McNally v. United States, 483 U.S. 350 (1987)

McNally v. United States

No. 86-234

Argued April 22, 1987
Decided June 24, 1987 *
483 U.S. 350

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR

THE SIXTH CIRCUIT

Syllabus

The federal mail fraud statute, 18 U.S.C. § 1341, prohibits the use of the mails to execute

any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises.

Petitioners Gray, a former Kentucky official, and McNally, a private individual, along with one Howard Hunt, the former chairman of the Commonwealth’s Democratic Party, were charged with violating § 1341 by devising a scheme to defraud the Commonwealth’s citizens and government of their "intangible right" to have the Commonwealth’s affairs conducted honestly, and to obtain money by means of false pretenses and the concealment of material facts. After informing the jury of the charges, the District Court instructed the jury that the defendants’ alleged scheme could be made out either by finding: (1) that Hunt had de facto control over the award of the Commonwealth’s workmen’s compensation insurance contract; that he obtained commission payments from the company awarded this contract which were mailed to a company he owned and controlled with petitioners, without disclosing his ownership interest to commonwealth officials; and that petitioners aided in the scheme; or (2) that Gray had supervisory authority over the insurance when his company received payments; that he did not disclose his interest in the company to commonwealth officials; and that McNally aided and abetted him. The jury convicted petitioners, and the Court of Appeals affirmed, relying on a line of decisions holding that § 1341 proscribes schemes to defraud citizens of their intangible rights to honest and impartial government.

Held: The jury charge permitted a conviction for conduct not within the reach of § 1341. Pp. 356-361.

(a) The language and legislative history of § 1341 demonstrate that it is limited in scope to the protection of money or property rights, and does not extend to the intangible right of the citizenry to good government. The argument that, because the statutory phrases "to defraud" and "for obtaining money or property by means of false or fraudulent pretenses, representations, or promises" appear in the disjunctive, they should be construed independently, so that "a scheme or artifice to defraud" may include a scheme designed to deprive parties of intangible rights is not persuasive. The words "to defraud" commonly refer to wronging one in his property rights by dishonest methods, and there is nothing to indicate that Congress meant to depart from this common understanding when it enacted § 1341 in its present form. Rather, the statute was amended to include the second phrase simply to make it clear that it reaches false promises and misrepresentations as to the future as well as other frauds involving money or property. Pp. 356-360.

(b) A state officer does not violate § 1341 if he chooses an insurance agency to provide the State’s insurance, but specifies that the agency must share its commissions with another agency in which the officer has an ownership interest, and hence profits from the commissions. Here, there was no charge and the jury was not required to find that the Commonwealth itself was defrauded of any money or property or would have paid a lower premium or secured better insurance in the absence of the alleged scheme. In fact, the commissions Hunt and Gray received were not the Commonwealth’s money. Nor was the jury charged that, to convict, it must find that the Commonwealth was deprived of control over how its money was spent. Indeed, it would have paid the insurance premium to some agency, and Hunt and Gray simply asserted control that the Commonwealth might not otherwise have made over the payment of insurance commissions. Moreover, although the Government relies in part on the assertion that petitioners obtained property by means of false representations to the company awarded the insurance contract, there was nothing in the charge that required such a finding. Pp. 360-361.

790 F.2d 1290, reversed and remanded.

WHITE, J., delivered the opinion of the Court, in which REHNQUIST, C.J., and BRENNAN, MARSHALL, BLACKMUN, POWELL, and SCALIA, JJ., joined. STEVENS, J., filed a dissenting opinion, in Parts I, II, and III of which O’CONNOR, J., joined, post p. 362.