If a man entered the orchard of (another) man and was seized
there for stealing, he shall pay ten shekels of silver.
The best things are not things.
Whoever dies with the most toys wins.
The rain it raineth on the just and also on the unjust fellow,
but chiefly on the just, because the unjust steals the just's umbrella.
Things are to be used. People are to be loved. We are prone to reverse it.
Daylight Robbery - a one-hour documentary of U.S. corruption and fraud in the Iraq war. By Stealth By Servant By the Finder of Lost, Mislaid or Misdelivered Property By Bailee (Gratuitous or for Hire) By Trick Consolidation Deprivation Theft by Unlawful Taking or Disposition Theft by Deception Theft by Extortion Theft of Services Claim of Right Defense Grading MPC Theft Crimes Consolidation Ownership of Property Intent to Steal Claim of Right Receiving Stolen Property Theft by False Pretenses Theft by Extortion Value - Ladder Special Statutes That Protect Consumers MPC Forgery TPC Forgery Common Law MPC Robbery TPC Robbery Common Law MPC Burglary TPC Burglary
INTRODUCTION - PROPERTY CRIMES
The French philosopher Voltaire in his essay on Manners in 1756 said, "All men have equal rights to liberty, to their property, and to the protection of laws." (1 - Declaration of Independence), (2), (3 - 1923 article re distribution of property) How does our criminal justice system react to the right to private property? As man has evolved, the criminal law has expanded and grown in its role as a protector of private property. In our American system, the acquisition of private property (coupled with sensual pleasure) is what life is seemingly all about, despite the fact that greed (and lust) is one of the original seven deadly sins (Pride, gluttony, sloth, anger, and envy are the other five.) Criminal laws protecting property have been used as a device to keep man's greed and avarice in check and to provide the property-owning public with a feeling of security. These same criminal laws are used to promote the work ethic - the idea being that one way to legitimately gain property is by labor. (1) To a considerable extent, our society is based on monetary values and business transactions. Equity (fairness) and natural law (higher laws that transcend positive laws) have not had great influence in recent times. From the philosophical perspective, some persons believe that private property is a necessary and proper means by which each individual achieves his livelihood and happiness. To them, the justification of the existence of the state consists in its protection of private property, while the ultimate corruption of the state appears when it nonconsensually deprives peaceful and honest persons of their rightful possessions. (1) (2) On the other side of the coin, the Tao Te Ching tells us: If you overvalue possessions, people begin to steal. The American revolutionists seemed to fee that the security of private property was tied to the concept of liberty. Our philosophy as a county appears to demand respect for the individual's liberties and his/her control over legitimately acquired property. Thus, in the United States no person or government may unlawfully deprive any person of his life, liberty or rightfully acquired property without due process of law (1). See the Fifth and Fourteenth Amendments. In our previous portions of the crimes and defenses web site, we examined the law of criminal homicide. In most instances, our inquiry focused on the elements of the various crimes. As a rule, nothing good can be said about conduct that results in the loss of human life, irrespective of whether it is a crime, a civil tort, or simply an accident. The same cannot be said when we consider the acquisition of property. In property cases, we may be asking whether a particular method of acquiring property is wrongful, or, if it is wrongful, whether it should be defined as criminal or left solely as a civil wrong. As we examine property crimes, we notice that there is a history of increasing criminalization. One might ask whether this is part of ubiquitous crime hysteria or simply keeping pace with ever expanding complexity of property transfer.
I've got everything I need, but it still ain't quite enough.
Elton John (lyrics from Georgia) The common law crime of larceny (1), (2) contained six elements (1): (1) a trespassory (2) taking and (3) carrying away (asportation) of (4) the tangible personal property (Such things as real property, chose-in -action, services, "base" and wild animals in nature, and trade secrets were excluded from the concept of "personal property; UCL 5th, p. 563, says dogs were base but horses and cattle were not; another source, Criminal Law by Crump, et al., p. 377, agrees that dogs were base but claims that horses, cows, pigs, and chickens were also base but cats and foxes were not; if Crump has it right, cattle and horse rustling might have been a good trade in common law days; of course , we know that theft of cattle by armed bands was by far the most important crime against property the fifteenth cetntury and earlier; so, logic would tell us that Crump has it wrong, at least re cows.) (5) of another (except the spouse who at common law was deemed to have joint possession of one another's property) (6) with intent to steal (animus furandi - the intent to permanently deprive the owner of the value of the property, irrespective of whether the thief intended to benefit himself). The crime of larceny is complete very quickly. Larceny is designed to protect against permanent deprivation, but it does not depend on the owner actually being permanently deprived. In fact, larceny can occur event though the property is soon restored to its owner, as when the inept larcenist is caught while fleeing with the loot and the owner suffers nothing more than a momentary loss of possession, Recognize that It's the intent of the larcenist to permanently and unlawfully deprive the owner of his/her property that is the centerpiece of the crime. It may be easier for you to think of larceny as an unlawful attempt to permanently deprive a person of her property, an attempt that does not depend for its efficacy on whether the larcenist is successful in doing so. Also, keep one other thing in mind as you study common law larceny and modern day theft (1- theft), (2 - theft) - it doesn't matter in terms of whether the crime was committed that the larcenist afterwards changed his mind and brought the property back. In early times, the first concern of the law was with crimes of violence where property was taken from the person by force, e.g., the highwayman who robbed travelers on or near a public highway. The common law crime that developed from that concern is the one we know as robbery (1), (2). That crime will be discussed later on this page. After recognizing the crime of robbery, the common law next expanded to criminalize all taking of another's property from his immediate possession and without his consent, even though no force was used. When no force was used in such circumstances, this antisocial conduct was called larceny by stealth. Perhaps the best example of larceny by stealth is the pickpocket who, without violence of the threat of it, trespasses into the victim's clothes, takes personal property, e.g., a wallet, and carries away the wallet.
As time went by, common law larceny expanded to encompass several forms of trespassory taking, including the following:
- By stealth - This most typical larceny offense occurred when, unbeknownst to the victim, the defendant took and carried away the victim's tangible personal property with intent to permanently deprive.
- By servant - This offense took place when a servant or employee who had been given custody of property by the trusting master or employer as a incident of the service or employment took the master's or employer's property with intent to permanently deprive the master/employer of the use, value and benefit of the property. In effect, the custody of the servant/employee was the possession of the master/employer. However, if the servant or employee received the property directly from a third person rather than from the master/employer, it was deemed to be lawful possession in the servant/employee rather than custody, and no trespassory taking from the master/employer was deemed to have taken place if the servant/employer appropriated the property. In other words, by legal fiction the common law courts held that in cases where the servant or employee received property directly from the master or employer, the servant never got possession of the goods; instead the servant or employer got only custody. Thus, when the servant or employee subsequently misappropriated the property, it was then that he was deemed to be trespassorily taking the property as required by the definition of larceny. As Justice Oliver Wendell Holmes, Jr., said in Commonwealth v. Ryan, 30 N.E. 364 (MA. 1892) (1): "We must take it as settled that it is not larceny for a servant to convert property delivered to him by a third person for his master, provided he does so before the goods have reached their destination, or something more has happened to reduce him to a mere custodian; while, on the other hand, if the property is delivered to the servant by his master, the conversion is larceny." The common law theory re the servant/employee receiving property from a third person as in Ryan was that possession passed from the third person to the servant/employee; the servant/employee could not therefore "take" possession from the employer; since there was no trespassory taking, there was no larceny when the servant converted the property to his own use. On the other hand, if a servant received possession of property from a third person and then transferred it to the master under circumstances where it is clear that possession passed to the master, e.g., where the servant transferred money to a cash register and rang up the sale, and then at a later time took the property from the register, a larceny (trespassory taking from the master's possession) occurred. But, if the servant/employer placed the property in the master/employer's receptacle for a brief temporary purpose, possession did not pass to the master, so long as the servant remained in control of the property and no larceny occurred when the property was removed from the receptacle (the precise situation in Ryan). You can see the potential problem with such narrow distinctions, i.e., the defendant charge or convicted of larceny would often claim that the crime, if any, was embezzlement and vice versa. [Note: Gaps in the larceny by servant crime resulted in the enactment of the first English embezzlement statute in 1799.]
- By the finder of lost, mislaid, or misdelivered property - First, understand that found property may be abandoned rather than lost or mislaid. There is a big distinction. Abandoned property is property that has been abandoned by its former owner or possessor with the intent of relinquishing all control over the property. Abandoned property cannot be the subject of larcenous taking, i.e., when another takes it, there is no trespass to the possession of the owner. Lost or mislaid property is property that is no longer in the control of the owner or former possessor but which was not knowingly relinquished insofar as the intent of the loser or mislayer is concerned. The common law did not take a purely "finders keepers, losers weepers" philosophy, but it did give finders more protection against larceny conviction than the MPC does with regard to theft. Larceny of lost property: This larceny crime occurred when at the time of the finding of lost property there was an indicia of ownership such that the true owner of the lost property could reasonably be found, and the finder took the lost property with intent to steal it, i.e., s/he intended at that time to permanently deprive the owner of the found property. If there was no indicia of ownership in lost property, the finder's state of mind (mens rea) was irrelevant, and the offense was not larceny. The situation is roughly analogous to that of abandoned property where there is no owner, (Note: Abandoned property is property that has been abandoned by its former owner or possessor with the intent of relinquishing all control over the property. Abandoned property cannot be the subject of larceny because there no trespass to the possession of an owner, thus , no larceny.) except that here no owner can reasonably be expected to be found. However, if there is adequate indicia of ownership of the lost property, the determination of whether there is larceny depends on the state of mind of the finder. When at the time of the finding, the finder of lost property, whose ownership was reasonably ascertainable, intended to appropriate the property rather than return it to its rightful owner, larceny occurred. Larceny of mislaid property: In the case of mislaid property, i.e., property that was not lost but simply misplaced, temporarily forgotten and left, the common law presumed that the owner would return for it, and, thus, the only issue was the finder's state of mind. Consequently, if the finder of mislaid property picked the item up intending at that time to steal it, there was larceny. If the finder of either lost or mislaid property did not intend to steal it when it was first found, but formed such an intent later in time, there was no larceny. Larceny of misdelivered property: What about situations where property was misdelivered based on a unilateral mistake, e.g., the cleaners mistakenly but willingly misdelivered V's suit to D? Larceny occurred when D realized that possession of someone else's property had been delivered to him and D took delivery anyway with the intent to keep the property suit and permanently deprive the owner of it. The legal view was that when the transferor acted under unilateral mistake of fact, delivery of the chattel was ineffective to transfer right to possession; if the transferee, knowing of the transferor's mistake, receives the goods with the intention of appropriating them, his receipt and removal of them is a trespass and the offense larceny. On the other hand, if there is a mutual mistake, e.g., D thought the suit was his when it was delivered to him, and the recipient is innocent of wrongful purpose at the time of his initial receipt of the property, its subsequent conversion by the transferee is not larceny.
- By bailee (gratuitous or for hire) - With the dawn of the commercial age, commerce became more dependent on transportation of goods to market by persons who were independent contractors (bailees) rather than servants. As you might imagine, some of these bailees were a bit shady to the point that they might convert a shipment of goods. A bailment is a delivery of personal property by one person (the bailor) to another (the bailee) who holds the property for a certain purpose under an implied-in-fact or express contract; unlike a sale or gift of personal property, a bailment involves a change in possession but not in title. A bailment for hire is a bailment for which the bailee is compensated, as when one leaves a car with a parking attendant; a gratuitous bailment is one in which the bailee receives no compensation, as when one borrows a friend's car. When property was converted by a bailee who had been given custody pursuant to an agency relationship, larceny could occur under special circumstances. When a container was delivered to the bailee, it was held that the bailee had constructive possession of the containers but only custody of the contents of the container. It was said that when the bailee opened the containers, i.e., broke bulk, a trespass against possession of the bailor occurred and hence larceny would occur if the other elements were present. On the other hand, if the bailee simply sold the unopened containers, there was no larceny because there was no trespass to the bailor's possession, the bailee having been given lawful possession of the container. The concept of theft by bailee dates back to the famous "breaking bulk" Carrier's Case, 13 Edw.IV (1473), where the carrier (bailee for hire) broke open bales (containers) and took the contents, (in this case a blue dye called woad) from the constructive possession of the owner.
- By trick -This type of larceny offense occurred when property was taken by one who obtained possession but not title based on misrepresentation of treating it in a particular way, but who at the time intended to misappropriate it and did so. Larceny by trick differs from larceny by stealth only in the manner of taking. This is a type of larceny involving taking by means of fraud and deception, i.e., the taking is with the consent of the victim but the consent was obtained by misrepresentation. Note that in larceny by trick the victim consensually parts with possession due to the fraudulent inducement of the thief. The seminal case reflecting this offense was Pear's Case in 1780, holding that one who obtained possession of, but not title to, a horse on the false pretext that he wants to take a journey when in fact he intends to sell the horse, which he does, is guilty of larceny by trick. The modern day analog would be the customer at an auto dealership who, with intent to steal a car, took a solo "test drive" but just kept going. Note the difference between larceny by trick and false pretenses; in larceny by trick the larcenist uses a misrepresentation (fraud, trick) to induce the owner to part with possession only; in false pretenses the owner is induced by a misrepresentation (fraud) to part with title alone or title and possession. One of the seminal cases that you find in many casebooks is Graham v. United States, 187 F.2d 87 (D.C. 1950) involving a crooked lawyer who had tricked his client into paying $2000 in juice, above the $200 legal fee, by falsely telling the client that the juice was bribe money for the police; the conviction for larceny by trick was upheld on the ground that the crime was larceny not false pretenses because the client intended that possession but not title to the $2000 to pass to the defendant with title remaining in the client until accomplishment of the specific purpose of the bribe.
Larceny is viewed as a specific intent crime because it requires proof that the accused intended at the time of taking to permanently deprive the victim of the value, use and benefit of the tangible personal personal property in question. It is also crime against another person's possessory rights ( as opposed to ownership rights) in that the accused trespasses and carries away the property of one with a superior right to possession. Note that under the common law (as well as MPC and TPC theft) the victim of larceny could himself be a thief, i.e., a person with no lawful ownership right in the property.
Most of the litigation concerning common law larceny centered on what was meant by "trespass to possession." Other issues that were the subject of litigation included such questions as what constituted a "taking," what constituted "carrying away (asportation)," what constituted "property of another," and what constituted "possession" as opposed to "mere custody."
The general rule of common law required that the act, i.e., the trespassory taking, and the mens rea, i.e., the intent to permanently deprive," had to coincide, i.e., occur concurrently. The common law recognized an exception to this general rule through the important doctrine of continuing trespass, i.e., if there was any wrongfulness in the original taking, a subsequently formed specific intent to deprive was deemed to be sufficient because the wrongfulness of the original taking constituted a continuing trespass. For example, if D borrowed (took) his next door neighbor's (V's) bicycle without permission (a trespass to V's possession) but with the intent to return the bike, but D subsequently formed the intent to keep the bike (depriving V of it permanently) the crime of larceny would exist at the time D decided to permanently keep the bike he had unlawfully taken. So if there is any wrongfulness in the original taking, a subsequently formed specific intent to permanently deprive will be deemed to be contemporaneous in time with the taking. Professor Dressler explains in UCL5th, p. 567, that the continuing trespass doctrine is based on the assumption that when a person takes possession of another person's property by a wrongful trespass, every moment that he retains possession of it constitutes a new trespassory taking that continues until he terminates possession of the property.
As to carrying away (asportation), at common law asportation (a carrying away) of the stolen property by the thief was an essential element of larceny. In general, the courts said that the slightest movement of the property was sufficient to satisfy the requirement of asportation. Suppose a would be car thief was caught red-handed as he tried unsuccessfully to start and steal another's car. Is it larceny or only attempted larceny because of the absence of asportation? It would appear to be attempted larceny. Could you have a taking and carrying away even though the wrongdoer never takes the property into his actual possession? Visualize a case of possible constructive asportation of the owner's property where a vehicle is actually in possession of car dealership and is sold by a crook posing as a salesman to a bona fide purchaser who drives off with the car. Would the purchaser who actually takes and moves the car be considered as the innocent agent of the crook, thus satisfying the trespassory taking and asportation requirements re larceny of the car by the crook? [Note: Why would the purchaser of the car who was cheated out of his money by the crook be more likely to be a victim of false pretenses than larceny by trick? Did the purchaser intend to convey possession or possession and title to the purchase money?] Finally, asportation of property does not always involve a trespassory taking in the sense of exercising control over property. For example, suppose that D, moves a widget slightly; however, it the widget weighs 500 tons, may be difficult for D to take it.
Intent to pay later - What happens when property is for sale and the accused takes it, intending at the time of taking to pay later for the property taken? In this hypo, there is no intent to unlawfully deprive the owner of the value of the property as is required for common law larceny. Intent to pay later apparently does not act as a defense to larceny if the property taken was not for sale.
Claim of Right - If one who takes, acquires or appropriates property has an honest claim of right to ownership of the property, then one of the crucial elements of larceny and robbery , i.e., intent to steal, is missing. The common law crime of larceny requires a specific intent to steal. If the defendant subjectively believes that he owns and is entitled to possession of the property that he wrongfully takes , logic suggests the he be absolved of the crime of larceny because he does not intent to steal the property. This is the theory behind the defensive claim of right. At common law, claim of right was a defense to larceny and robbery. (Remember that common law robbery required proof of a completed larceny.) While modern day courts accept claim of right as a defense to the mens rea of larceny when the good faith honest claim is for specific property, if the defendant takes other property of another with the goal of settling a real or supposed debt due from that person, the claim of right defense may be precluded. Also, some jurisdictions show a reluctance to allow claim of right in cases of forcible takings, e.g., robbery or when property is obtained by threat, extortion. For an interesting approach, see Tufunga and Smith from California.
At common law, larceny was a capital crime. An early statute divided the offense into two grades - grand larceny if the value of the property taken exceeded twelve pence (the value of one sheep) and petty (petit) larceny if it did not. Both offenses were felonies under the statute, but whipping was substituted for death as the penalty for petty larceny
Hint to Law Students: Law school and bar exams sometimes involve temporary taking of property scenarios where there may not be either an intent to permanently deprive the owner of this property (as required by common law larceny) or the intent to withhold the property for so an extended period of time that a major portion of the value or enjoyment is lost to the owner or where D intends to dispose of the property in a manner that makes recovery of the property by the owner unlikely (as required by the MPC or TPC for theft). Often the facts in the exam will demonstrate what might be called a brief unauthorized use of a motor vehicle, usually a car. We recognize this not as larceny or theft but as joyriding, and many jurisdictions will have a special non-theft joyriding statute. See Sections 223.9 MPC - Unauthorized Use of Automobiles and Other Vehicles and 31.07 TPC Unauthorized Use of a Motor Vehicle. Hint to Law Students: Recall that common law larceny, embezzlement, false pretenses, receiving stolen property, burglary, robbery, and assault in the form of attempted battery, along with other crimes such as extortion (blackmail), forgery, kidnapping for ransom, attempt, conspiracy, solicitation, and, in degrees of murder jurisdictions, first degree premeditated murder, are deemed to be specific intent crimes. Under the common law approach, an honest, good faith mistake of fact (1), whether reasonable or unreasonable, is available as a defense to negate the specific intent of such crimes. General intent could be negated by a good faith, reasonable mistake of fact. Also, the common law allowed voluntary intoxication to negate specific intent of specific intent crimes. So watch for questions in which the accused was honestly mistaken or intoxicated concerning the specific intent element of the crime. For example, look for larceny questions in which D took property, mistakenly believing in good faith that the property was hers; if so, D would probably have a mistake of fact defense.
Do not buy stolen goods.
He who profits by a crime commits it.
Seneca Medea - First Century
The common law larceny offense required proof of a trespassory taking with intent to permanently deprive the victim of his property. Complicity theory in criminal law is based on accomplice liability or co-conspirator liability. The "fence" who simply purchases the stolen loot or booty after the offense would not fall within either of these complicity theories. Thus, it becomes necessary to create a statutory crime criminalizing the conduct of those who, with the requisite state of mind, e.g., knowledge that the goods are stolen, purchases the stolen goods or assists the thief in disposing of them. English parliament created a law in 1692 that treated the receiver of stolen goods as an accessory after the fact to larceny. In 1827 the parliament created the separate and independent crime of receiving stolen goods. We generally call this offense receiving stolen property. See Section 223.6 MPC; 18 USC Section 2315. (1), (2), (3)
A bank manager saw a nervous new employee diligently counting out $100 bills.
"You look like an industrious young man," he said. "Where did you receive your
business education?" "Yale," the young man replied."Excellent," the manager said.
"And what's your name?" "Yim Yohnson."
Toward the end of the eighteenth century, the expansion of the law of larceny through judicial interpretation by common law judges came to a standstill. The primary reason for judicial reluctance to expand the scope of larceny was the fact that the death penalty was attached as punishment for virtually all of the felony offenses of the time, including grand larceny. (Petty larceny of property valued at twelve pence or less was a non-capital felony.) By legislative enactment, the English property crimes continued to keep pace with the developing mercantile society. Prompted by Bazeley's Case, 168 Eng. Rep. 517 (1799), where an enterprising bank teller received money from a customer and immediately pocketed it, thus relieving himself of responsibility for common law larceny, the first embezzlement statute was enacted by the English Parliament in 1799. While there is no set-in-stone definition of statutory embezzlement (1), (2) in the various jurisdictions, it can be described generally as: (1) the fraudulent; (2) conversion (exercising the rights of ownership and thusly interfering with the owner's rights to the benefit, enjoyment or use of the property); (3) of the property (generally the same type of property covered by the larceny crime); (4) of another; (5) by one who is already in lawful possession of the property. Some embezzlement statutes require that the the lawful possession be through some type of fiduciary relationship, e.g., agency or trust. In such case, the crime may be visualized as a breach of the owner's trust. Note that embezzlement requires an actual conversion, unlike the requirement of common law larceny that there be merely a taking and asportation. On the other hand, unlike common law larceny where there must be an intent to permanently deprive the owner, embezzlement requires an intent to defraud the owner. The statutory crime of embezzlement has numerous variations but can be visualized as a crime against ownership because the embezzler has lawful possession of the property at the time of the crime. In this sense, it differs from common law larceny which requires a trespassory taking from the owner's possession. One who takes possession of property lawfully and then coverts it to his own use, benefit or enjoyment is not guilty of common law larceny. Embezzlers don't have the mere custody that was a fiction in common law larceny. Notice also that the embezzler's intent to defraud, as evidenced by the unlawful conversion, arises after s/he comes into lawful possession of the property. Embezzlers start off as lawful possessors. The act that embezzlement punishes is not the trespassory taking or larceny but the conversion, misapplication or misappropriation of the owner's property which the embezzler possesses. In short, to have embezzlement, we must have actual conversion of the property where the embezzler exercises the right of ownership over the property to the exclusion of the rightful owner's interest. Additionally, embezzlement doesn't require asportation in the sense of physical carrying away of the property; conversion by misappropriation is enough, as where an accountant juggles funds. Under some embezzlement statutes, there is no requirement that the embezzler intend to permanently deprive the owner of the property. Thus, unauthorized temporary borrowing of property, e.g., corporate funds by corporate officials to whom the funds had been entrusted, might be embezzlement under some statutes. See People v. Talbot, 28 P.2d 1057 (Cal. 1934). In modern times, jurisdictions with MPC- influenced theft statutes might treat such conduct as theft if the intent to the converter was to withhold property from the owner for so extended a period that a major portion of the value or enjoyment of the property is lost to the owner; also, there may be a statutory offense covering misapplication of property crime, e.g., TPC Section 32.45, that might apply to such situations. Under some embezzlement statutes if the defendant could be shown to have intended, at the time of conversion, to restore the exact property taken, it would not be considered embezzlement; however, under this approach, if the defendant intended to restore similar or substantially identical property, it would be considered embezzlement, even if it was money (fungible property) that was initially taken and it was other money, though of identical value, that he intended to return. [In the case of larceny, it the trespassory taker intended at the time of taking to return the very same property, there would be no intent to permanently deprive and no larceny.] [Students Note: In UCL5th, p. 571, Dressler states "Embezzlement involves two basic ingredients: (1) D came into possession of the personal property in a lawful manner; (2) D thereafter fraudulently converted the property (i.e., D performed some act that demonstrated his intent to deprive another of the property permanently)." While I do not personally agree that embezzlement always requires a showing of the embezzler's intent to permanently deprive, for purposes of our final exam we will take the Dressler statement as correctly stating the law.] In trying to understand the technical difference between common larceny and embezzlement, recall Commonwealth v. Ryan, 30 N.E. 364 (Mass. 1892); there Justice Holmes held that it was embezzlement when money delivered to an employee by a third person was put briefly into an open cash drawer by the employee who then pocketed the money without ringing up the sale. At common law, if a servant/employee in a shop stole money from the master's cash register or safe, this was held to be a trespassory taking from the master and was larceny (by servant). If the servant/employee lawfully received money from a customer and then put it in his pocket, the crime was viewed as embezzlement. During the nineteenth century, the concept of embezzlement was broadened to encompass various types of fiduciaries such as attorneys, public officials, corporate officials, trustees, agents, and brokers. Today the coverage of embezzlement in most jurisdictions has expanded to cover not only fiduciaries but virtually anyone who has property of another in possession. Under the influence of the MPC, in many jurisdictions embezzlement has been consolidated into the general concept of theft. See Section 31.02 TPC and Section 223.1 MPC.
If I were two-faced, would I be wearing this one?
Laws should be made to protect the trusting as well as the suspicious.
As through this world I've traveled, I've seen a lot of funny men;
some will rob you with a six-gun and some with a fountain pen.
Fraud may consist as well in suppression of what is true as in the representation of what is false.
The statutory crime of false pretenses (1- Wiki), (2), (3) is a crime of deception. It is aimed at deterring and punishing deceivers (cheaters, swindlers, con-men) from gaining title to property by deception (deceit, fraudulent misrepresentation). The first false pretense statute entered English law as a misdemeanor in 1756. It was necessary, since the common law crime of larceny was a crime against possession and sometimes owners were deceived by misrepresentation into parting with title or title and possession to their property. The theory that kept common law larceny from applying in this situation was that when, as a result of false representation, the defendant obtained title to property rather than mere possession, there could be no larceny because there was no opportunity for a subsequent misappropriation. But what about cheaters who only got possession of property as a result of deceitful misrepresentation? Even with the crime of false pretenses, there was still a gap between larceny and false pretenses when the the deceiving cheater only got possession of property. The upshot of that quandary resulted in the the 1779 Pear's Case, 168 Eng. Rep. 208, of horse-stealing where the common law judges extended common law larceny to situations where the trick or misrepresentation that resulted in the cheat gaining possession alone was treated as a trespass to possession and thus larceny. [Filling the Gap in Larceny with Larceny by Trick: Remember Pear's Case where Pear hired or rented a horse owned by Finch from a livery, intending from the outset to take the horse to a different town and sell it, which he did that same day. The horse's owner, Finch, did not intend to pass title to his horse, only possession. The common law court said that the possession was not consensual because of Pear's fraudulent intent when he first received it. Pear's fraudulent possession was never legal. When Pear sold the horse, the fraudulent conversion was a trespass to the owner's possession and, therefore common law larceny. More specifically it was called larceny by trick. When you think about how many rental horses there were in those times, extension of larceny to this type of horse stealing made a lot of practical sense, particularly since false pretenses didn't apply to the situation because of no intent by the livery services to transfer title or title and possession of their horses.] Back to false pretenses. We know that the limitations of common law larceny led to the statutory misdemeanor of false pretenses. When you look for false pretense look for transfer of title to property based on fraud. False pretenses is a crime against ownership of property. False pretenses typically consists of the following elements: (1) a false representation, i.e., a misrepresentation; (2) of a material; (3) past or present fact; (4) that is intended to and does cause the victim to pass title to his property; (4) to the misrepresenting party who knows his/her representation to be false and who intends thereby to defraud the victim. You are looking for a misrepresentation of a past or present fact of monetary significance, not a future promise or present intention, coupled with victim reliance on the misrepresentation playing a material part in inducing the victim to pass title, not just possession, of the victim's property to the accused, plus knowledge by the accused that his misrepresentation is false and an intent to defraud the victim. Remember, false pretenses involves a taking of title or title and possession of property with the consent of the owner; however, the owner's consent to the passage or giving up of title is not deemed effective because it was secured or induced by misrepresentation of a material previously or presently existing fact i.e. fraud. The facts must show that the victim gave up title because s/he relied on the misrepresentation. Notice that false promises of future occurrences did not qualify as misrepresentations. False pretenses is consolidated in the crime of theft under TPC Section 31.02 and is a species of "theft" under MPC Section 223.3
Cheats, swindles, and cons are sometimes the logical deceptive extensions of the sort of behavior that might be considered perfectly respectable in legitimate dog-eat-dog business.
Extortion as defined by statute generally in many jurisdictions is the act or practice of obtaining property something by illegal means, as by force, intimidation or coercion. (1), (2), (3), (4). In common law days, the so-called common law extortion was a limited offense - committed by a public official who illegally obtained property under color of office, esp., an official's collection of an unlawful fee. Common Law - In common law days, the statutory crime of extortion was limited in subject matter and scope. Extortion was the corrupt collection of an unlawful payment by an official under color of office. Neither threat nor coercion was an element of the offense. Modern day extortion statutes are broader and encompass the obtaining or attempting to obtain property of another by means of a threat (coercion, intimidation). Some refer to the crime of extortion as "blackmail." The crime of extortion is akin to robbery in the sense that it involves use of threat to obtain property, but it differs because the threat is not of immediate violent action. For example, the robbery threat might be as follows: "Your money or you will be injured or killed right now." The extortionate threat does not have to be one that is carried out in the presence of the the victim, as is true with traditional common law robbery where the taking is from the person by means of actual or threatened violence. See robbery below. The extortionate threat can also be of action that is not unlawful or violent, e.g., the threat to expose truthful information that would damage another's reputation by exposing truthful information or to ruin a person's credit score. The extortionate threat can be a threat of future harm, not necessarily physical. For example, an extortionate threat might be as follows: "Your money or your vacation cottage will be torched." (or "Your kids will be hurt or abducted some time in the future," or "Your husband/wife will be told about your sexual infidelity with a co-worker," or "You'll be accused of battery," or as judge in your criminal case, "I'll give you the maximum punishment," or "You'll be reported to the Better Business Bureau for rendering sub-par service.") In the case of public servants extorting a victim, the public servant may even be required to do the act that s/he threatens to do unless the victim provides him/her with property. Attempted larceny and larceny merge into extortion. Some jurisdictions, see MPC Section 223.4 and TPC Section 31.03 below, require that the money or other property actually be obtained. In those jurisdictions, when the would be extortionist is arrested before obtaining the loot, he will be liable for attempted extortion (attempted theft if the extortion crime is consolidated). Note that there is a crime known as compounding that might at first blush be confused with theft by extortion. How does compounding differ from extortion? In compounding the unlawful act is the putative complainant in a criminal case (who becomes the defendant in the compounding case) soliciting, accepting,or agreeing to accept a benefit in consideration of abstaining from, discontinuing or delaying a criminal proceeding; it applies only after criminal proceedings have been instituted. See, for example, Section 36.05 TPC where the crime of compounding has been made part of the offense of tampering with a witness. MODEL PENAL CODE THEFT AND RELATED OFFENSES The Model Penal Code treats theft in Article 223; forgery and fraud are the subject of Article 224. The MPC defines "theft" in three sections in terms of (1) theft by unlawful taking and disposition (This encompasses the crimes of larceny and embezzlement.), Section 223.2; (2) theft by deception (This encompasses larceny by trick and false pretenses.), Section 223.3; and (3) theft by extortion, Section 223.4. In addition to these three categories of theft, the MPC also defines four other special categories of theft, namely, (1) theft of lost, mislaid or misdelivered property, Section 223.5; (2) receiving stolen property, Section 223.6; (3) theft of services, Section 223.7; and (4) theft by failure to make required disposition of funds received, Section 223.8. Finally, the MPC defines the non-theft (and, thus, not consolidated) offense of unauthorized use of automobiles and other vehicles, Section 223.9.
MPC Consolidation: Re consolidation, the issue bound up in the consolidation of theft crimes is whether we should preserve the rather complex differentiations between the different property crimes and the strict charging rules that accompanied that complexity. This antedated system required prosecuting attorneys to make very neat choices when carving an allegation of a property crime out of a given set of facts. History revealed that under the old complex system defendants charged with one type of property crime would often seek and sometimes obtain reversal on appeal by contending that the evidence technically established the commission of a different property offense than the one charged, i.e., a claim of fatal variance between the allegata and the probata - the allegations don't conform to the proof. Section 223.1 MPC consolidates theft offenses into a single offense, setting forth several different "theft" crimes and saying that the prosecution may prove a different form of theft crime than was charged. Specifically, with reference to Article 223 - Theft and Related Offenses, it says, "Conduct denominated theft in this Article constitutes a single offense. An accusation of theft may be supported by evidence that it was committed in any manner that would be theft under this Article, notwithstanding the specification of a different manner in the indictment or information, subject only to the power of the Court to ensure fair trial by granting a continuance or other appropriate relief where the conduct of the defense would be prejudiced by lack of fair notice or by surprise."
MPC Deprivation: The MPC definition of "deprive" is found in Section 223.0(1) MPC. It, like the Texas definition in Section 31.01(2) TPC, is considerably broader than the common law larceny requirement of intent to permanently deprive. Specifically, Section 223.0(1) states: "deprive" means: (a) to withhold property of another permanently or for extended a period as to appropriate a major portion of its economic value, or with intent to restore only upon payment of reward or other compensation; or (b) to dispose of the property so as to make it unlikely that the owner will recover it.
The MPC eliminates the common law requirement of asportation and requires only the unlawful taking or exercise of unlawful control. See Section 223.2(1) MPC. The MPC includes, under the definition of theft, anyone who takes or exercises unlawful control. See Section 223.2(1). The "unlawful" requirement has the purpose of necessitating that the taking or control be without the owner's effective consent.
MPC Theft By Unlawful Taking or Disposition - Section 223.2 deals with movable property in (1) which says that a person is guilty of theft if he unlawfully takes, or exercises control over, movable property of another with purpose to deprive him thereof, and (2) which says that a person is guilty of theft if he unlawfully transfers immovable property of another or any interest therein with purpose to benefit himself or another not entitled.
MPC Theft by Deception - Section 223.3 describes the four circumstances in which one will be liable for theft when he purposely obtains property of another by deception, i.e., (1) one creates or reinforces a false impression, including false impressions as to law, value, intention or other state of mind; but 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; or (2) prevents another from acquiring information which would affect his judgment of a transaction; or (3) fails to correct a false impression which the deceiver previously created or reinforced, or which the deceiver knows to be influencing another to whom he stands in a fiduciary or confidential relationship; or (4) fails to disclose a known lien, adverse claim or other legal impediment to the enjoyment of property which he transfers or encumbers in consideration for the property obtained, whether such impediment is or is not valid, or is or is not a matter of official record. The Section also makes clear that the term "deceive" does not, however, include falsity as to matters having no pecuniary significance, or puffing by statements unlikely to deceive ordinary persons in the group addressed. We are all exposed to overblown statements in advertising, e.g, the old jalopy that has a sign on the windshield saying "Just like new!" or the soap powder that "cleans like magic" or the cigarette that claims "one puff and it's springtime." These statements are not deceptive in the criminal sense of affecting (influencing) the judgment of another in the transaction. Compare with "deception" in Section 31.01(1) TPC. MPC Theft by Extortion - Section 223.4 MPC defines theft by extortion as purposely obtaining property of another by threatening to; (1) inflict bodily injury on anyone or commit any other criminal offense; (2) accuse anyone of a criminal offense; (3) expose any secret tending to subject any person to hatred, contempt, or ridicule, or to impair his credit or business repute; (4) take or withhold action as an official, or cause an official to take or withhold action; (5) bring about or continue a strike, boycott or other collective unofficial action, if the property is not demanded or received for the benefit of the group in whose interest the actor purports to act; (6) testify or provide information or withhold testimony or information with respect to another's legal claim or defense, or (7) inflict any other harm which would not benefit the actor. Compare with "coercion" in Section 1.07 (9) TPC.
Note that the property must be obtained by the extortionist for MPC theft by extortion to exist. (Texas takes the same approach.) Otherwise, the offense will be attempted theft. Note that the MPC makes it an affirmative defense to prosecution based on paragraphs (2),(3) or (4) above that the property obtained by threat of accusation, exposure, lawsuit or other invocation of official action was honestly claimed as restitution or indemnification for harm done in the circumstances to which such accusation, exposure, lawsuit or other official action relates, or as compensation for property or lawful services. This has the effect of creating a claim of right defense that the prosecution must disprove beyond a reasonable doubt when the defense produces evidence of claim of right when the threat fits within the (2), (3) and (4) in the above paragraph (red for easy location). Apparently a creditor may threaten a debtor with loss, but only to the amount lawfully owed to the creditor. But may the creditor also threaten to sully the debtor's reputation in the business community in order to exact immediate payment of the debt?
MPC Theft of Lost, Mislaid or Misdelivered Property: MPC Section 223.5 covers scenarios involving theft of lost, mislaid or misdelivered property. (Texas has no corresponding law.) The MPC states that a person who comes into control of property of another that he knows to have been lost, mislaid, or delivered under mistake is guilty of theft if, with the purpose to deprive the owner thereof, he fails to take reasonable measures to restore the property to the one entitled to it. Notice that, unlike the common law, the MPC does not require that there be a reasonable clue to ownership at the time of the taking of lost property. This can come to light later in the process.
MPC Receiving Stolen Property: The MPC makes a person guilty of theft if he purposely receives, retains, or disposes of movable property or another knowing that it has been stolen, or believing that it has probably been stolen, unless the property is received, retained, or disposed with purpose to restore it to the owner. The word "receiving" means acquiring possession, control or title, or lending on the security of the property. The "lending" provision allows the crime to include pawnbrokers. Notice that the MPC includes the word retain; this covers the situation where a person might have innocently received the property but after later learning that the property was stolen chooses to keep it. Compare with the Section 31.03(b)(2) & (3) TPC approach to receiving and concealing by requiring that the accused "know" the property was stolen by another and making it and law enforcement stings aspects of unlawful appropration in the theft crime.
How much must the alleged receiver of stolen property know about the "hotness" of the goods s/he is receiving? What do we mean when we say that the receiver must know or believe that the property was stolen. Actual knowledge or belief is required by most jurisdictions. The MPC allows belief that the property has probably been stolen to suffice as the culpable mental state. Would it be appropriate to allow conviction if a reasonable person in the defendant's position would or should have "known." Should recklessness or even criminal negligence suffice? In some states, proof less than actual knowledge that the goods were stolen will suffice. In other states, e.g., Texas, actual knowledge is required. However one may find that some of those states, e.g., Texas, provide for a presumption, usually in the form of a permissible inference, of actual knowledge that the goods were stolen when certain circumstances are shown to exist.
Interestingly, the MPC provides that the knowledge or belief that the property has been stolen is presumed in the case of a "dealer" (a person in the business of buying or selling goods including a pawnbroker) who (a) is found in possession or control of property stolen from two or more persons on separate occasions; or (b) has received stolen property in another transaction within the year preceding the transaction charged; or (c) being a dealer in property of the sort received, acquires it for a consideration which he knows is far below its reasonable value. This presumption can be used by prosecutors who have the gumption to go after the pawnbrokers, junkyards, auto salvage yards, etc. that are receivers of stolen goods. [Note: A competent burglar commits several hundred burglaries before having to do time. That burglar has no personal use for the majority of the property that he steals. The burglar needs to convert the stolen property for cash. Where does s/he go to accomplish this goal? Common sense would suggest that most stolen property winds up in pawnshops and flea markets, often in a different city from where it was stolen. If we want to discourage burglars, it might be wise to choke off their sources for converting the stolen goods into cash. That would mean strong regulation of pawn shops and flea markets. You may be interested to know that the pawnshop owners typically have strong lobbies in the state legislatures. See the discussion below relating to Texas.] MPC Theft of Services: Unlike common law larceny that applies only to tangible personal property, the MPC law of theft covers theft of service. Section 223.7 MPC states that a person is guilty of theft if he purposely obtains services which he knows are available only for compensation, by deception or threat,or by false token or other means to avoid payment for services; also, a person commits theft if, having control over the disposition of services of others , to which he is not entitled, he knowingly diverts such services to his own benefit or to the benefit of another not entitled thereto. Services are broadly defined to include labor, professional services, transportation, telephone service, accommodation in hotels, restaurants, etc. If the actor refuse to pay or absconds without paying or offering to pay gives rise that the service was obtained by deception as to intention to pay. Compare with theft of service in Section 31.04 TPC.
MPC Claim of Right Defense to Theft: The MPC, Section 223.1(3), provides claim of right as an affirmative defense to theft when the actor (a) is unaware that the property or service was that of another or (b) acted under an honest claim of right to the property or service involved or that he had a right to acquire or dispose of it as he did or (3) took property exposed for sale, intending to purchase and pay for it promptly, or reasonably believing that the owner, if present, would have consented. The MPC appears to grant the claim of right defense to theft of services as well as property. [Note: Unlike the TPC, "affirmative defense" under the MPC, Section 1.12(1), means that the defense has the burden of production, but once that burden has been met, the prosecution has the burden of persuasion to rebut the affirmative defense beyond a reasonable doubt.]
Grading MPC Theft Crimes: The MPC approach to grading crimes is found in Section 223.1(2). Theft is a felony of the third degree if the amount involved exceeds $500, or if the property stolen is a firearm, automobile, airplane, motorcycle, motorboat or other motor-propelled vehicle, or in the case of receiving stolen property, if the receiver is in the business of buying and selling stolen property. An other theft is a misdemeanor, except if the property was not taken from the person or by threat, or in breach of a fiduciary obligation, and the actor proves by a preponderance of the evidence that the amount involved was less than $50, the offense is a petty misdemeanor. As to amounts, remember that the MPC was written in 1962 when the value of a dollar far exceeded its present value. Inflation would drastically change the MPC $ numbers. [Note: Prior to enactment of the revised TPC in 1974, $50 was the line between felony and misdemeanor theft in Texas.] Notice that this MPC grading scheme applied to all theft. [Note: At the this time in 1962, Texas had some 60 different theft crimes, each with its own separate punishment provision.]
In some circumstances, however, the MPC does not confine itself to actual value of the property stolen when calculating the appropriate punishment category. Section 223.1(2)(c) indicates that "the amount involved in a theft shall be deemed to be the highest value, by any reasonable standard, of the property or services which the actor stole or attempted to steal." The grading factors are considered as material elements of the offense according to the MPC commentary in Section 1.13(10) and in Section 2.02, Comment 1. The mens rea element applies to all the material elements of the offense. Since there is no mens rea specified in the grading language, a standard of recklessness will be applied. So if an actor recklessly believes he is stealing a cheap glass imitation of the Koh-i Noor diamond but is actually stealing the real thing, he may be convicted of theft using the real value of the diamond. However,when there is an honest but negligent mistake under Section 2.04(1) as to the value of the property, i.e., where the actor mistakenly, though negligently, believes that the property is worth less than it actually is, mistake can be used to lower the grade of the offense. The theory of the MPC is that the actor's own culpable state of mind, even though grounded in negligence, should be the focus. So if the thief negligently thinks he's stealing a cheap glass imitation of the Koh-i Noor diamond but is actually stealing the real thing, value will be based on the glass imitation. [Note: This differs from the Texas approach to monetary value which is based on the actual fair market value of the property and not what the thief thinks he's getting. See Section 31.08 TPC] What should "value" mean? Should we always look only to the actual value of the stolen property or services, or, when the actor mistakenly thought he was stealing something of materially less value, should he be allowed to claim mistake of fact and benefit by being punished according to what he thought the value of the property or service was? Consolidation in Texas: Unlike the MPC that sets forth several theft crimes and says that the prosecution may prove a different form of theft than was charged, the TPC creates a single theft offense and allows it to be proven in many different ways. Texas, in Section 31.02 TPC, consolidates various forms of theft, e.g., theft by false pretext, conversion by a bailee, theft from the person, shoplifting, acquisition of property by threat, swindling, swindling by worthless check, embezzlement, extortion, receiving or concealing embezzled property, and receiving or concealing stolen property, into a single offense - theft - and allows it to be proven many different ways. When more than one theory of theft, e.g., consent by owner ineffective due to deception, coercion, youthfulness, intoxication, or diminished capacity for property disposition due to advanced age, is charged in separate paragraphs of the charging instrument, consolidation allows the accused to be convicted even if the jury members differ as to what manner of theft, e.g., why the consent was not effective, was committed. One might worry that consolidation of theft crimes prevents the punishing authority from fitting punishment to the particular manner and mode of commission. One answer to that quandary is to establish a range of punishment that is broad enough so that it can be tailored to the facts of the particular case. The Texas Penal Code treats theft in Chapter 31. The general theft of property statute is Section 31.03 TPC. Section 31.03 (a) TPC defines theft as the unlawful appropriation of property with intent to deprive the owner of the property. Notice that the appropriation must be without the "effective consent" of the owner (invito domino - without the consent of the owner). The "owner" includes anyone with title to the property, possession of the property (whether lawful or not) or with a greater right to actual care, custody, control or management of the property than the defendant. See Section 1.07 (35) TPC. The gravamen of the theft offense in Texas is in depriving the owner of the use, benefit, enjoyment of his or her property without consent. See McClain v. State, 687 S.W.2d 350 (Tex. Crim. App. 1985). The requirement of "appropriation" serves to distinguish the theft crime from destruction of property crimes, e.g., criminal mischief, see Sections 28.03, 28.04 TPC. "Appropriate" is the key word in the Texas definition of theft. We don't use the word "taking." See Sections 31.01(5), 31.03(a) TPC. The word "appropriate" refers in part to an acquisition or exercise of control over the property. The various methods by which D may unlawfully appropriate need not be pled in the charging instrument, e.g., indictment, but they must be proved by the Texas prosecutor. There is not requirement that the thief (D) actually converted the property to his own use and benefit; it is sufficient if it is shown that he appropriated it by acquiring control over it or acquiring title to it. Exercise of control does not require receipt of the property. TPC Ownership of Property - As to "ownership," the Texas statute talks about "appropriation" without the owner's "effective consent." Who qualities as an "owner"? Notice that Section 1.07 TPC defines the word "owner" in terms of title, possession (lawful or unlawful) or greater right to possession. See McGee v. State, 572 S.W.2d 723 (Tex. Crim App. 1978). As to situations in which D has a joint interest in property, see Compton v. State, 607 S.W.2d 246 (Tex. Crim App. 1980) holding that D's joint interest in property prevents the use of the concept of greater right to possession in determining whether D appropriated the property without the effective consent of V. What about partnership property? We know that the common law held that D could not be liable for larceny of partnership property owned jointly with V. The Texas position is not settled by binding case law. Note the basic property principle in the United States that the owner of property has a superior right to possession of his stolen property over a bona fide purchaser - a piratus et latronibus capta dominium non mutant - the ownership of things taken by pirates and thieves does not change; in some countries of Western Europe, the bona fide purchaser of stolen property has a superior property interest than the original owner from whom it was stolen. TPC Intent to Steal - The Animus Furandi - The Texas theft crime includes the mental state of "intent to deprive the owner of property." See Section 31.03(a) TPC. Intent to permanently deprive surely suffices to prove the deprivation (intent to steal, animus furandi) The element of theft, but a deprivation less than permanent also suffices when the intent is to withhold the property for so extended period of time that a major portion of the value or enjoyment is lost to the owner or where one intends to dispose of property in a manner that makes recovery of the property by the owner unlikely. Again, it is also not essential to show that D intended to benefit himself. See Section 31.01(2) TPC for the definition of "deprive." TPC Lost Property - In Texas, in order for lost property to be subject to theft by the finder, it would seem that the circumstances must be such that the owner can be identified by ordinary means, i.e., there must be an indicia of ownership. See Williams v. State, 268 S.W.2d 670 (Tex. Crim. App. 1954). TPC Misdelivered Property - If a bank erroneously credits D's account with money and D knows that the credit was a mistake, may D spend the money without being liable for theft? See Clayton v. State, 872 S.W.2d 4 (Tex.App [Tyler]) 1993) which holds that this would be theft since lack of effective consent is shown by the exercise of control over property that D knows he has no right to possess. See also Bailey v. State, 885 S.W.2d 193 (Tex. App. [Dallas] 1994). TPC Claim of Right - The TPC is silent on claim of right. [Note: There's a history to the glaring omission of claim of right from the theft chapter of the TPC. The proposed revision of the TPC presented to the Texas legislature by the State Bar in 1973 had a provision for the claim of right defense. The proposed Texas Penal Code stated in Section 31.10 - "It is a defense to prosecution under this chapter that the actor: (1) acted under an honest claim of right to the property or service involved; or (2) acted in the honest belief that he had the right to obtain or exercise control over the property or service as he did; or (3) obtained or exercised control over property or service honestly believing that the owner, if present, would have consented." The Texas Legislature, composed largely of persons unlettered and naive in matters relating to the basic law of crimes and defenses, took the claim of right provision out of the revised code that it enacted in 1974. We can all thank our lucky stars that these politicians didn't do much tampering with the proposed code. It turned out to be one of the best in the country - not because of what the legislature did, but because of what they didn't do.] One might argue that claim of right in Texas is simply a part of mistake of fact. But remember that any claimed mistake of fact under Section 8.02 TPC must be reasonable (another moronic change penal code change made by the Texas legislature that deprives the person who negligently or recklessly picks up his neighbor's mail or newspaper or a stranger's umbrella or briefcase from claiming mistake of fact to negate the element of intent to steal in a theft/larceny prosecution); whereas, traditional claim of right is based simply on an honest, good faith belief, reasonable or unreasonable, that it is the actor's property or that the owner has given the actor permission to take it or that the owner has abandoned it. TPC Receiving Stolen Property - Law enforcement officers don't always catch the thief in the act of unlawful taking. What happens when a suspect is found in possession of property that has been recently stolen? Should case law allow a jury to reasonably infer or conclude (a permissible inference) from such circumstantial proof that the suspect stole the property? It stands to reason that those who steal property may remain in possession of it for some time afterwards. On the other hand, persons may acquire property honestly from a thief shortly after it was taken. It is always possible that the defense may have a reasonable explanation for the accused's possession, but one can imagine circumstances that would support the logical inference that the suspect in possession of stolen property stole the property. Suppose, however, that we think that someone else might have stolen the property and that the defendant is a receiver of stolen property, perhaps a fence. If the defendant is the receiver of the stolen property and knew that the property was stolen, should we create a separate crime of receiving stolen property or just consolidate receiving into the general concept of theft? Texas, in Section 31.02 TPC, has chosen to consolidate receiving and/or concealing stolen or embezzled property into the general Section 31.03 theft crime. TPC Theft by False Pretenses - Theft by deception falls within the general theft statute in Texas. Deception is one of the conditions that makes consent to appropriation of property ineffective. See Section 31.01(3)(A) TPC. deception is defined in five circumstances in Section 31.01 (1) TPC. re puffing or overblown statements, notice that Section 31.01(1) requires that the deceptive words or conduct be ones likely to affect the judgment of another in the transaction. TPC Theft by Extortion - Extortion is expressly consolidated into the crime of theft, Section 31.03 TPC, by the consolidation statute, Section 31.02 TPC. Consent to appropriation of property is not effective if it is induced by coercion (threat). To find the extortion theory in the general theft crime, one must look to the definition of "coercion" in Section 1.07(9) TPC. Note that under Section 1.07(9) "coercion" means, among other things, a threat, however communicated: (A) to commit an offense; (B) to inflict bodily injury in the future on the person threatened or another; (C) to accuse a person of any offense; (D) to expose a person to hatred, contempt or ridicule; (E) to harm the credit or business repute of any person; (F) or take or withhold action as a public servant, or to cause a public servant to take or withhold action. The threat may be implied or explicit. The harm threatened is not always required to be against the person threatened. For example, the threat to commit an offense, e.g., a bomb on an airliner, even though it doesn't endanger the person, e.g., the mayor, threatened or the threat to inflict bodily injury in the future may be against someone, e.g., a loved one, other than the person threatened or the threat to harm business repute may be against someone other that the person threatened. Although most states don't require appropriation of the property at issue for extortion to exist, Texas does because the theft statute requires appropriation. If the extortionist is arrested before he appropriates the victim's property, the offense will be attempted theft. TPC Value - The TPC approach is to consider what the actor intends to steal as immaterial in the proof of value. Sections 31.08 (theft) and 32.02 TPC (fraud) tell you how to to determine value at the relevant time and place, e.g., fair market value, or if that cannot be determined, replacement value. Notice that the actor can offset the ascertained value of the property or service if he can prove by a preponderance of the evidence that he gave consideration for or had a legal interest in the property or service stolen. See Section 31.08 TPC. The TPC allows for aggregation of value by the prosecution when all the items are stolen pursuant to one scheme or continuing course of conduct. See Section 31.09 TPC . For aggregation, the owner does not have to be the same, nor do the thefts have to occur closely in time and space. If the prosecution chooses to aggregate value, it must be pled in the in the charging instrument. What if the prosecution alleges a wrong value? Where the charge is a misdemeanor theft and the proof shows it to be a felony amount, jurisdiction remains in the misdemeanor court, and the defendant is tried for a misdemeanor with no ground of complaint. if the charge is a felony , but the proof shows a misdemeanor, the felony (district) court has jurisdiction, but only for a misdemeanor. In cases where value is material, it is an element of the crime and failure to prove it is fatal. Sometimes value is not material to the grade of offense. There are a number of examples in Section 31.03(e) TPC. For example, regardless of value theft from the person or theft from a human corpse or grave is a state jail felony. Special interest groups have done what is necessary to have certain animals, e.g., sheep, cattle, goats, swine, horses, exotic fowl, and exotic livestock, or any part thereof protected by the statute regardless of value. [Note: What punishment for stealing a ham or rack of ribs or a side or beef or a can of cat food made from horse meat? Would the part have to be from a rustled animal or could it be from the red meat section of the corner grocery?] As the rural Texas judge Woodrow Suggs explained after being asked why killers don't get indicted and cattle thieves get twenty years:
"There's a lot of folks in Texas that need killin', but we don't have any cows that need stealin'."
Basic Texas Theft Punishment Ladder Based on Valuation
Amount of Monetary Loss Punishment Range
$300,000 or more First Degree Felony
$150,000 < $300,000 Second Degree Felony
$30,000 < $150,000 Third Degree Felony
$2,500 < $30,000 State Jail Felony
$750 < $2,500 Class "A" Misdemeanor
$100 < $750 or Class "B" Misdemeanor
< $100 Class "C" Misdemeanor
TPC - Special Texas Statutes That Protect Consumers From Fraud - In Texas we have specific penal statutes that protect the consumer from fraud, e.g., Deceptive Business Practices, Section 32.42 TPC; and penal statutes that protect business, e.g., forgery, Section 32.21 TPC, credit card abuse, Section 32.31 TPC, and false statement to obtain credit, Sections 32.32 TPC; misapplication of fiduciary property or property of a financial institution, including removing mortgaged property, Section 32.45 TPC ; and issuing a bad check with knowledge that there are insufficient funds on account, Section 32.41 TPC ( a class C misdemeanor, irrespective of the amount of the check and without the necessity of proving intent to steal). Forgery (1), (2) (also included passing a forged instrument) is a statutory crime and not judge-made. Forgery can be described as the false making or altering of a legally significant instrument with the intent to defraud, e.g., a forged check. (1 - defined). Since forgery in most instances is committed with the purpose of obtaining property, it may be viewed as a form of theft by deception. The purpose of criminalizing forgery is to discourage and punish those whose conduct puts the authenticity of instruments into question. The typical early forgery statutes required that the fraudulent making or altering of a writing with legal significance had to render it false and not merely inaccurate or a misrepresentation.
MPC Forgery - Forgery under the MPC is defined in Section 224.1. The MPC definition of a "writing" is quite broad. A person is guilty of forgery if, with purpose to defraud or injure anyone, or with knowledge that he is facilitating a fraud or injury to be perpetrated by anyone, the actor (a) alters any writing of another without his authority; or (b) makes, completes, executes, authenticates, issues or transfers any writing so that it purports to be the act of another who did not authorize that act, or to have been executed at a time or place or in a numbered sequence other than was in fact the case, or to be a copy of an original when no such original existed; or (c) utters (passes) any writing which he knows to be forged in a manner specified in (a) or (b) above. Note that Section 224.4 MPC contains a prohibition against simulating antiquities and rare objects.
TPC Forgery - Texas recognizes the separate offense of forgery and criminal simulation as property crimes in Sections 32.21 and 32.22 TPC See McFarland v. State, 605 S.W.2d 904 (Tex. Crim. App. 1980) that explains the types of forgery, i.e., (1) making, (2) uttering (passing), and (3) possessing a forged instrument.
Moving across the dimly lit parking lot, a law student was suddenly approached
by a grizzly stranger who had slipped out of the shadows. "Please sir," asked the stranger,
"would you be so kind as to help a poor unfortunate fellow who is hungry and out of work?
All I have in the world is this gun."
Common Law - Common law robbery may be defined generally as the illegal taking of property from the person of another, or in the person's presence, by violence or intimidation. may be visualized as a property crime aggravated by violence or threat of violence against the person or as a crime of violence against the person aggravated by a threat to property. (VIDEO) (VIDEO) Either way you look at it, robbery involves a combination of the laws of assault (battery) and larceny (theft). We could probably get along with simply charging the offender with the two separate crimes of assault (or battery) and larceny (theft). However, we have chosen to create the crime of robbery, into which these separate crimes merge. The common law of robbery (1), (2) is generally defined as the commission of theft from the person or in his presence by the use of force or threat of force. In effect, the robbery crime involves a violation of a property right (proof of a completed larceny is required) coupled with a crime against the person (assault or battery), i.e., assault for the purpose of larceny, coupled with the completion of larceny. In the absence of statutory modification the constituent elements of robbery at common law are as follows: (1) a trespassory taking; (2) accompanied by asportation; (3) of personal property of value; (4) from the person of another or in his presence; (5) against his will (without his effective consent); (6) by use of violent force or putting him in fear through threat of immediate force; (7) with intent to steal (animus furandi).
At common law, the force or intimidation had to occur during the commission of larceny. Common law courts typically required that the force or intimidation occur during the actual taking. Thus, at common law, when a defendant took possession of property without the intimidating use of force or fear but then employed force or fear in order to keep the property or effect escape, the offense would not be robbery. Force used to prevent a victim from recapturing property that was already taken and carried away was not robbery, though it would be assault or battery. [Note that not all takings from the person are robbery. The pickpocket or even the purse-snatcher who takes without threat of force or use of violence is a larcenist/thief from the person, not a robber.] On the other hand, a minority of jurisdictions including the MPC and the TPC, hold that force used in attempt to commit, in commission, or in flight after the attempt or commission of theft qualities as robbery. Also, some jurisdictions, including the MPC and TPC, do not adhere to the common law rule that required a completed theft as an element of robbery. Under the common law, the incomplete robbery, e.g., where theft was not completed, would be treated as an attempted robbery. In some jurisdictions, e.g., Texas but not the MPC, the crime of robbery is aggravated when the robber uses or exhibits a deadly weapon.
[Note: Women should be wary of hijackers on the streets. Robbery is the only crime in which women seem more likely to be victimized by strangers rather than intimates, other family members, or acquaintances.]
MPC Robbery - Section 222.1 MPC defines the offense of robbery. Like Texas, MPC robbery only occurs "in the course of committing theft." The three circumstances which give rise to robbery are: (1) inflicting serious bodily injury upon another, (b) threatening another with or purposely putting him in fear of immediate bodily injury; or (3) committing or threatening immediately to commit any felony of the first or second degree. The MPC interprets the requirement of force or intimidation to include force or threat of force that takes place during attempted theft or during flight from attempted or completed theft. Robbery occurs under the MPC even though the robber is unsuccessful in taking the property. An attempted theft and a threat to cause injury suffice for MPC robbery. The focus is on the forceful aspects of the offense rather than the property aspects. The MPC limits robbery to forceful or intimidating acts that constitute an immediate threat to commit or commission of a first or second degree felony offense or involve either serious bodily harm or the threat of it. The offense jumps from a second degree felony to a first degree felony if in the course of committing the theft the actor attempts to kill anyone, or purposely inflicts or attempts to inflict serious bodily injury. (Note: Most jurisdictions, e.g., Texas, do not limit robbery to this high level of bodily harm.] When there is no threat of a first or second degree felony and less than serious bodily injury or the threat of it, one may look to the MPC offenses of extortion, assault and theft as potential charges. Note that, like the common law, claim of right is a defense to MPC robbery.
TPC Robbery - The offense of robbery is found in Chapter 29 TPC. There are two robbery offenses, Robbery in Section 29.02 TPC and Aggravated Robbery in Section 29.03 TPC. Robbery can only occur in the course of committing theft, i.e., conduct that occurs in an attempt to commit, during the commission, or in immediate flight after the attempt or commission of theft. The essence of robbery as opposed to theft is a physical interaction in the form of injury or threat of injury between the accused and the victim. However, unlike the common law, it is not required that the victim of the theft be the same person who is injured or threatened with imminent bodily injury or death. Note that a theft or attempted theft can turn into a robbery if the thief inflicts injury or threatens injury during the attempt, the commission, or flight from attempt or commission of the theft. Similarly, robbery can occur in Texas, under the terms of the robbery statute, where D obtains or attempts to obtain property from V1, e.g., the bank manager husband who is at the bank, while D is threatening imminent bodily injury or death to V2, e.g, D is holding a loaded gun at the head of V1's wife, V2, at the family home. Visualize a scenario where D calls V1 from the family home and with a gun at V2's head threatens to kill or rape V2 unless V1 immediately delivers $50,000 to an innocent waiting delivery service messenger hired by D. Unlike common law but like the MPC, one may be liable for robbery even though the theft was not completed. See Gilmore v. State, 822 S.W.2d 350 (Tex. App. - Ft. Worth - 1992). Federal Robbery Statutes - The crime of carjacking (1 - US Atty's Manual), 18 USC 2119, is one example of the federal government's incursion into what is normally considered violent street crime that the state courts can handle. Carjacking 18 USC Section 2119 is a species of robbery. The crime is described thusly: Whoever, with the intent to cause death or serious bodily harm (1) takes a motor vehicle that has been transported, shipped, or received in interstate or foreign commerce from the person or presence of another by force and violence or by intimidation, or attempts to do so, shall - (1) be fined under this title or imprisoned not more than 15 years, or both, (2) if serious bodily injury (as defined in section 1365 of this title, including any conduct that, if the conduct occurred in the special maritime and territorial jurisdiction of the United States, would violate section 2241 or 2242 of this title) results, be fined under this title or imprisoned not more than 2 years, or both, and (3) if death results, be fined under this title or imprison any number of years up to life, or both, or sentenced to death. See Jones v. United States, 526 U.S. 227 (1999).
The faults of the burglar are the qualities of the financier.
The object of the common law and modern day burglary offense (1), (2) is not just to prevent trespasses, but rather trespasses that are the first step to target crimes that may be of greater magnitude, e.g., rape, robbery, murder, assault, theft, etc. Burglary was a common law crime that was designed to protect the habitation, i.e. the dwelling. It was a felony. Common law burglary was defined as "the breaking and entering of the dwelling house of another at night, with intent to commit a felony therein." Note the elements: (1) actual or constructive breaking; (2) entry by the defendant or any portion of his body or by an inanimate instrumentality that of itself is capable of committing the target felony; (3) at night, e.g., thirty minutes after sunset and thirty minutes before sunrise; (4) dwelling house, i.e., a place of human habitation and the surrounding curtilage, e.g., garage; (5) occupied by another; 96) with intent to commit a felony inside the dwelling. Breaking occurred when one used some amount of force to create an opening (a hole) or enlarge an existing one one in the structure or substructure, i.e., parts of the house that are built into the house or when one constructively broke by threat or fraud. At common law, entry existed if a body part or an instrument or tool capable of committing the offense, e.g., a long hook to grab the property, enters the property with the actor on the other end of it. However, if the tool, e.g., a pry bar, is used only to gain entry, e.g., breaking a lock or forcing open a window, this alone was not enough to constitute an entry because the tool is not used to commit the offense. The intent to commit a felony had to be present at the time of entry. However, it was not necessary that the felony be committed for burglary to occur. If the felony was committed, there was no merger of the burglary and the target felony.
Modern statutes based on common sense have greatly enlarged the scope of the burglary crime. In some the requirement of breaking is omitted. In most, the common law restriction that limited the crime to the dwelling house has been expanded to include all buildings, residential and commercial. Often it is a crime to remain in a building that was open to the public after it has closed. Nighttime has typically been eliminated as an element in burglary statutes, though it may function as an aggravating factor in some statutes. Intent to commit a felony has been expanded to include all species of theft (misdemeanor and felony) and misdemeanor assaults.
Burglary is a good example of a conduct offense rather than a result offense. From a conceptual viewpoint, burglary is akin to a criminal attempt, an inchoate offense, in that it is a crime even though the object offense is not completed. Generally, criminal laws don't allow conviction for an inchoate offense to commit an inchoate offense, e.g., attempt to commit a conspiracy. But what about attempted burglary? One might argue that attempted burglary constitutes an attempt to attempt to commit the object offense and therefore could not be a cognizable offense. However, since burglary is view as a substantive, rather than inchoate, crime, attempted burglary is typically accepted as a valid crime.
MPC Burglary - Burglary is defined in Section 221.1(1) MPC. The crime is defined as entering a building or occupied structure, e.g., a place, vehicle or structure adapted for overnight accommodation of persons or for carrying on business therein, whether or not a person is actually present, with the purpose to commit a crime therein, unless the premises are at the time open to the public or the actor is privileged or licensed to enter. It is an affirmative defense that the building or structure was abandoned.
MPC burglary is a second degree felony if it is perpetrated in the dwelling of another at night or if the actor, in the course of committing the offense (this includes attempt to commit the object offense or in flight after the attempt or commission of the object offense), purposefully, knowingly, or recklessly inflicts or attempts to inflict bodily injury on anyone or is armed with explosives. Otherwise, burglary is a third degree felony. As to merger of burglary with the object offense, only when the object offense is a first or second degree felony is joint conviction for the burglary and commission or attempt to commit the object offense allowed. See Section 221.1(3) MPC
TPC Burglary - The offense of burglary is contained in Chapter 30 TPC. Aside from the felony crime of burglary of buildings and habitations in Section 30.02 TPC, there are a couple of discrete burglary offenses, e.g, vehicles, coin-operated machines. The latter two are Class A misdemeanors, except that burglary of a vehicle has a provision for enhancement of punishment based on prior convictions for burglary of a vehicle. The felony offense of burglary of a building can be committed in any of three ways: (1) By entering a building not then open to the public, without the effective consent of the owner, with intent to commit a felony, theft or assault; (2) By remaining concealed in a building, without the effective consent of the owner, with intent to commit a felony, theft, or an assault; or (3) By entering a building, without the effective consent of the owner and committing or attempting to commit a felony, theft or assault. If the actor is charged with burglary under Section 30.02(a)(1) or (a)(2), the prosecution must prove that the actor intended to commit a felony or theft at the time the actor entered or remained concealed in the building. On the other hand, if the actor is charged under (a) (3), the prosecution must prove only that the actor intentionally or knowingly entered the building without the owner's permission and while inside committed or attempted to commit a felony or theft. Section 30.01 TPC defines a "building" broadly as any enclosed structure intended for use or occupation as a habitation or for some purpose of trade, manufacture, ornament or use. Common law breaking is not necessary. Entry is required by (1) and (2) above, but entry may be accomplished by intruding any part of the body or by intruding any physical object connected with the body. Notice that the object offense may be misdemeanor theft or misdemeanor assault. Burglary and the object felony, assault or theft don't merge. The actor is liable for each and may be convicted of each. Burglary of a commercial building is a state jail felony. Burglary of a habitation is a second degree felony, except when any party to the offense entered the habitation with intent to commit any felony other than felony theft or committed or attempted to commit a felony other than felony theft, in which case the burglary of the habitation is a first degree felony. What's a habitation? Notice that "habitation" is defined broadly as a structure or vehicle that is adapted for overnight accommodation of persons. It included each separately secured or occupied portion of the structure or vehicle and each structure appurtenant to or connected with the structure or vehicle. What is not a habitation? Case law suggest that an unoccupied house with no water, gas, electricity, light bulbs, appliances or furniture would not be a habitation. See Blankenship v. State, 780 S.W.2d 198 (Tex. Crim . App. 1988).
Note: Residential property burglaries accounted for roughly 68 percent of all burglary offenses in 2007 in the U.S. This is the one serious property crime that many of us have or will have experienced when the string runs out. Residential burglary will remain popular with professional criminals so long as the law does not require pawn shops to photograph, fingerprint. and record the driver's license of every person who pawns property and does not connect pawnshop information with a national database of stolen property.
At common law, trespass (1), (2), in the sense of invasion of possession of realty, was a civil action (trespass quare clausum fregit - a tort involving a person's unlawful entry on another's land that is visibly enclosed). Trespass was not a crime at early common law. (1 - indicating that criminal trespass did eventually become a common law crime in the mid-eighteenth century), (2), (3), (4). Criminal trespass is a statutory crime in many states. It is defined generally as an unlawful trespass on property that is clearly marked against trespass by signs or fences. It also includes a trespass in which the trespasser remains on the property after being ordered off by a person authorized to do so. (1), (2), (3)
MPC Trespass - The Model Penal Code makes a person liable for criminal trespass if, knowing that he is not licensed or privileged to do so, s/he enters or surreptitiously remains in any building or occupied structure, or separately secured or occupied portion thereof. The offense is a misdemeanor if committed at night; otherwise, it is a petty misdemeanor. There is also provision for liability of the so-called "defiant trespasser" who knowing that he isn't licensed or privileged to do so, enters or remains in any place as to which notice of trespass is given by (1) actual communication to the actor; (2) posting in a manner prescribed by law or reasonable likely to come to the attention of intruders; or (3) fencing or other enclosure manifestly designed to include intruders. The defiant trespasser is liable for a petty misdemeanor if he defies an order to leave personally communicated to him by the owner of the premises or other authorized person. Otherwise, the offense is a noncriminal violation. See Section 221.2 MPC for further information.
TPC Trespass - The Texas Penal Code defines criminal trespass in Section 30.05. The statute, which is lengthy, covers entry or remaining on property, including an aircraft, of another without effective consent, or entering or remaining in a building of another (ownership is not required) without effective consent if the actor (1) had notice that entry was forbidden; (2) received notice to depart but failed to do so. Trespass is deemed an offense against the possession and control and not an offense against the property itself. See Reed v. State, 762 S.W.2d 640 (Tex. App. - Texarkana1988, pet. ref'd)
Greed, for lack of a better word, is good.
Lack of honor by men in high places.
FDR's explanation for the crash of '29
Decency, security and liberty alike demand that government officials shall be subjected to the same rules of conduct that are commands to the citizen. In a government of laws, existence of the government will be imperiled if it fails to observe the law scrupulously. Our Government is the
potent, the omnipresent teacher. For good or for ill, it teaches the whole people by its example. Crime is contagious. If the Government becomes a lawbreaker, it breeds contempt for law;
it invites every man to become a law unto himself; it invites anarchy.
Olmstead v. United States
Every government is a parliament of whores.
The trouble is, in a democracy, the whores are us.
Who controls money controls the world.
The United States of America has been brought to the brink of financial
chaos by lying, cheating, and stealing folks in fancy clothes.
Will any of them be brought to the bar of justice?
Will our elected legislators ever represent the welfare of the people
rather than the economic interests of those who fill their campaign coffers?
The United States is a corporate oligarchy hiding itself in a cloak called democracy.
Politicians are corporate prostitutes. The American Congress is kept,
kept by big corporations the way a whore is kept by a rich man.
Who owns us? Corporate executives, politicians and the owners of the press and television.
Is there a modern day equivalent to tar and feathers and ropes and pitchforks
by which the millions who have lost their homes, jobs, and savings
could express their displeasure with Wall Street outlaws?
With the government's crosshairs on Wall Street, Washington politicians are in
perfect position to milk the financial wrongdoers of huge political contributions.
Federal crimes are solely creatures of statute. There is no federal common law of crimes. In this sense, the federal system is akin to a code state. Here's some summary material regarding federal crimes that relate to property.
Some Relevant Federal Titles:
Here are some selected federal criminal statutes under Title 18:
- The Wall Street Cesspool and SEC Fraud (Watch the Frontline Special on the economic meltdown of 2008-2009 where trillions in "phantom wealth" disappeared almost overnight. If possible, watch Plunder: The Crime of Our Time of 2009.) Greed and scheming seem to be indigenous to modern Wall Street culture, where being unscrupulous rather than just shrewd has been the key to success. One of the relevant laws is the Securities and Exchange Act of 1934 (1 - 15 USC Chapter 2B-1 - Securities Investor Protection), (2 - SEC web site), (3 - discussed) see also 17 Code of Federal Regulations, Chapter II, Section 202.5(a) The Bush SEC, chaired by Christopher Cox and four other Presidential appointees, appeared to be a significant player in the failure of American economic markets and the subsequent insolvency of major corporations during the economic meltdown and crash of 2008. Exhibit No. 1: The Bernard "Ponz Scum?" Madoff (Ponzi Scheme) scandal involving a massive $50 billion fraud in which the SEC was, at best, asleep at the wheel. [Note: One tidbit - a Madoff family member married one of the SEC compliance officers who gave Madoff's securities brokerage operation a clean bill of health in 1999 and 2004. Adding a bit more spice to the criminal investigation, the son of Bush2 United States Attorney General Michael Mukasy is the defense lawyer for one of Madoff's top financial officers.] More recently, Texas bumpkin "Sir" Alan Stanford put "Ponzi" back in the news at the $8 billion level. Many investors in the too-good-to-be-true schemes are themselves blinded by greed.
- If you are interested in another significant political player in the banking meltdown and the economic and corporate solvency crisis, look at former Texas Senator Phil Gramm's legislation (the Gramm-Leach-Bliley Act) that deregulated the American banking industry in 1999 by repealing the former Glass-Steagall Act of 1933 regulations that had theretofore kept banks from getting into the investment, retail brokering, and insurance business. Gramm's bill shattered the longstanding barriers between the banking, securities and insurance industries without instituting any significant new regulations or oversight changes. Wikipedia also explains Gramm's villainous role in passage of the Commodity Futures Modernization Act of 2000 which opened the way for derivitive transactions such as credit default swaps to exist free of govenment regulation. The foxes were in the henhouse. It took 8 years of speculation and insider greed, e.g., plundering the public with the scheme to unload subprime mortgages on pension and mutual funds, but the deregulated banks and investment bankers finally went into a tailspin, e.g., Citigroup, once a titan when it was a bank known as Citibank, but now a 2 or 3 dollar stock titmouse after financier Sanford I. Weill used the partial repeal of Glass-Steagal to turn it into a "supermarket," presently kept afloat a $300 billion federal taxpayer loan guarantee, and direct government purchase of $45 billion of preferred shares; Citigroup was aided by lucre hungry directors and chairpersons who took extraordinary risks in the subprime mortgage market, exemplified by the guidance of Robert "The Man Wall Street Trusts" Rubin, Clinton's former Secretary of the Treasury, who was reported by CNBC to have profited by $150,000,000 in cash (though Wiki has it at $115,000,000) for his Citigroup work. Whoa daddy, I wanna be baptized! [Aside: Citigroup President Vikram Pandit was paid $10.82 million in 2008, a year when the U.S. Government rescued the failing institution with $45 billion in taxpayer funds.] Rubin and former Federal Reserve Chairman Alan Greenspan, cheerleader for deregulation and blamed by many, including Nobel prize-winning economists for the housing bubble that contributed greatly to the meltdown of 2008, teamed up to prevent supervision of derivatives by the Commodities Futures Trading Commission. Let us hope that President Obama and the Congress will enact and enforce regulatory and oversight legislation for the nation's financial services industry, while fixing health care, reviving the economy, and managing two wars. Do you wonder if some of these Wall Street Wunderkinds should be cooling their heels in the Cross Bar Hotel? No such luck. For flavor, check out Sam Israel III. Smick's, The World is Curved: Hidden Dangers to the Global Economy (Penguin 2008) is worth a read. For other arguably causative influences on the economic meltdown of financial markets in 2008, see the Community Reinvestment Act which some point to as pressuring banks to make risky home loans in the name of "affordable housing" to people without the wherewithal to repay the loans; the Federal Housing Enterprises Financial Safety and Soundness Act in which Congress required Fannie Mae (placed in conservatorship in 2008) and Freddie Mac (placed in conservatorship in 2008) to devote a percentage of their lending to "affordable housing"; the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 that repealed restrictions on interstate banking.
- In February of 2009, Time magazine offered this list of the 25 People to Blame for the economic meltdown: Angelo Mozilo, Phil Gramm (Note that Texas ex-senator Gramm, architect of the repeal of banking regulations and the consequent erosion of transparency and accountability of banks, is now vice-chairman of Swiss investment bank UBS which was the subject of a 2009 criminal prosecution that revealed the existence of more than 50,000 offshore secret USB accounts held by more than 20,000 rich U.S. taxpayers seeking to avoid paying their taxes; in a plea bargain for deferred prosecution, USB agreed to pay more than $780 million in penalties; by the way, USB reportedly received $5,000,000,000 in pass-through taxpayer funds from AIG; the whistleblower on Gramm's bank got $104 million from the IRS.), Alan Greenspan, Chris Cox, Hank Paulson, Joe Cassano (AIG's credit default swaps guru), Ian McCarthy, Frank Raines, Kathleen Corbet (head of S&P, the rating agency that labeled repackaged toxic assets with AAA seals of approval), Dick Fuld (He raked in $500,000,000 in compensation from now defunct Lehman Brothers.), Marion and Herb Sandler, Bill Clinton (Clinton signed the Gramm-Leach- Bliley Act and the Commodity Futures Modernization Act, presenting a deregulated playing field for Wall Street cupidity), George W. Bush, Stan O'Neal, Wen Jiabao, David Lereah, John Devaney, Bernie Madoff (see sidebar), Lew Ranieri, Burton Jabin, Fred Goodwin, Sandy Weill, David Oddsson, Jimmy Cayne and last, but not least, the American consumers who took the bait and borrowed, borrowed, borrowed beyond their means. (Average household debt - what we owe - was 130% of household income in 2007.) If you follow these names from 2009 to 2012, you will see that none (ZERO) of them, other than Bernie Madoff, were required to pay the piper for their part in the meltdown. Everyone has his/her list of potential villains; what about the CNBC television network, owned by corporate giant GE with an obvious stake in a deregulated market, and its Wall Street stock hucksters, e.g., Jim "Buy, Buy, Buy" Cramer ,(1)(2) or the 535 members of Congress who are supposed to have the public's welfare at heart but seemed to sleepwalk into the horrific economic crisis or Bush2, who emblematically received a $200,000 political contribution from AIG. Will there be prosecution of deceitful corporate crooks, swindlers, and con-men with assessment of large fines and disgorgement of ill-gotten gains? Answer: No. Senator Durbin of Illinois admitted that, even in the midst of the meltdown, "Capitol Hill is still owned by the banks." Buying off Congress at $1M a member would cost slightly more than half a billion, a relatively small price when the members hold the keys to trillions of taxpayer dollars. Will shareholders have rights against corporate bosses who looted and drained companies they didn't own? Will there be anti-trust action to prevent any corporation from becoming so large that it can hold the American taxpayer a financial hostage because it is "too big to fail"? Will we return to the pre-Clinton, Gramm and Bush days when banks and other fiduciaries were prohibited from gambling with other people's money? [Note: With Citizen's United v. Federal Election Commission, 558 U.S. 50 (2010), (1) the USSC appears to have opened the door to corporate buy up of elected state supreme court judges. See (1)]
- Usury - Will we go back further back and undo the laws dating from the Reagan administration that permit the moneylenders to engage in practices that would be usury under some state law? (1 2 - state limits) See the Depositary Institutions Deregulation and Monetary Control Act of 1980 allowing federally chartered savings banks, installment-plan sellers, and chartered loan companies to charge any interest rates they choose, irrespective of state usury laws. Note that the CARD Act of 2010 does not impose a usury cap, and it does not mandate that anyone be given credit. The USSC effectively did away with a state's power to limit interest and fees charged by nationally chartered banks doing business in a state when a subsidiairy of the national bank is chartered in another state with scaled back or no usury laws. See Marquette National Bank.v. First of Omaha Service Corp., 439 U.S. 299 (1978);Smiley v. Citibank, 517 U.S. 735 (1996); Watters v. Wachovia Bank, 550 U.S. 1 (2007) giving the banks the green light for unlimited interest rates and fees.
- Derivatives - We have all heard about unregulated trading by hedge funds in a type of financial instrument known as a derivative, a complex contract that allows banks and corporations to bet on future events much as one bets in a casino, and how this practice made billions for a few people while contributing to the economic recession of 2008. For example, taxpayers had to pony up $180 billion to pay off bad derivative bets by AIG; one of the major beneficiaries of the bailout of AIG was Goldman Sachs who got $12 billion of the AIG taxpayer bailout. One of the questions presently pending is whether Congress will regulate the derivative trade by making it more transparent. How about Congress imposing a very small % sales tax on every derivative trade? The answers to all the questions surrounding banks, investment banks, and financial instruments depends on the answer to one question: Who has the screws, corporations or government? If government continues to take a backseat to unscrupulous corporate bigwigs, we'll know that this tiny percentage of the population, i.e., corporate commanders, still has the screws.
- Insider Trading: The Deadly Sins of Finance - The original statute was Section 10 (b) of the Securities Exchange Act of 1934. See Code of Federal Regulations Section 240-10b-5. See also United States v. O'Hagans, 521 U.S. 642 (1997) which approved the "misappropriation theory" as a prosecutorial tool against insider trading in criminal and civil insider trading cases. This theory makes it possible to convict individuals who trade on material, non-public information, regardless of whether they worked for the company whose stock was being traded or otherwise owed the corporation's shareholders a fiduciary duty; the government had charged O'Hagan's, a lawyer, with mail fraud, wire fraud, and securities fraud. See also Chiarella v. United States, 445 U.S. 222 (1980) which was the first federal criminal case brought for insider trading since the Securities and Exchange Act was passed. During the decade of the 1980's, some called it the "Greed Decade," scores of cases were filed against the so-called "little piggies who went to market and pillaged it," e.g., "Ivan the Terrible" Boesky - who pled guilty to insider trading and paid $100 million in civil penalties and led the government to the corporate brokerage house Drexel Lambert that plead guilty to six securities fraud charges and paid $650 million in fines and penalties, and the embodiment of the era's white-collar crooks Michael Milken. See the book Den of Thieves. "The Junkbond King," as Milken was known, eventually made out better than the proverbial bandit. His lawyers magically arranged to have his 10-year federal prison sentence cut to two years; although Milken was forced to disgorge hundreds of millions of that had been defrauded from shareholders and was fined $200 million, he and his family kept many, many hundreds of millions. See Judge Kimba M. Wood's sentencing order at 1990 WL 310497. Today, Milken, once again a multi-billionaire, has attempted, with the help of a public relations campaign, to reinvent himself, sans topper, as a "philanthropist." Some folks buy it. Interviewer Charlie Rose appears to be a big fan. Milken applied for a full pardon in 2008 from the out-going President. To his credit, Bush2 gave a full and unconditional pardon to the national Thanksgiving turkey, whereas Clinton pardoned Marc Rich. (Of course, the turkey hadn't defrauded anyone.) Do you think it pays to be buddies with a multi-billionaire? Martha Stewart's one-step-over-the-line for securities fraud and obstruction of justice pales in comparison to these guys and the amorphous crowd of Wall Street gonifs and government schleps who wrecked the economy of the country in 2008. Two recent big time insider trading crooks, Rajat Gupta and Raj Rajaratnam, make Stewart look like Goldilocks.
- Banking Crimes - Embezzlement and Misapplication of Funds - 18 USC Sections 656 and 657; False Entries - 18 USC Sections 1005, 1006; False Financial Statements - 18 USC Section 1014; Fraud - 18 USC Section 1344
- Tax Fraud - 26 USC Section 7201 et seq. describes the government's role in enforcing the federal tax laws. Section 7201 criminalizes attempt to evade or defeat taxes imposed by Tiitle 26 or payment thereof. Section 7203 defines the crime of willful failure to file returns, supply information or pay tax. Fraud and false statements are covered in section 7206. [Interesting question: What happens if the IRS makes a unilateral mistake and erroneously sends an tax refund check to a taxpayer? Suppose the taxpayer cashes the check. Is he guilty of some sort of theft of government property? See United States v. Hale, 984 F.2d 1144 (11th Cir. 1993) which held that the refund check made payable to Hale was no longer government property when the government delivered the check to him and he used the proceeds. Another interesting question: Can a person who mails a fraudulent tax return to the IRS be charged with mail fraud? It's been allowed in some circuits, see United States v. Miller, 545 F.2d 1204 (9th Cir. 1976).]
- Fraud Abroad - When former President Bush and his VP Cheney decided to disregard the concept of national sovereignty as inviolable and invade a country that posed no danger to the United States, they created a cash cow that has been a petri dish for fraud. Take some time and watch this 75-minute documentary Iraq for Sale: War Profiteers, Robert Greenwald's 2006 revealing expose' of the private companies who ripped off billions of US taxpayer dollars from the war in Iraq. Should anything have been or be done about fraud at this level or is it just too insulated in the protective mantle of corporate control of a U.S. government at perpetual war? See Assignment Ten in Bushrod 1 for further information. Another issue of fraud crops up when corporations either initiate or succumb to bribery of foreign officials. In many societies, overt bribery is the way to get things done. The Foreign Corrupt Practices Act was passed to prevent corruption in international transactions. Inshort, the FCPA prohibits corrupt payments to foreign officials for the purpose of obtaining or keeping business. The antibribery provisions of the FCPA make it unlawful for a U.S. person, and certain foreign issuers of securities, to make a corrupt payment to a foreign official for the purpose of obtaining or retaining business for or with, or directing business to, any person; the Act also prohibits foreign firms and persons from taking actions in furtherance of such a corrupt payment while in the United States. Here is a 2010 discussion re federal enforcement of the FCPA and an explanation of the antibribery portion of the Act. (U.S. Dept. of Justice layman's explanation of the FCPA)
The Hobbs Act, 18 USC, Section 1951, (1) entails the conspiracy to commit, attempted commission and commission of the crimes of robbery or extortion. Concerning extortion, the concept of "fear" includes fear of an economic loss. See United States v. Covino, 837 F.2d 65 (2nd Cir. 1988) where the defendant employed fear of economic loss to obtain property. The extortion portion of the Hobbs Act is sometimes used in prosecutions of government stings against corrupt, greedy local officials. Concerning extortion where the Hobbs Act was properly employed against a public (local) official who accepts or demands money in exchange for a specific requested exercise of his official power, even if it is in the form of a campaign contribution, the USSC said that the under color of official right language continues to mirror the common law definition of extortion as bribe taking. See Evans v. United States, 504 U.S. 255 (1992). . All that is required is that the government prove that a public official has obtained a payment to which he was not entitled, knowing that the payment was made in return for official acts. Evans modified the earlier case of McCormick v. United States, 500 U.S. 257 (1991) which had sought to provide bright line rules for determining the requirements for Hobbs Act extortion under color of official right. As you can tell from the Hobbs Act statute below, it is necessary for prosecutors to determine whether their their theory is based on robbery or extortion and, if the theory is extortion, to distinguish between extortion and bribery. (1) On the robbery portion of the Hobbs Act, note that it can be applied to take what seemingly is a state court crime into the federal court system. Why might prosecutors do this? One reason might be that parole is not available in the federal system. See United States v. McFarland, 311 F3d 376 (5th Cir. 2002) affirming the federal Hobbs Act conviction and 97-year sentence of a Ft. Worth, Texas, convenience store robber and finding a sufficient evidence to show a nexus affecting interstate commerce. See also, United States v. Hickman, 179 F.3d 230 (5th Cir. 1999).
The Hobbs Act reads as follows:
Title 18, United States Code Section 1951. Interference with commerce by threats or violence
- (a) Whoever in any way or degree obstructs, delays, or affects commerce or the movement of any article or commodity in commerce, by robbery or extortion or attempts or conspires so to do, or commits or threatens physical violence to any person or property in furtherance of a plan or purpose to do anything in violation of this section shall be fined under this title or imprisoned not more than twenty years, or both.
- (b) As used in this section— (1) The term “robbery” means the unlawful taking or obtaining of personal property from the person or in the presence of another, against his will, by means of actual or threatened force, or violence, or fear of injury, immediate or future, to his person or property, or property in his custody or possession, or the person or property of a relative or member of his family or of anyone in his company at the time of the taking or obtaining. (2) The term “extortion” means the obtaining of property from another, with his consent, induced by wrongful use of actual or threatened force, violence, or fear, or under color of official right. (3) The term “commerce” means commerce within the District of Columbia, or any Territory or Possession of the United States; all commerce between any point in a State, Territory, Possession, or the District of Columbia and any point outside thereof; all commerce between points within the same State through any place outside such State; and all other commerce over which the United States has jurisdiction.
- (c) This section shall not be construed to repeal, modify or affect section 17 of Title 15, sections 52, 101–115, 151–166 of Title 29 or sections 151–188 of Title 45.
The ostensible purpose of the mail fraud statute (1 -wiki), (2 - defined), (3 - examples) is to prevent misuse of the mails. In fact, it often serves as the only federal hook for charging the accused with federal crimes like RICO (18 USC Sections 1961-1968) and money laundering (How Stuff Works makes it real hard to read this entire article, but the content is worth the effort - intro methods, operations, effects, fighting it, more info), (1- DOJ), (2), (3 - hedge funds laundering $) that require predicate acts. The USSC in McNally v. United States, 483 U.S. 350 (1987) and commentators (1- federal mail fraud and RICO) have been critical of federal prosecutors for using the mail fraud statutes to turn nominally state court violations into federal cases. There are many examples of mail and wire fraud being used as the two predicate "pattern" offenses in RICO prosecutions. See United States v. Miller, 545 F.2d 1204 (9th Cir. 1976), but see United States v. Czubinski, 106 F.3d 1069 (1st Cir. 1997). See Cleveland v. United States, 531 U.S. 12 (2000) where poker licenses in the hand of the official licensor were held not to be property under the mail fraud statutes. The landmark case of mail fraud is Durland v. United States, 161 U.S.306 (1896), making clear fraudulent intent to harm the victim is an essential element of mail fraud. Materiality of the misrepresentation (falsehood) has been held to be an element of the federal mail fraud, wire fraud and bank fraud statutes. See Neder v. United States, 527 U.S. 1 (1999). Some courts indicate that mail and/or wire fraud charges are inappropriate when a special more particularized statute covers the same subject matter. For example, with enactment of the Economic Espionage Act of 1996, the mail and wire fraud statutes (as well as the National Stolen Property Act 18 USC Section 2314) have been supplemented (or supplanted) in the field of trade secret theft (intellectual property). Even when it is charged as a stand-alone crime, mail fraud is now a very serious offense. See United States v. Hsu, 155 F.3d 189 (3rd Cir. 1998). For many years, the maximum punishment for mail fraud was five years. However, the maximum punishment for mail and wire fraud was increased to twenty years in 2002 with the passage of the Sarbanes Oxley Act (1 - text of SOX Act), (2 - SOX Cornell), (3 - discussion analysis of SOX) that was supposed to help clean up white-collar crime by increasing oversight of corporate accounting and responsibility. [Note: The Bush2 Administration's laissez-faire attitude toward enforcement rendered SOX and other regulations ineffective in stanching the securitized mortgage market, banking, and corporate fraud that helped bring the U.S. economy to its knees in 2008, prompting the government to shell out trillions in corporate bailouts, loan guarantees, etc.; the question remains whether there will be any meaningful federal criminal investigation into possible fraud charges that could be filed against the hogs (as opposed to the "little piggies" of the 80's) who fed so voraciously at the trough of the monstrous shadow banking system of derivative dealers, hedge funds and investment banking firms. To many thinking, law-abiding members of of the middle class, the American banking and financial system appears to have lost its legitimacy.] A defendant can be charged with a separate crime for each use of the mails, even if there is only one scheme to defraud. "Any scheme or artifice" is quite broad. Also, use of the mails, while essential to federal jurisdiction, does not have to be the centerpiece or essential element of the scheme or artifice; it can be incidental to an essential part the scheme or artifice. See Pereira v. United States, 347 U.S. 1 (1954). The relevant question seems to be whether the mailing was part of the execution of the scheme as conceived by the perpetrator at the time. See Schmuck v. United States, 489 U.S. 705 (1989). The mail or wire communication itself does not have to be fraudulent. Fraud has a broad meaning. Black's law dictionary needs 1 1/2 pages, e.g., "a knowing misrepresentation of the truth or concealment of a material fact to induce another to act to his or detriment." Defraud is defined by Black's as "to cause injury or loss to (a person) by deceit." A scheme to defraud can have as its object defrauding a victim of services as well as money and all forms of property. Human cunning, greed, and deceit have almost no bounds. Put the three together in one person, and we can expect new forms of fraud with each generation. If specialized statutes don't exist to cover them, mail or wire fraud usually do. Somewhere in almost any white-collar scheme or artifice, someone must have mailed a letter, made a phone call or sent an email. The mail fraud statute has been used to deal with securities fraud, loan sharking, real estate fraud and credit card fraud. For example, the mail fraud statute was used against politicians, e.g. former Maryland Governor Marvin Mandel in United States v. Mandel, 591 F.2d 1347 & 602 F.2d 653 (4th Cir. 1979) cert. denied;unfaithful employees, see Carpenter v. United States, 484 U.S. 19 (1987) holding that confidential information is property under the mail fraud statute; United States v. Von Barta, 635 F.2d 999 (2nd Cir. 1980); unfaithful lawyers, see United States v. Bronston, 658 F.2d. 920 (2nd Cir. 1981).
If we analyze the mail and wire fraud statutes, we can see that they seem to require proof of: (1) any scheme (This connotes an artful plot or plan.) or (2) any artifice (An artifice is a clever plan or idea.) (3) to defraud (Fraud involves an element of intent to deceive, i.e., to induce action or inaction by one in reliance on another's misrepresentation; intent to harm is not required.) or (4) to obtain money or property by means of false or fraudulent pretenses, representations or promises (This involves misrepresentations of past, present and/or future facts. See false pretenses above.) (5) with use of the Postal Service or a private or commercial interstate carrier, e.g., Fed Ex, UPS (Note: After 1994, mail fraud is no longer tied only to use of the Postal Service.) or the phone, Internet, radio, or television.
Title 18, United States Code Section 1341 (Mail Fraud) reads as follows:
- Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, or to sell, dispose of, loan, exchange, alter, give away, distribute, supply, or furnish or procure for unlawful use any counterfeit or spurious coin, obligation, security, or other article, or anything represented to be or intimated or held out to be such counterfeit or spurious article, for the purpose of executing such scheme or artifice or attempting so to do, places in any post office or authorized depository for mail matter, any matter or thing whatever to be sent or delivered by the Postal Service, or deposits or causes to be deposited any matter or thing whatever to be sent or delivered by any private or commercial interstate carrier, or takes or receives therefrom, any such matter or thing, or knowingly causes to be delivered by mail or such carrier according to the direction thereon, or at the place at which it is directed to be delivered by the person to whom it is addressed, any such matter or thing, shall be fined under this title or imprisoned not more than 20 years, or both. If the violation affects a financial institution, such person shall be fined not more than $1,000,000 or imprisoned not more than 30 years, or both.
The wire fraud statute (1- wiki), (2 - info) was intended to complement the mail fraud statute by giving federal prosecutors jurisdiction over frauds involving the use of interstate (or foreign) wire transmissions. It applies to the Internet communication in as well as radio, television, and telephone. Apparently, it is necessary for the wire communication to actually be interstate, e.g., intrastate phone calls, i.e., calls that don't cross state lines, don't furnish the interstate commerce nexus. See United Sates v. Phillips, 376 F.Supp.2d 6 (D. Mass. 2005) holding that the wire fraud statute requires that the transmission itself must be "in interstate or foreign commerce." Thus, the government must prove beyond a reasonable doubt that the pertinent wire transmission actually crosses state lines; use of the mechanisms of interstate commerce is not enough for conviction under the wire fraud statute. Note that Congress has declined on at least two occasions to extend wire fraud to cover simple use of an interstate instrumentality. It is probably unnecessary to prove that the perpetrator knew that the wire communication would be interstate, except when the conduct giving rise to the scheme would not be a violation of state law or morally wrongful. See United States v. Bryant, 766 F.2d 370 (8th Cir. 1985). Remember, the wire messages don't have to contain lies, misrepresentations or falsehoods themselves so long as they are used to further the fraudulent scheme. Title 18, United States Code Section 1343 (Wire Fraud) reads as follows:
- Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, transmits or causes to be transmitted by means of wire, radio, or television communication in interstate or foreign commerce, any writings, signs, signals, pictures, or sounds for the purpose of executing such scheme or artifice, shall be fined under this title or imprisoned not more than 20 years, or both. If the violation affects a financial institution, such person shall be fined not more than $1,000,000 or imprisoned not more than 30 years, or both.
Scheme or Artifice to Deprive Another of the Intangible Right to Honest Services
Title 18, United States Code Section 1346. Definition of “scheme or artifice to defraud” reads as follows:
- For the purposes of this chapter, the term “scheme or artifice to defraud” includes a scheme or artifice to deprive another of the intangible right of honest services.
This statute (1) was Congress's answer to McNally v. United States, 483 U.S. 350 (1987). By legislation Congress overrode the court's interpretation of the mail and wire fraud statutes. In 2010, the USSC pared the "honest services" provision down to bribery and kickbacks. See the following cases: Skilling v. United States, 561 U.S. 40 (2010) involving Enron white-collar convict Jeffrey Skilling where the USSC upheld a narrow interpretation of the "honest-services' fraud provision, saying that it covers only fraudulent schemes effectuated through bribery and kickback schemes; thus, possibly saving it from being void for vagueness, as Kennedy, Thomas and Scalia had contended ; Black v. United States, 561 U.S. __, 130 S. Ct. 2963 (2010) involving convicted publisher Conrad Black; and Weyhrauch v. United States, 561 U.S. __, 130 S.Ct. 2971 (2010). The statute has been attacked in lower federal courts for being unconstitutionally vague. See United States v. Rybicki, 354 F.3d 124 (2nd Cir. 2003) where the court upheld the statute, saying that the term "scheme or artifice to deprive another of the intangible right to honest services," when applied to private actors, means a scheme or artifice to use the mails or wires to enable an officer or employee of a private entity (or a person in a relationship that gives rise to a duty of loyalty comparable to that owed by employees to employers) purporting to act for and the interests of his or her employer (or of the other person to whom the duty of loyalty is owed) secretly to act in his or her or the defendant's own interests instead, accompanied by a material misrepresentation made or omission of information disclosed to the employer or other person.
Trail's end. Good luck to one and all.