Justice Cardozo observed that legal principles have a tendency to expand to the limits of their logic, and Judge Friendly has added the corollary that sometimes the expansionary momentum carries the principle even beyond those limits. So it has been with the recent growth in the federal mail fraud law, as courts have applied a standardized formula- known as the "intangible rights" doctrine- to a broad range of fact patterns having relatively little in common. The result has been both to extend the net of the federal criminal sanction over an extraordinarily vast terrain and to arm the federal prosecutor with a weapon substantially different in character from any previously known to the substantive criminal law.
Under the "intangible rights" doctrine, a public or private fiduciary can be prosecuted on the theory that his conduct has deprived his beneficiaries of their right to his "honest and faithful services." Critical to this doctrine's significance is its assertion that the nondisclosure of a conflict of interest by a person characterizable as a fiduciary can amount to a deprivation of the "honest and faithful services" owed by the fiduciary to the beneficiary. As a practical matter, the operative effect of this disclosure requirement is to simplify the prosecutor's case by substituting proof of nondisclosure for proof of loss or illicit gain. At the same time, the protean character of the term "fiduciary" has enabled the prosecutor to reach areas that Congress never contemplated would be subject to federal criminal sanctions.
Without here restating the author's earlier analysis of the case law, two conclusions seem justified from recent decisions involving mail fraud prosecutions. First, although doctrinal conflict is apparent, courts generally seem to be accepting the "intangible rights" theory, both with respect to private and public fiduciaries. Second, the reach of the statute continues to be extended further into sensitive areas not previously thought to be subject to the criminal law of fraud.
At its current pace of expansion, the mail fraud statute seems destined to provide the federal prosecutor with what Archimedes long sought – a simple fulcrum from which one can move the world. Useful as this expansion may be to the prosecutor, its consequence is also to dwarf and trivialize much of the remainder of substantive federal criminal law. Statutory defenses in other more limited statutes would thereby be circumvented, and the power of the prosecutor over the defendant would be measurably enhanced. Yet conversely, if we freeze the evolution of the statute, new forms of predatory behavior will appear to which the legislature cannot realistically be expected to respond quickly. What compromise then is possible between strict construction and infinite expansion?
Accordingly, the case for statutory reform is strong. A recent article in this Review by Mr. Daniel Hurson has made a serious effort to curb the reach of the mail fraud statute. Nonetheless, this author disagrees with the specifics of Mr. Hurson's proposal, believing them to be both ambiguous and overly limited, but shares his sense that the statute's potential reach should be checked.
In overview, this Article submits that any effort to reform the statute should proceed from three core premises. First, the crime of mail fraud must be coherently integrated with the law generally governing inchoate crimes. To do so, a requirement of proximity between the "scheme" and the threatened loss, should be imposed that is at least equal to that required by the law of attempt. Second, an obligation to disclose all conflicts of interest by anyone characterizable as a fiduciary is an impossibly broad standard for the criminal law to enforce. Thus a failure to make disclosure should lead to criminal liability only where personal gain or benefit is sought. Finally, prosecutorial discretion should be better formalized to conserve on scarce resources, to utilize more equitable intermediate sanctions, and to activate available state criminal resources. This Article will first place the mail fraud statute in perspective and then address each of these premises.
Criminal Law | Criminal Procedure | Law
John C. Coffee Jr.,
The Metastasis of Mail Fraud: The Continuing Story of the Evolution of a White-Collar Crime,
Am. Crim. L. Rev.
Available at: https://scholarship.law.columbia.edu/faculty_scholarship/3845