1904) (appellant collecting decisions
addressing application of the revised fraud statutes to forged civil service applications).
The only reason these civil service cases raised the open statutory question under Revised
Statutes §§ 5418 and 5440 was because the underlying conduct—falsifying an application to
obtain a slot in the civil service—was generally understood not to involve a deprivation of
government “property.” As one court put it when applying the new, government-focused fraud
statutes to falsified applications: “When this case first came before me, I was under the impression
that the defendants were indicted under the old law [containing a money-or-property requirement]
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. . . and as it was not shown that either of them had defrauded the government of money or other
property, I was in doubt whether the statute covered the charge.” United States v. Bunting, 82 F.
883, 884 (E.D. Pa. 1897) (emphasis added). But once the court reviewed “the Revised Statutes
under which the defendants [we]re charged”—which were “broad and sweeping” and did not
include a property limitation—the court was “of opinion that the offense comes within their terms.”
Id. In short, if the relevant statutes had required a deprivation of property, lying on a civil service
Other courts reached the same conclusion. In Tyner v. United States, 23 App. D.C. 324,
361-63 (D.C. Cir. 1904), for instance, another court considered whether fraudulent applications to
the Civil Service Commission did not fall under the revised fraud statutes because they caused no
“pecuniary injury.” Once again, the court concluded that such fraud was not a property
deprivation, but nonetheless fell within the scope of the new government-focused statutes that did
Id. at 362-63 (emphasis added); see also Palmer v. Colladay, 18 App. D.C. 426, 433-34 (D.C. Cir.
1901) (stating that Rev. Stat. § 5440 applies to forgery on Civil Service applications despite fact
that such fraud does not deprive the government of “money” or “money value”).
As Bunting, Tyner, and other cases show, the traditional understanding was that falsifying
an application for a slot in the federal civil service did not implicate property. The only question,
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then, was whether such conduct was actionable under the new government-focused fraud statutes
because those statutes covered additional harms to the government, above and beyond the money-
When that question reached the Supreme Court in Plyler, Justice Holmes made quick work
of it. There, the Court addressed the recurring issue of defendants who had forged the “vouchers
required upon examination by the Civil Service Commission of the United States, certifying to the
character, physical capacity, etc., of the applicant.” 222 U.S. at 16. The district court had
dismissed an indictment brought against a North Carolina man who had submitted forged
documents in support of his application to serve as a rural letter carrier in the federal civil service.
The Supreme Court reversed, explaining that the forgery violated Section 5418 even though the
slot in the civil service did not constitute a property interest. As the Court explained, “[i]t now
must be regarded as established that it is not essential to charge or prove an actual financial or
property loss to make a case under [Rev. Stat. § 5418]. The section covers this case.” Id. (internal
quotation marks omitted). Plyler thus accepted the general premise that falsifying an application
for a civil service position did not constitute a property deprivation, and concluded that the
government-focused fraud statute reached the conduct nonetheless because—unlike the more
Plyler and the cases leading up to it are highly instructive. Those cases were decided during
the same period that the “money or property” limitation was added to the mail fraud statute, see
Act of Mar. 4, 1909, ch. 321, § 215, 35 Stat. 1130, and they reflect the general consensus that
falsifying an application to obtain a slot in the civil service does not implicate the government’s
property interests. That proposition was so uncontroversial that courts often accepted it as true
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Here, the Government alleges that Defendants deprived the universities of property by
slot,” like an admission slot to the federal civil service, is neither a “traditional” nor “long . . .
recognized” form of property. Cleveland, 531 U.S. at 24; Carpenter, 484 U.S. at 26. Indeed, at
the time the property element was added to the mail fraud statute, that theory was too farfetched
The Government’s novel theory also fails because a university “admission slot” is not
property, but rather an offer to attend the university and receive educational services in exchange
for tuition payments. And both the common law and the courts of appeals today agree that fraud
related to an offer does not constitute a property deprivation if the subsequent transaction is
consummated and the fraudster pays full price. That is just what occurred here, where Defendants
admission may be valuable to the recipient and may involve a university’s right to exclude, those
characteristics cannot overcome the complete absence of historical evidence that offers have been
traditionally considered property. As best we can tell, no legal or general dictionary or treatise
supports the assertion that an “offer” to engage in subsequent transaction counts as a form of
property. See supra at 8-9 (citing historical sources); Property, Wharton’s Law Lexicon 689-90
(11th ed. 1911); Property, IV Oxford English Dictionary 1471 (1st ed. Suppl. 1933).7
7
Defining property as: “1. The condition of being owned by or belonging to some person
or persons; hence, the fact of owning a thing; the holding of something as one’s own; the right
(esp. the exclusive right) to the possession, use, or disposal of anything (usually of a tangible
material thing); ownership, proprietorship. 2. That which one owns; a thing or things belonging to
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In all of its various filings and hearings related to this alleged conspiracy, the Government
has yet to identify a single source that supports its offer-as-property theory. The reason for that is
plain. An offer is not property, but rather an invitation to engage in a future transaction in which
offer of admission was not property but rather an invitation to engage in a future transaction in
which the university would provide services (an education) in exchange for money (tuition
payments). Moreover, the Government does not allege that Defendants defrauded the universities
in that subsequent education-for-tuition transaction. Nor could it. Defendants paid full price for
educational services, and the universities suffered no pecuniary harm. See supra at 9 & n.5.
Second, the Government’s offer-as-property theory has been roundly rejected by the
Supreme Court and federal courts of appeals. In Skilling, for example, the Supreme Court
confirmed that a victim is not defrauded of property when tricked into entering a subsequent
transaction that is itself consummated on standard terms. There, the Court made clear that a city
government would not be defrauded of property if its mayor “accepted a bribe from a third party
in exchange for awarding that party a city contract, yet the contract terms were the same as any
that could have been negotiated at arm’s length.” 561 U.S. at 400. The Court explained that the
bribe would constitute honest services fraud—but not money-or-property fraud—even though the
fraudulent scheme resulted in the city giving up money in exchange for performance of the
contract. Id. In those circumstances, because the contract terms were the same as would have
been negotiated “at arm’s length,” the city “would suffer no tangible [property] loss.” Id.
The courts of appeals, meanwhile, have consistently reversed mail and wire fraud
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convictions where the defendant’s fraud merely induced an offer but the subsequent transaction
was consummated at full price. For example, in United States v. Sadler, 750 F.3d 585 (6th Cir.
2014), the defendant owned a pain-management clinic and lied to pharmaceutical distributors in
order to qualify to purchase certain prescription drugs. Id. at 589. She submitted false credentials
by “using the clinic doctor’s DEA registration,” and she “falsely [told] the distributors that the
drugs were being used to serve ‘indigent’ patients.” Id. at 589-90. Once she qualified, however,
she bought the drugs from the distributors at full price. Id. at 590. The Government brought wire
fraud charges against the defendant because she had fraudulently induced the distributors to sell
her the drugs—i.e., she had procured their offer to do business by fraud.
In an opinion by Judge Sutton, the Sixth Circuit reversed the defendant’s wire fraud
conviction because “the government never showed that [the defendant] intended to deprive anyone
of property.” Id. The evidence showed that she had “paid full price for all the drugs she
purchased.” So, the Court asked, how did she “deprive the distributors of property?” Id. The
Government’s first response was that the defendant had fraudulently obtained the drugs, but the
court rejected that argument out of hand: “[The Defendant] may have had many unflattering
motives in mind in buying the pills, but unfairly depriving the distributors of property was not one
of them. . . . she ordered pills and paid the distributors’ asking price, nothing more.” Id. Next, the
Government argued that the defendant deprived the distributors of their “right to accurate
information” because the distributors would not have offered to do business with her had they
known the truth. The court flatly rejected this argument because the “statute is ‘limited in scope
to the protection of property rights,’ and the ethereal right to accurate information doesn’t fit that
description.” Id. at 591 (quoting McNally, 483 U.S. at 360). In sum, even though the defendant
had lied to the distributors, that lie did not defraud the distributors of “property” because the
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The Eleventh Circuit reached a similar conclusion in United States v. Takhalov, 827 F.3d
1307 (11th Cir. 2016) (Thapar, J., sitting by designation). There, the court held that defendants
who owned a nightclub did not fraudulently obtain property from their customers when they had
female employees pretend to be tourists to induce customers to patronize the club. Id. at 1310,
1318, 1325. The court explained its reasoning with the following analogy:
Consider the following two scenarios. In the first, a man wants to exchange a dollar
into four quarters without going to the bank. He calls his neighbor on his cell phone
and says that his child is very ill. His neighbor runs over, and when she arrives he
asks her to make change for him. She agrees; the quarters pass to the man; the
dollar passes to the woman; and they part ways. She later learns that the child was
just fine all along. The second scenario is identical to the first, except that instead
of giving the woman a true dollar, he gives her a counterfeit one. . . . The first
scenario is not wire fraud; the second one is.
Id. at 1313. Applying that reasoning to the case at hand, the Court noted, “if someone is lured to
a bar under false pretenses but nevertheless gets precisely what he pays for, he has hardly been
deceive[d] or cheat[ed] out of money or property.” Id. at 1318 (alterations in original) (citation
omitted). The matter would have been different, however, if the future transaction had been
fraudulent, for example by “running up fake bills on the victims’ credit cards and charging absurd
As with the defendants in Sadler and Takhalov, the Government alleges that Defendants
here made misrepresentations to induce an offer. The Government claims they gave inaccurate
information to the universities, and absent that inaccurate information, the universities would not
have extended them an offer. But just like in Sadler and Takhalov, the Government has not alleged
that the subsequent transaction (here, educational services for tuition payments) was itself
fraudulent. Thus, the Government has failed to allege a deprivation of property sufficient to state
an offense under the mail and wire fraud statutes. In sum, the Government’s offer-as-property
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theory lacks historical support as a traditional concept of property, and it lacks contemporary
support in the courts of appeals. This Court should reject the theory as well.
Even if the Government could bypass the fact that “admission slots” are offers, it has still
failed to identify a traditional form of property. That is because universities do not exchange
property for tuition payments, they exchange educational services for those payments. See FSI
¶ 29 (stating that the universities “charge tuition for their services” (emphases added)). And
services are treated as distinct from property both at common law and in the courts today.
Moreover, numerous statutes show that Congress knows how to include “services” when it wants
First, the Government has provided no historical evidence that services are traditionally
considered a form of property. Neither Blackstone nor Kent nor Black define property to include
services. And Black’s definition of “service” does not suggest it is property. See Service, Black’s
Law Dictionary 1076 (2d ed. 1910) (“The being employed to serve another; duty or labor to be
rendered by one person to another.”). Indeed, courts and treatises have typically distinguished
Most notably, in Gleason v. Thaw, 236 U.S. 558, 561 (1915), the Supreme Court held that
“professional services” did not qualify as “property” under a bankruptcy statute that exempted
from general discharge any property obtained by false pretenses. While the Court’s interpretation
of “property” was specific to the bankruptcy statute, it was premised on “the word’s meaning as
employed in ordinary speech and business.” Id. The Court also noted that the “constitutions of
many States provide that all property shall be taxed, but it has never been supposed that this applies
to professional services.” Id.; see also State v. Smith, 197 So. 429, 431 (La. 1940) (noting that
“labor” or “personal services” are not “worldly goods or possessions, or tangible things” and thus
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“clearly do not fall within the ordinary meaning of the word ‘property’” (citing State v. Eicher,
140 So. 498 (La. 1932); State v. Frusha, 91 So. 430 (La. 1922)).8
The development of statutes criminalizing “theft of services” also puts in sharp relief the
longstanding distinction between property and services. At common law, the crime of false
pretenses “covered only ‘money, goods, wares or merchandise,’ and thus was limited to tangible
personal property and money.” Wayne R. LaFave, 3 Subst. Crim. L. § 19.7(e) (3d ed. Oct. 2019).
Because that traditional understanding of property did not include “services,” fraudulently
obtaining services was not covered by false pretenses statutes. To account for that gap, many
states enacted “theft of services” statutes to criminalize such misconduct even when its object
(services) extended beyond traditional notions of property. See id.; State v. Dixon, 553 A.2d 1, 2
(N.J. 1989) (explaining that theft of services statute arose because “[u]nder prior false-pretenses-
criminality statutes and case law, the object of the crime was limited to theft of property,” which
did not include “services”); Commonwealth v. McCray, 242 A.2d 229, 230 (Pa. 1968) (similar).
The Model Penal Code notes the same development in its commentary on theft of services:
“Though arguably viewed as a species of ‘property,’ labor or professional service has not been
included within the traditional scope of that term in ordinary theft statutes. Theft of services thus
was not ordinarily a criminal offense in the absence of special legislation.” Model Penal Code
§ 223.7, cmt. 1. As this history illustrates, although services have long been considered valuable,
Second, courts today still refuse to conflate property and services. As one court bluntly put
8
See also Matter of Lombard, 739 F.2d 499, 504 (10th Cir. 1984) (applying Gleason to
conclude that architectural services are not property); In re Wright, 584 F.2d 83, 84 (5th Cir. 1978)
(applying Gleason to conclude that “[p]rofessional services of all kinds, including legal services,
are excluded from the definition of ‘property’ as it pertains to the Bankruptcy Act”); Hisey v.
Lewis-Gale Hosp., 27 F. Supp. 20, 23 (W.D. Va. 1939) (applying Gleason to medical services).
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it when the Government advanced this theory in a mail fraud prosecution: “Quite simply, there is
no authority to support the proposition that services are a traditional property interest. Generally,
services are not a traditional property interest . . . .” United States v. Alsugair, 256 F. Supp. 2d
306, 314 (D.N.J. 2003) (emphasis added). The First Circuit has agreed, emphatically stating that
“[i]t is true . . . that the traditional common-law definition of theft was limited to property, and that
services were not considered property in many common-law jurisdictions.” De Lima v. Sessions,
867 F.3d 260, 266 (1st Cir. 2017); see also, e.g., United States v. Corona-Sanchez, 291 F.3d 1201,
1208 (9th Cir. 2002) (noting that theft of services is “generally [not] included within the scope of
ordinary theft statutes because one’s labor is not one’s ‘property’”), superseded by statute on other
grounds as recognized in United States v. Vidal, 426 F.3d 1011 (9th Cir. 2005).
Moreover, the Supreme Court in McNally has already held that the fraud statutes are limited
to “property rights,” 483 U.S. at 360, and that the right to services—namely, the honest services
of government officials or fiduciaries—is not a traditional property right. See Skilling, 561 U.S.
at 401-02. After McNally, Congress knew that services were not covered by the property element,
yet “Congress amended the law to cover [only] one of the ‘intangible rights’ that lower courts had
protected under § 1341 prior to McNally.” Cleveland, 531 U.S. at 19-20; see 18 U.S.C. § 1346
(extending fraud statutes to include “a scheme or artifice to deprive another of the intangible right
of honest services”). The Government has not explained how, after McNally and Congress’s
response, the property element could extend beyond honest services to educational services.
Third, Congress undoubtedly knows how to legislate beyond traditional property interests
when it so chooses. In other statutes, Congress has done just that. For example, 18 U.S.C. § 371
criminalizes any conspiracy “to defraud the United States . . . in any manner or for any purpose.”
(emphases added). There, Congress limited the scope of the statute by specifying the victim (the
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United States), but expressly disavowed any limitation based on the object of the fraud (“in any
manner or for any purpose”). Thus, as the First Circuit has noted, the statute is not limited to
frauds that “deprive the government of money or property, but includes conspiracy to interfere
with government functions.” United States v. Goldberg, 105 F.3d 770, 773 (1st Cir. 1997). It also
Congress has not only defined the object of certain fraud statutes in broad terms, it has also
expressly identified “services” as the object of other frauds. For example, courts continued to
faithfully apply the Supreme Court’s holding in Gleason, see supra at 20 n.8, until Congress
amended the bankruptcy statute to expressly cover “services” alongside “property,” see
Bankruptcy Act, Pub. L. 95-598, 92 Stat. 2549 (1978) (codified at 11 U.S.C. § 523(a)(2)(A)
(providing an exception to discharge for “money, property, [or] services” obtained by “actual
fraud” (emphasis added)); see also Access Device or Credit Card Fraud, 18 U.S.C. § 1029(e)(1)
(“The term ‘access device’ means any card . . . or other means of account access that can be used
. . . to obtain money, goods, services or any other thing of value.” (emphasis added)).
Congress chose to limit the mail and wire fraud statutes to deprivations of “property.” It
did not include a broader prohibition relating to fraud “in any manner” and it did not specifically
include “services,” as it has done elsewhere. Even after McNally narrowly interpreted the money-
or-property requirement, Congress did not respond by extending the statute to cover “anything of
value” or all forms of service. Instead, it carefully chose a limited amendment that would include
only deprivations of “honest services.” As Judge Sutton put it, “Congress’s reverberating silence
about other intangible interests tells us all we need to know.” Sadler, 750 F.3d at 591.
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The Supreme Court has repeatedly warned against overly broad interpretations of the fraud
statutes. See, e.g., McNally, 483 U.S. at 356-61; Skilling, 561 U.S. at 415-25 (Scalia, J., concurring
in part and concurring in the judgment). And rightly so. Open-ended criminal statutes “cast a pall
of potential prosecution” over every day conduct and raise significant constitutional concerns.
McDonnell v. United States, 136 S. Ct. 2355, 2372 (2016). For that reason, the Court’s
interpretation of the mail and wire fraud statutes has rigorously invoked principles of constitutional
avoidance, federalism, and lenity to impose sensible limits on their scope. See, e.g., Skilling, 561
U.S. at 410-11; Cleveland, 531 U.S. at 25; McNally, 483 U.S. at 359-60. Those considerations
weigh strongly against the Government’s novel and expansive property theory here.
In Cleveland, the Supreme Court rejected “the Government’s theories of property rights
not simply because they stray from traditional concepts of property,” but also because they would
effect “a sweeping expansion of federal criminal jurisdiction” into “a wide range of conduct
traditionally regulated by state and local authorities.” 531 U.S. at 24. Here, the Government’s
property arguments share the same problem. The Government’s approach would criminalize a
wide range of conduct that—even though unethical—no one thinks should constitute a federal
For starters, any misrepresentation in a college application would place the applicant at the
mercy of federal prosecutors. The same goes for any exaggeration or fib in any other kind of
employer, a civic organization, or any other entity accepting applications for limited membership
or participation slots. It also presumably criminalizes any act of cheating or plagiarism that helps
a high-school or college student earn a diploma or get accepted into a school, program, or club.
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The Government’s theory also means that every misrepresentation made to promote a
subsequent transaction to induce a sales offer will be a federal felony—regardless of the fairness
of the subsequent transaction—so long as the jurisdictional elements are met. For example, the
• The parent who convinces a local math teacher to tutor his son by claiming that his son’s
math struggles were due to illness, when they were really due to lack of effort;
• The man who persuades his barber to offer an earlier haircut appointment by claiming he
has a last-minute business trip, when really the trip has been scheduled for weeks; and
• The parent who persuades a toy store to reserve one of its fast-selling toy trucks by claiming
that he had promised his son the truck for Christmas, when really the gift is a surprise.
Congress intended none of this. Telling a lie is dishonorable and wrong, but it does not violate the
mail and wire fraud statutes and turn the dissembler into a federal criminal. The fraud statutes do
not criminalize all bad behavior or even all fraud; rather, they prohibit fraudulent schemes with
Because of its breadth, the Government’s expansive property theory would cloud the
boundary between lawful and criminal conduct, thereby bestowing vast, unchecked discretion on
prosecutors and opening the door to arbitrary and discriminatory enforcement of the law. This is
precisely the threat the Supreme Court has warned against. See McDonnell, 136 S. Ct. at 2372-73
(“[W]e cannot construe a criminal statute on the assumption that the Government will ‘use it
responsibly.’” (citation omitted)). Based on these same considerations, the First Circuit has
recently rejected one of the Government’s property theories under which “virtually any false
statement in an application for a medical license could constitute a federal crime.” Berroa, 856
F.3d at 150; see also United States v. Czubinski, 106 F.3d 1069, 1079 (1st Cir. 1997) (warning that
the “broad language” of the fraud statutes should not “be used to prosecute kinds of behavior that,
albeit offensive to the morals or aesthetics of federal prosecutors, cannot reasonably be expected
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narrow construction that leaves everyday human conduct outside the scope of liability. The rule
of lenity “requires ambiguous criminal laws to be interpreted in favor of the defendants subjected
to them.” Berroa, 856 F.3d, at 157 n.8 (citation omitted). The Supreme Court has repeatedly
invoked that rule to explain its rejection of the Government’s ever-innovative property theories
under the fraud statutes. See, e.g., Skilling, 561 U.S. at 410-411; Cleveland, 531 U.S. at 25 (stating
that the rule of lenity is “especially appropriate in construing § 1341”). As the Court emphasized
in McNally, “when there are two rational readings of a criminal statute, one harsher than the other,
we are to choose the harsher only when Congress has spoken in clear and definite language.” 483
U.S. at 359-60. Here, it is entirely rational to conclude that an “admission slot” is not property.
definition that it raises serious vagueness concerns. To satisfy due process, “a penal statute [must]
define the criminal offense [1] with sufficient definiteness that ordinary people can understand
what conduct is prohibited and [2] in a manner that does not encourage arbitrary and discriminatory
enforcement.” Kolender v. Lawson, 461 U.S. 352, 357 (1983). The Government’s theory flunks
that test. As noted, the Government’s arguments would transform everyday conduct into potential
federal felonies. In these circumstances, the Supreme Court has “instructed the federal courts to
possible.” Skilling, 561 U.S. at 406 (alteration and citation omitted). Here, such a limiting
interpretation is not only possible but also the soundest reading of the statute.
CONCLUSION
For the foregoing reasons, this Court should dismiss Count One of the indictment insofar
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George W. Vien (BBO #547411) David C. Scheper (admitted pro hac vice)
Joshua N. Ruby (BBO #679113) SCHEPER KIM & HARRIS LLP
DONNELLY, CONROY & GELHAAR, 601 West Fifth Street
LLP 12th Floor
260 Franklin Street Los Angeles, CA 90071
Suite 1600 Phone: 213.613.4655
Boston, MA 02110 Fax: 213.613.4656
Phone: 617.720.2880 [email protected]
Fax: 617.720.3554
[email protected] Counsel for Lori Loughlin
[email protected]
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Counsel for Gamal Abdelaziz Counsel for Diane Blake and Todd Blake
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CERTIFICATE OF SERVICE
I certify that the foregoing document, which was filed with the Court through the CM/ECF
system, will be sent electronically to all registered participants as identified on the Notice of
Electronic Filing and that paper copies will be sent to those identified as non-registered
participants.
30