Federal Criminal Law – Fall 2009 –
FULL OUTLINE
Scope of Federal Criminal Laws
I. Jurisdiction
a. Direct Federal Interests; i.e. attacks on sovereignty (assassinating the president), violating federal intellectual property interests, crimes on federal property (trespassing)
i. Derived from § 8 of the Const’n (includes the NPC)
b. Supplemental/Indirect Federal Interests
i. Postal Power (Mail Fraud Act)
ii. Taxing Power (basis of old fed’l drug enforcement laws in the 1970s; now they are based on the Comm Cl)
iii. Commerce Clause Power
1. Early approach:
a. Transportation in interstate commerce
i. Based on direct crossing of interstate boundary
1. Lottery tickets transported across state borders are subject to fed’l jurisdiction. (Ames)
2. Victims transported across state lines subject D to fed’l jurisdiction. Hoke v US:
ii. Today: extended to apply to communications, electronic signals, and use of communication facility (i.e. Wire Fraud Act)
2. Channels of interstate commerce
a. Justification: when people cross state lines, it’s harder to catch them and harder to prosecute them under state law.
b. Concern: federal interest is more attenuated
c. Crime must be related to travel across state lines:
i. Crime and travel don’t have to occur simultaneously
1. US v Page (6th Cir 1999): D beat his ex girlfriend in his condo in OH; she was subdued and he put her in the car, crossed state lines, then dropped her at a hospital in PA. He challenged his conv’n under the interstate domestic violence prov’n of VAWA, saying that he beat her first, then crossed state lines. Ct upheld his conviction as valid exercise of Comm Cl power b/c the beating was integrally related to the subsequent transportation of V across state lines by force. D’s act enabled him to force her to travel. He probably couldn’t have been charged under the statute if he just drove around OH on the interstate b/c the statute required “interstate domestic violence,” not just use of channels of interstate activity. No intent req’d to satisfy jurisd’l element; one can be convicted even w/accidental crossing.
2. US v Al-Zubaidy (6th Cir 2002): D traveled to wherever his W was to threaten and harass her family; he was conv’d under the interstate stalking prov’n of the VAWA and he challenged his conviction, saying that he didn’t have the intent to harass her when he crossed state lines. Ct held that he had intent to harass her when he crossed state lines because he started calling her and harassing her family almost immediately (this was part of the crime under the statute); Ct infers intent from the totality of the circumstances.
ii. Intrastate use of an interstate channel is OK (Travel Act)
1. US v Marek (5th Cir 2001): Two cases consolidated; fed’l murder-for-hire (MFH) act crminalizes MFH, but only when D travels or causes another to travel in interstate commerce or use the mail or “any facility in interstate or foreign commerce.” Marek used Western Union to transfer $500 to fake hit man; no evidence that the transmission crossed state lines; Cisernos, through fortune teller, made phone calls between TX and Mexico in furtherance of the scheme. Ct aff’d both convictions, holding that the use of interstate commerce facilities in a purely intrastate manner constitutes “use of interstate commerce facilities,” and that the use itself could be purely intrastate in character. Statute was not ambiguous, so Ct ignored rules of statutory construction.
2. US v Heacock (5th Cir 1994): Intrastate mailings using the US Postal Service constitutes “use of a facility in interstate commerce”; statute didn’t rely on the postal power, but rather the Comm Cl.
3. US v Baker (8th Cir 1996): ATMs are facilities in interstate commerce, even w/strictly local transactions.
3. Instrumentalities of interstate commerce (i.e. train tracks)
4. Substantially affecting interstate commerce
a. Jurisdictional element included in statute: no intent required for satisfaction of jurisd’l element (don’t have to intend to affect interstate commerce or intend to cross state lines)
i. Statutes included: Hobbs Act, new Gun-Free School Zones Act (after Lopez), firearm poss’n/use acts
1. Bailey v US (SCOTUS 1995): Two Ds convicted under § 924(c) for “using or carrying a firearm” during/in relation to a crime of violence; D1 had a loaded gun in the trunk of his car, D2 had an unloaded gun in a locked trunk in the bedroom closet. D2 likely gets off; Ct holds that “use” of a firearm, for purposes of the statute, requires active employment, not just proximity and accessibility. If this case was decided after Raich, the “broad regulatory scheme” argument would have been employed.
ii. Jurisdictional element saves statute from facial challenge
b. No jurisdictional element in statute
i. General Rules:
1. Minimal effect on interstate commerce is not sufficient(US v McFarland (below), four separate robberies had to be aggregated to achieve “substantial effect on interstate commerce”)
2. Interstate regulation: a statute regulating interstate activity is ok without a jurisd’l element if the activity has a substantial effect on interstate commerce (congr’l findings re: effect are given broad latitude)
a. Test from Morrison: (1) whether regulated activity is commercial/economic in nature; (2) whether an express jurisd’l element is provided in the statute; (3) whether Congress made findings re: the effect of the activity on interstate commerce; (4) whether the link between prohibited activity and effect on interstate commerce is attenuated.
3. Intrastate regulation: A statute regulating intrastate activity is ok without a jurisd’l element if it is (1) commercial or economic, because then aggregation is allowed (Wickard); OR (2) it is part of a broader regulation of economic activity, and the scheme would be undercut w/o enforcement of intrastate regulation (Raich).
ii. OK if Congress makes findings re: effect on commerce
1. Perez v US (SCOTUS 1971): D loanshark convinced of extortion re: loan to a butcher; D challenged conviction b/c no jurisdictional element and D claimed his actions had no subst’l effect on interstate commerce. Ct held that no jurisdictional element is required if Congress makes findings re: effect on interstate commerce.
2. But Court doesn’t always buy Congr’l findings (see US v Morrison)
iii. Intrastate activity subject to Comm Clause regulation (generally occurs only w/o jurisd’l element in statute, but see US v McFarland, where equally divided en banc court aff’d aggregation-based conv’n for four separate robberies under the Hobbs Act, which has a jurisd’l element).
1. Economic/commercial activity may be aggregated
a. Wickard v Filburn (SCOTUS 1942): D farmer grew wheat to feed his family when statute said he had to report/sell all of his wheat; he challenged his conv’n saying that his wheat had no effect on interstate commerce b/c it was just for home use. Court held that it was proper to aggregate all individuals similarly situated; if all farmers did this, the effect on interstate commerce was substantial.
b. Perez v US (above): loans are economic/commercial activity, even purely intrastate loans, when aggregated, demonstrate substantial effect on interstate commerce.
2. Noncommercial/noneconomic activity(see US v McFarland (dissent), which suggests a distinction between commercial and economic activity, whereby comm’l activity should be aggregated but not economic activity (robbery)).
a. Cannot be aggregated
i. US v Lopez (SCOTUS 1995): D brought gun to school, faced fed’l charges under Gun-Free School Zones Act, which prohibited knowing poss’n of a firearm w/in a school zone. D challenged application of statute b/c there was no jurisd’l hook and no substantial relation to interstate commerce. Court rev’d D’s conviction and held the statute unconst’l, rejecting the govn’ts arguments re: connection to interstate commerce (most based on impact on education). No aggregation with noneconomic/noncommercial activities, aggregation principle has limits.
b. Not subject to Comm Cl regulation if totally removed from interstate commerce or link is too attenuated
i. US v Morrison (SCOTUS 2000): Violence Against Women Act (VAWA) authorized private civil suits for women against their attackers. Ct held that this civil suit provision of VAWA violated the Comm Cl and struck it down, saying that this activity (violence against women) was very far removed from interstate commerce. Lots of legislative findings, but Ct didn’t give them deference (unusual). Test: (1) whether regulated activity is commercial/economic in nature; (2) whether an express jurisd’l element is provided in the statute; (3) whether Congress made findings re: the effect of the activity on interstate commerce; (4) whether the link between prohibited activity and effect on interstate commerce is attenuated.
ii. US v Stewart(see below): mere possession of a homemade machinegun is too attenuated to interstate commerce. Homemade machineguns don’t stimulate a demand and there was no reason to think D would have bought a machinegun if he hadn’t made his own
c. Can be subject to Comm Cl regulation if it is part of a broader regulatory scheme that would be undercut if the noncommercial intrastate activity was not regulated. This comes from the NPC as well as the Comm Cl (Scalia’s idea)
i. Gonzalez v Raich (SCOTUS 2005): D grew medicinal marijuana (CA had statute) for herself at her home, she was convicted of violating the Controlled Substances Act (CSA) and challenged her conv’n as an unconst’l exercise of the Comm Cl, saying the marijuana she grew had no effect on interstate commerce. Court held that the CSA was valid and const’l as applied; saying Congress can properly regulate purely local activities w/substantial effect on interstate commerce even if the particular effect on commerce is trivial; the CSA is a broad regulatory scheme and even though D’s marijuana had little/no effect on interstate commerce, if the CSA couldn’t regulate purely intrastate pot it would be undercut.
ii. US v Stewart on reargument(in light of Raich): (homemade machinegun case) Ds in both cases argued that their possession fell within a subgroup of people doing an activity who were not connected to the interstate market; since this is part of a larger scheme, D’s conviction is appropriate. Question is whether the Ct believes that congress had a rat’l basis for its proposed connection to interstate commerce; here, it did.
iii. Consequences of this approach: Congress can “hide” otherwise invalid legislation in larger schemes. Circular reasoning: the way to get around limitations on legislating is to legislate more.
3. Qualitative component: only related activities may be aggregated
a. US v McFarland (5th Cir 2002): D robber was convicted of four small separate robberies of local convenience stores under the Hobbs Act (Ct aggregated the crimes); he challenged his conv’n, saying there was insufficient evidence of nexus to interstate commerce. En banc court was equally divided, so it aff’d his conviction. Dissent held that the statute violated the Const’n as applied b/c aggregation is generally not applied when there is a jurisdictional element in the statute. There was no rational basis for aggregating these instances because there was no interrelationship of effect on interstate commerce.
i. Concurring in Dissent: Doctrine of clear statement; court should refuse to apply the Hobbs Act until Congress clarifies whether aggregation is OK.
iv. Class of activities: no specific proof of effect on interstate commerce req’d
1. Purely intrastate activities commingled with interstate commerce OK
a. US v Darby (SCOTUS 1941): Statute prohibited interstate shipment of goods made by workers whose hours didn’t comply w/the Fair Labor Standards Act, another section required employers to comply w/provisions of the Act. This extended to intrastate activities (manufacturing). Court held that the statute was const’l because mfr’ing was so commingled with shipment in interstate commerce that if Congress couldn’t reach the intrastate activity the Act wouldn’t have any effect. Court made no inquiry into whether the particular articles D produced had any effect on interstate commerce.
2. No specific proof of effect on interstate commerce req’d
a. Rational basis review of congressional findings for proof of connection to interstate activity re: class of activities
i. Perez v US (above): D loanshark claimed that his conv’n was improper b/c his activity had no effect on interstate commerce. Ct looked at congr’l findings re: impact of loansharking, noting that it is connected to organized crime (inter- and intra-state).
ii. It doesn’t matter if D can prove his activities had no effect on interstate commerce (aggregation under Wickard still available)
b. But effect on interstate commerce is still required, and mere possession without any proof of transport is not sufficient.
i. US v Stewart (9th Cir 2003): D made a homemade machinegun out of parts that were homemade and purchased; he was convicted for poss’n and challenged his poss’n as an invalid exercise of Comm Cl power. Ct overturned his conv’n, saying that Congress cannot prohibit mere poss’n of a homemade machinegun if it never traveled in interstate commerce b/c poss’n does not substantially effect interstate commerce. Ct hinted that if D had put together a kit, his conv’n would have been ok.
c. Implications of this approach:
i. Expands fed’l jurisdiction (most local crimes have economic impact that reaches interstate commerce)
ii. Relieves fed’l prosecutors of burden of proving link to interstate commerce.
c. Rules of Construction (applied only when a statute is determined to be ambiguous)
i. Rule of Lenity: criminal statutes should be construed narrowly.
ii. Clear statement rule: absent a clear statement of congr’l intent to alter the balance between the state and fed’l govn’t, Court won’t do it. If jurisdiction is concurrent (not exclusively federal), Ct won’t reject application.
The Mail Fraud Act
18 USC § 1341
I. Statutory Text
a. § 1341: Whoever, having devised or intending to devise any scheme or artifice to defraud, for the purpose of executing the scheme or attempting to do so, places in any post office any matter or causes anything to be sent/delivered by the Postal Service (or any pvt or commercial interstate carrier), is guilty.
i. Punishment: Fined or imprisoned not more than 20 years or both. If violation affects a financial institution, D shall be fined not more than $1mn or imprisoned more than 30 years or both.
b. § 1343: Whoever, having devised or intending to devise any scheme or artifice to defraud, transmits or causes to be transmitted writings, signs, signals, or pictures by means of wire, radio, or TV communication in interstate or foreign commerc
(SCOTUS 1941): (Burger dissenting) MFA is important as a stopgap, it must be strong and expansive b/c people come up with new “frauds” all the time.
III. Use of the Mails
a. Must be incident to an essential part of the scheme (not necessarily essential to the scheme)
i. Schmuck v US (SCOTUS 1989): D was a used car dealer who bought cars, rolled back their odometers, and sold them to dealers at inflated prices. When the dealers resold the cars, they submitted (by mail) a title application form on behalf of the customers; this was a prereq to sale and was required to transfer title and get license plates. Court upheld his conviction, saying that “use of the mails” was satisfied because the mailing of the title was part of the execution of the scheme and was incident to an essential part of the scheme: if the mailing hadn’t occurred, the person who bought the car couldn’t have gotten a license plate (may not have come out the same way if this was a one-time gig). Doesn’t matter if use of the mails is counterproductive and eventually gets D caught.
1. Dissent (Scalia): here, there was fraud, and then mailing happened; the mail must be used as part of the execution of the fraud, and these were mechanical mailings.
b. Does not satisfy if …
i. It’s immaterial to the scheme (Kann: Ds ha dummy company to funnel money to themselves and issued checks to pay themselves; it was immaterial that the checks were then mailed to payee banks b/c the scheme was already over)
ii. The mailing occurs after the scheme is finished (Maze: D stole card from roommate, invoices were mailed from stores where he used the card to the bank, which then mailed a bill to the card owner. Scheme was already finished).
iii. Mailing is not in execution of the scheme (Parr: Ds charged w/fraudulently obtaining things w/credit card; similar facts to Maze).
iv. Mailing is mechanical; but Schmuck (above) seems to indicate that mechanical mailings, if done in furtherance of the fraud (as broadly construed by the maj in that case) may satisfy.
c. Innocent mailings may supply the mailing element (see Carpenter, above: mailing the paper wasn’t fraudulent)
d. Specific intent to use the mails:
i. Ds charged with causing an innocent third party to make the mailing: Ds “cause” the mailing when they act w/knowledge that use of the mails will follow in the ordinary course of business or where that use can be reasonably foreseen even if not intended.
e. Unit of prosecution: each use of the mails is a separate violation.
IV. Mail Fraud prosecution not exclusive (this does not violate Blockburger b/c that case applies to single punishment when more than one statute is violated by the same conduct; this Q is of liability under multiple statutes, not punishment)
a. US v Computer Sciences Corp (4th Cir 1982): D was prosecuted under the False Claims Act and the MFA and WFA; he claimed that the False Claims Act (FCA) was exclusive and therefore precluded prosecution under the MFA/WFA for the same activities. Ct upheld all convictions, holding that prosecution under the FCA was not exclusive; there was no language in any of the statutes to indicate mutual exclusivity.
b. US v Weatherspoon (7th Cir 1978): there’s no language in either the MFA or the false statement statute to indicate exclusivity or hierarchy. The MFA proscribes different conduct, requiring proof of different elements than the false claims statute.
Securities Fraud
18 USC §
I. Relevant Statutes
a. General Antifraud Provision: “Unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce or the mails, or any facility of any national securities exchange … “
i. § 10(b) of Securities Exchange Act of 1934: use or employ, in connection w/ the purchase or sale of any security … any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors.”
ii. SEC Rule 10b-5: (a) to employ any device, scheme, or artifice to defraud; OR (c) to engage in any act, practice, or course of business which operates or would operate as a fraud or deceit on any person, in connection with the purchase or sale of any security.
b. Both civil and criminal remedies under these statues.
i. Elements of Civil Liability
1. D engaged in a fraudulent scheme, or made a material misstatement or omission;
2. which occurred in connection with the purchase or sale of a security;
3. D’s act/omission was the prox cause of damages to P;
4. P reasonably relied on D’s act/omission; AND
5. D acted w/ intent to defraud.
ii. Elements of Criminal Liability: Gov must prove that:
1. The D: (a) Engaged in a fraudulent scheme, OR (b) Made a material misstatement, OR (c) Omitted material information to one to whom D owed a duty;
2. The scheme, misstatement, or omission occurred in connection w/ the purchase or sale of a security; AND
a. “In connection with”: In connection w/ element is satisfied b/c fiduciary’s fraud is consummated, not when he gains the confidential info, but when, w/o disclosures to his principle, he uses the info to purchase/sell securities.
3. D acted “willfully.”
a. Willfulness: Gov ∅ have to prove specific intent to violate the law
i. US v. O’Hagan (8th Cir 1998) “willfulness” in SF ∅ require proof of intentional violation of a known legal duty. Sufficient ev that O’Hagan knowingly breached fiduciary duties that he owed both to his firm and to the firm’s client, supporting a jury finding of willfulness.
II. The Civil/Criminal Overlap
a. SEC has primary responsibility for enforcing securities laws, but can’t institute criminal cases—must refer them to the DOJ
b. Civil SEC actions and federal criminal actions may proceed simultaneously
i. If D testifies in the civil action, he waives his 5 Am right to remain silent, and that testimony may be used in criminal trial.
III. Insider Trading
a. Policy Rationale
i. Inherently unfair to let an insider take advantage of info intended to benefit only the company and its shareholders. Insiders must disclose that info or not trade. (Cady, Roberts; Chiarella)
ii. BUT some argue insider trading → more efficient markets b/c brings info to the market. (Dirks v. SEC notes role of market analysts)
1. Easterbrook’s convergence requirement discussion; MF/WF ∅ to be used to reach misappropriation (Walters)
