ASSIGNMENT TWENTY-FIVE - False Pretenses (vis a vis Larceny By Trick) - Wire & Mail Fraud :
[I have five absences and have used up all my sick leave at work. Today, I called in dead.] On this next to last unit, my focus will be on the statutory offense of false pretenses that was created back in the common law days to fill gaps in the larceny law (1). The minor accident of being totally ignorant about this material (just kidding) won't deter me from offering my views on what I think it means. This is what I got from my research. There's more material about this and other property crimes on Bullets IV.
The elements of false pretenses are basically as follows (1.) D obtains title (title must pass) or title and possession (but not possession alone), (2.) to someone else's property, (3.) by knowingly (recklessness doesn't work under the majority rule) making a false representation (a misrepresentation), (4.) of a material present or past fact of monetary significance, (5.) which the defendant knows to be false, (6.) with the intent to defraud, i.e., intending to cause the victim to pass title. The professor says this often comes up on exams in the context of trying to determine whether a crime is false pretenses or larceny by trick or embezzlement. From what I read, the general rule for statutory false pretenses required that the proof show that there not only was a false representation, but that D knew that it was false. Apparently there were a few states that had statutes that would allow recklessness as sufficient, but the majority required proof of knowledge. There was also a requirement that the victim rely on the misrepresentation; therefore, if V did not hear the false statement or simply didn't believe it, there was no false pretenses offense, just an attempted false pretenses.
Here's a good hypothetical explanation that I ran across that may assist us in understanding false pretenses:
- If D1 persuades V to loan D1 V's lawnmower (or bicycle or chainsaw or etc.) and D1 intended at the time to permanently deprive V of the lawnmower, it's C/L larceny ("by trick" because fraud is used to obtain possession). Note that V did not pass lawnmower title to D1, therefore we quickly rule out false pretenses.
- If D1 really just wants to borrow the lawnmower at the time V loaned it to him, but after D1 gets possession of it D1 then decides to convert it to D1's use, it can be embezzlement; but since the original taking was not trespassory, it can't be larceny (by trick). (If D1, with the intent to use the lawnmower and return to V's garage, had just gone over to V's house and taken the lawnmower without V's permission and later decided to keep it, you could use the "continuing trespass doctrine" to make the trespassory taking without permission a larcenous trespass to possession and, thus, larceny. UCL 5th has a good explanation of the doctrine on page 567.)
- But if D1 obtained both title and possession of the lawnmower from V, based on D1's fraudulent claim to V that D1 needed to sell the lawnmower for the general purpose of raising money to pay medical bills for the sick, there being no such medical bills and no such sick persons, there was no C/L larceny because V intends to pass title (and possession) to the lawnmower to D1; also, there was no embezzlement because the original possession was based on fraud (misrepresentation) and, therefore, was not consensual. So, to cover this situation, the crime of false pretenses was created. [In analyzing exam problems what I need to look for are facts that show directly or by logical inference that V had title to the property and intended to and did pass that title to D.]
- BONUS: Look at this VIDEO, assume that the lady selling the car is attempting a scam, and figure out if the crime, if any, is larceny, embezzlement or false pretenses. Explain why it is or isn't each crime under the c/l? What would the seller's crime be under the MPC and TPC?
During the common law era, for the statutory crime of false pretenses to occur, the misrepresentation needed to be affirmative in nature. Failure to disclose a fact didn't constitute the statutory offense of false pretenses, unless these was a preexisting fiduciary duty to disclose the fact. Additionally, failure to correct the victim's false impression or misunderstanding was not sufficient to constitute a misrepresentation. Also, the traditional offense of false pretenses required that that the false representation (misrepresentation) had to be of a material present or past fact. False promises to do things in the future did not qualify. For example, if D pays V for a car with counterfeit money, this would be false pretense in the sense that D obtains title and possession to the car based on D's present misrepresentation that the money as real. On the other hand, if D obtained title (or title and possession) to the car from V based on D's promise to pay for the car tomorrow and then doesn't pay tomorrow, there was no false pretenses. As to the requirement that the misrepresentation had to be material, it seems that an oral statement of value of property was held to be mere opinion (puffing) and not a statement of fact.
A couple of other things need to be noted. It doesn't seem necessary for false pretenses that there be proof that V suffered a pecuniary loss as a result of the misrepresentation. Also, the false representation does not have to be the sole inducement for V giving up of title to the property to D. If D thinks his representation is false but it is in fact true, there is no false pretenses. ( Is this mistake one of those that would be a mistake of fact that would negate the possibility of fraud?) Also, the law of false pretenses protects the naive and gullible person; even if the V places unreasonable reliance on the material false representation. Finally, since false pretenses required a specific intent to steal, i.e., defraud, valid mistake of fact or intoxication or claim of right might be potential defenses.
The victim of false pretense must intend to pass title or title and possession for false pretenses to exist. There may be certain circumstances when possession and not title passes and the crime is larceny rather than false pretenses. There's a case about the larceny by trick conviction of a crooked lawyer named Graham who told his client that he needed $2K to bribe the cops; the client provided the payola but the lawyer kept the money; the court said that the crime was larceny by trick because the client did not intend to convey title to the bribe money until it was actually paid to the cops. Consider this: If D gets the V to part with the property for a very specified purpose, e.g., to give a bribe to a particular third party or to buy a specific parcel of land, the idea is that title to V's property would pass only if the goal were achieved. The thing is that if the goal is not achieved, title does not pass, and, thus, there is no false pretenses crime. Instead, the property crime may be larceny by trick, like the Graham case, if D only obtains possession based on a misrepresentation. One of the reasons the court in Graham said that the facts showed a larceny by trick may have been that the court felt like the facts wouldn't support a false pretenses conviction for the crooked lawyer. Why? It wouldn't even be false pretenses if a false promise to do something in the future won't suffice for false pretenses, and if the Graham court looked at the scenario as not involving a misrepresentation of a present or past fact, i.e., that the police could be bribed, but rather nothing more than a promise to try to do something in the future, i.e., to try to fix the case with the police by bribing them?
Some courts and modern statutes have expanded the definition of false pretenses and adopted a minority rule that a false promise along with other elements such as reliance is sufficient for a false pretenses conviction. The policy issue seems to be whether we should punish people for making false promises that they don't intend to keep at the time they make them. Even if the answer to the expansion issue is "yes," should we leave the decision to the legislature rather than to the courts? The Sec. 31.01 (1) TPC definitions of "deception" seem to take an expansive view of what in the old C/L days was false pretenses. [ Note: I'm not going to take up space reciting all the definitions, but from my reading of (E) in Section 31.01 (1) TPC it appears that making a promise that one doesn't intend to keep and that is likely to affect the judgment of the victim can be deception. However, that statute also makes it clear that the mere failure to keep a promise is not sufficient evidence alone to prove that the promissor intended to default on the promise. There must be other evidence of that intent. Look at the other TPC definitions of "deception" also. They are expansive in comparison the old concept of misrepresentation under false pretenses.] It seems like the hottest area of change concerning misrepresentation in theft by deception is in the legal effect of "false promises" and "misleading omissions." Notice that the MPC Section 223.3 crime of "theft by deception" is the source of the TPC approach to false promises; like the TPC the MPC makes clear that deception as to a person's intention to perform a promise shall not be inferred from the fact alone that he did not subsequently perform the promise.
A HELPFUL HINT: So here's a somewhat overly simplified system I plan to use to help me sort out larceny by trick, embezzlement, and false pretenses - three major property crimes that can appear on the multi-state bar exam and our own. First, I will ask whether the complainant intended to part with title, title and possession, or possession only of the property in issue. If title or title and possession was meant to be passed to the suspect, it can't be larceny by trick or embezzlement. If anything, it's false pretenses. If possession only was intended to be given to the suspect, it can't be false pretenses, but it may be larceny by trick or embezzlement. Second, in trying to determine if it's larceny by trick or embezzlement, I need to ask whether the suspect came into possession of the property lawfully. If so, it may be embezzlement, but it won't be larceny by trick. If the suspect came into possession of the property unlawfully, then it may be larceny by trick because in larceny by trick the complainant is fooled or conned by a fraudulent misrepresentation into giving up only possession of the property.
Like grandma said, "You want to clean up the creek - the first thing you do is you run the pigs out of it."
ULTRA-RICH WHITE-COLLAR CROOKS SCORING BIG IN OUR "KLEPTOCRACY" - Bushrod's Soapbox : "I'm sick and tired of corporate crooks, and I'm not gonna take it anymore!" I'm speaking of financial crimes, crimes of persuasion, con-games, white-collar crime, (1), (2), (3 - the Cornell white-collar megasite) and fraud. THEN: I wondered in the late "90's if a substantial number of the high managerial agents, virtually all of them males, at those huge meltdown corporations, e.g., Enron, World Com, Global Crossing, etc., would ever be convicted. It turns out that some were. Bernie Ebbers got 25 years on July 14, '05, for his role in the $11 billion WorldCom accounting fraud. Father and son Rigas got 15 and 20 respectively in the Adelphia Communications looting. See United States v. Rigas, 490 F.2d 208 (2nd Cir. 2007). Richard Scrushy beat the criminal rap in the HealthSouth book-cooking case. What about our local embarrassment - Enron? Messieurs Ken Lay and Jeffrey Skilling were put on trial in early 2006 with two talented defense lawyers, Houston's own Mike Ramsey for Lay and California's Daniel Petrocelli for Skilling. Despite the lawyers diligent efforts to obfuscate their guilt in the shelter of the corporate maze, both Skilling and Lay were convicted on many counts of corporate fraud/conspiracy. Lay died before sentencing, but Skilling received more than a score of years in Club Fed. I found the indictment against President Bush2's buddy Lay. Billions and billions of dollars seemingly vanished in these crooked corporate shenanigans. How could that much dough be missing without a substantial number of ranking employees being knowing participants in massive fraud? [Of course, it looks like the DOJ is accepting that Ponzi King Bernie Madoff single-handedly "made off" with $60 billion in investor funds over a score of years? Does that make sense?] Is the message in some of these long delayed cases - if you're gonna steal, steal big? Of course, the federal Congress responded to these economic catastrophes with gas-bag rhetoric and jaw-boning. After the cows were out of the barn, Congress did pass some band-aid legislation, e.g., Sarbanes-Oxley Act (SOX); that will mean nothing in preventing future corporate corruption without effective enforcement by a government run by folks who are disciples of deregulation. Congress' answer to white collar property crimes is often to simply create laws, e.g., in 1996 they passed the Economic Espionage Act that purports to protect against misappropriation of trade secrets, and there is also a federal money laundering law. Again, the teeth of the law is in the enforcement. It's a lot easier for a federal prosecutor to convict some street thug of selling crack than to go after major white-collar crooks who steal tens of billions and who still have political punch, plus bank accounts bulging with enough filthy lucre to pay high priced mouthpieces. Supposedly, the FBI assigns more agents to white collar crime than any other area except national security. If this is so, it doesn't show. And, of course, we have the "crack" investigators of the SEC to protect us against unscrupulous Wall Street crooks, right? The One Bright Spot: Maybe there's a future for criminal lawyers (prosecutors and defenders), in the areas of securities fraud, RICO, computer and Internet crime (1) (2 - article on unauthorized computer access, identity theft, cyberstalking, Internet fraud, Internet pornography), Internet Crimes listed by the FBI. banking crime (Except that the folks who run the banks and were major causes of our recent economic depression seem to be immune from prosecutorial attention. For an example that white collar crooks often escape justice, in December of 2012, HSBC, third largest bank in the world, agreed to pay $1.92 billion in fines to US regulators for money laundering, but the Obama DOJ declined to pursue any indictment against HSBC or any of its employees involved in the large-scale money laundering scheme, settling instead for a deferred prosecution agreement in which the bank promised to strengthen its controls against laundering.), criminal antitrust, bribery, extortion, tax fraud, and misappropriation of intellectual property (copyright violations, trafficking in counterfeit goods, theft of trade secrets, computer intrusion, etc). For a brief dose of some federal financial crimes look at the Secret Service web site. Here's the federal law regarding Fraud and False Statements (18 USC Sections 1001-1037) NOW: What is there to say about the economic meltdown of late 2008, 2009, and 2010? Wall Streeters and their lapdog political operatives in the US Congress gang-raped the working population of the USA. What do you think about anti-trust action to keep corporations from becoming "too big to fail"? Otherwise, the American taxpayer becomes the surety for the lives of these behemoths. What about expanding shareholder rights against crooked corporate bosses who loot and drain companies they don't own? And, what about the banks, insurance companies, and other fiduciaries? Shouldn't the law curb them from high-risk gambling with other their deposits and assets? For an explanation of some of the conduct and the names of a few villains, see the material at the end of Bullets IV.] What is the definition of "property" for purposes of larceny/theft laws. C/L larceny protected only tangible personal property. This traditionally included crops severed from the land, objects, money, and certain animals. It didn't include real estate, intangibles, or services. So, if I hired a guy to fix my chariot knowing from the get-go that I wasn't going to pay him and I didn't or if I checked into an a roadside inn intending not to pay and skipped out on the bill, there was no larceny of the services provided by the labors of the mechanic or hospitality of the innkeeper. As the world has become more "civilized" or at least more commercial and wealth-oriented, the types of property that are subject to protection by the criminal law have expanded. Obviously, the MPC and TPC have created theft of services statutes that make it a property crime to steal services. We've also seen that there are statutes that penalize unauthorized use of property, e.g., UUMV - Section 31.07 TPC, without the consent of the owner. Intangible property is typically protected by modern codes such as the TPC and MPC.
At early C/L, all larceny carried the mandatory death penalty (no taxpayer cost for expensive long-term warehousing of prisoners in penitentiaries). Eventually, the English Parliament decided that certain trivial larceny offenses should be exempt from capital punishment. This lower level of larceny was called petit (petty) larceny. The deciding line between the two levels of larceny seems to have been that the value of the property had to be less than 30 pence (the value of one sheep) for it to be petit (petty) larceny.
VALUE: Sec. 223.0 of the MPC that was finalized in the early 1960s sets up three value levels that are no longer reflective of the value of the dollar. Those value sets are: petty=under $50, misdemeanor = $50 - $500, felony = over $500. [Note: The TPC values in Sec. 31.03 are more realistic. Apparently the TPC value ladder has changed a couple of times to keep up with inflation of the continually valueless dollar. Here's an abbreviated ladder.
Dollar Value Ladder for Texas Theft Crimes:
Class C Misdemeanor: Less than $50 or less than $20 by Check; Class B Misdemeanor: $50 but less than $500 or @$20 by check but less than $500; Class A Misdemeanor: $500 but less than$1500; State Jail Felony: $150 but less than $20,000 or less than 10 head of cattle horses or exotic livestock or fowl or any part thereof under $20,000 or property is stolen from a person, corpse, or grave or the stolen property is a firearm or the value is less than $1500 and the defendant has two prior theft convictions or the property is an official ballot or carrier envelope for an election or the value is less than $20,000 and the property is insulated or noninsulated wire or cable of at least 50% aluminum, bronze or copper; Third Degree Felony: $20,000 but less than $100,000 or 10 or more head of cattle, horses or exotic livestock or exotic fowl stolen in a single transaction and having an aggregate value of less than $100,00 or 100 or more head of sheep, swine, or goats stolen in a single transaction and having a value of less than $100,000; Second Degree Felony:$100,000 but less than $200,000; First Degree Felony: $200,000 or more. [NOTE: People from other states will notice that we have a very strong livestock lobby in the Texas that gets special attention from the legislature. Also, there are many Texas Penal code crimes that have dollar values or dollar losses attached for purposes of determining punishment, e.g., Criminal Mischief (Sec. 28.03); Graffiti (Sec. 28.08); Theft of Service (Sec. 31.04) Counterfeit Trademarks (Sec. 32.23); Recruitment of an Athlete (Sec. 32.441); Execution of a Document by Deception (Sec. 32.46); Breach of Computer Security (Sec. 33.02); Theft of Telecommunication Service (Sec. 33A.04); Money Laundering (Sec. 34.02); Insurance Fraud (Sec. 35.02); Medicaid Fraud (Sec. 35A.02); Abuse of Official Capacity (Sec. 39.02); etc.]
I made myself this money ladder value chart to help sort out the level of the theft crime when it's based on monetary value of the property stolen:
Basic Texas Theft Punishment Ladder Chart Based on Valuation
Amount of Monetary Loss Punishment Range
$300,000 or more First Degree Felony
$150,000 - $299,999.99 Second Degree Felony
$30,000 - $149,999.99 Third Degree Felony
$2,500 - $29,999.99 State Jail Felony
$750 - $2,499.99 Class "A" Misdemeanor
$100 - $749.99 Class "B" Misdemeanor
Less than $100 Class "C" Misdemeanor
On the issue of value of property, the commentaries that accompany the MPC say that the MPC permits grading of theft offenses based on the thief's belief, if it's not a reckless belief, concerning the value of the property, rather than the actual value that the C/L and the TPC use in grading the severity of the offense. So, under the MPC, if the D thinks he is stealing a $5 bill and the particular $5 bill is a very rare and highly valuable piece of currency, the grade of theft could be based on the value the thief thought he was getting, i.e., $5. The contrary is also true. The grade of theft may also be raised based on the thief's mistaken belief that the value of the property was greater than it actually was. Apparently, the MPC would allow a thief to be prosecuted at a high grade of punishment for stealing a painting he thought has great value, even though it was a forged copy with a much lower value.
While service was not considered property subject to common law larceny, both the MPC in Section 223.7 and TPC in Section 31.04 criminalize theft of services.
MY SUGGESTION: Finally, we are done with theft. I don't know about you, but I have no desire for money. It's stuff that I want. Reading the casebook has been on my list of things I look forward to, right above a case of ringworm. Just joshing you. Honestly, now that it's over, I'm glad I read all the major (principal) cases. I book-briefed all of them, except the one I was assigned to post to Powwow. That one was a work of art because I was getting 114 briefs back in exchange for my one. If you want to understand the lingo and logic used in applying law to facts, I recommend reading the cases. At least, read the Powwow briefs filed by your colleagues before you go to class. The major cases flesh out the policy issues and arguments much better than just reading the UCL hornbook which gives you black letter law but no guidance as to how to apply it. At home or in the library, the ideal approach is to read UCL and then read the cases. You can catch sight of the players involved, the context in which the criminal law issues arise, and the complexities of the policy considerations. If the UCL hornbook of doctrine is the forest, the stories in the casebook are the trees. Even though the cases are written by appellate judges, they still give us the story of the case, albeit in condensed form. Sometimes it's easier to remember the doctrine if you can use a case as a mnemonic device. I think that reading all these cases in my casebooks on the 1L year has helped me to start reasoning in the analytical way lawyers do as they apply law to solve problems. [If my exams have an essay portion, I can apply this new skill.] After all, each case represents a set of facts, a legal problem, and the application of the law to those facts. The more I know about how the law sorts out the problems created by occurrences, the better prepared I'll be to do it when the time comes. Lawyers get paid for solving problems, either before they happen (as with many civil lawyers) or after they happen (as with all criminal lawyers and prosecutors). I'm going to try my best to be ready for that challenge. So, merci to the casebook authors for their outrageously expensive $126 plus tax collection of colorful and descriptive legal stories. But with all that black letter common and MPC law to study... the UCL hornbook is still the major resource that I'll rely upon for the exam!