1 8 -2811(L)

USA v. Blaszczak

1 UNITED STATES COURT OF APPEALS 2 F OR THE SECOND CIRCUIT 3 - - - - - - 4 August Term, 2020 5 (Argued: June 9, 2021 Decided: December 27, 2022) 6 Docket Nos. 18-2811, 18-2825, 18-2867, 18-2878 7

_ _ _______________________________________________________ 8 UNITED STATES OF A MERICA, 9 Appellee , 10 - v. - 11 D A V I D B LA S ZC Z A K, T H E O D O R E H U B E R , R O B E R T O L A N , 12 CHRISTOPHER WORR ALL, 13 Defendants-Appellants

. 14

_

_ _______________________________________________________ 15 B efore: KEARSE, WALKER, and SULLIVAN, Circuit Judges

. 16 Appeals, following vacatur and remand by the United States Supreme Court 17 for further consideration, i n light of Kelly v. United States , 140 S. Ct. 1 565 (2020), of this 18 Court's prior affirmance of judgments of the United States District Court for the Southern 19 District of New York convicting some or a ll of the defendants on substantive counts of1 conversion o f government property in v iolation of 18 U.S.C. § 641, wire fraud in violation 2 o f 18 U. S
. C
. § 1343, and securities fraud in violation of 1 8 U.S.C. § 1348; and convicting 3 certain of the defendants on various counts of conspiring to engage in conduct violating one 4 o r more o f the above sections, a ll originating from misappropriation of confidential 5 i nformation from the Cente r s f or Me dicare & Medicaid Services ("CMS"), see United S tates 6 v . Blaszczak

, 947 F .3d 19 (2d Cir. 2019), vacated and remanded , 141 S. Ct. 1040, 2021 WL 78042, 7 2 0 21 WL 78043 (Jan. 11, 2 020). On this remand: (A) defendants contend t hat their argument 8 t hat the CMS information at issue does not constitute "property" or a "thing of value" within 9 t he meaning of the a bove statutes is supported by the S upr e m e Court's decision in Kelly ; 10 (B) the government, concurring in that contention, confesses error a s to the substantive 11 counts and as to a count charging only conspiracy to violate §§ 1343 a nd 1348 (Count Two); 12 a n d it agrees t h at either the d efendants' convictions on those counts should be reversed, o r 13 t he cases should be remanded t o the district court so that the government can dismiss those 14 counts pursuant to F ed. R. Crim. P. 48(a); and (C) the g overnment seeks a ffirmance on the 15 r emaining conspiracy counts (Counts One and Seventeen). 16 Given the Supreme Court's decision in K elly a nd the prosecutorial discretion 17 t o which the Executive Branch of the governm e nt is entitled, we grant the government's 18 r equest to remand t h e cases to the district court for dismissal of the substantive counts a n d 19 Count Two. As t o Counts One and Seventeen, the verdicts do not reveal whether the jury

21 found that the charged defendants conspired to c o mmi t o f f en ses a s t o w h i ch t h e g o v ernment 2 h as confessed error or instead found that they conspired to engage in other charged criminal 3 conduct. Accordingly, we vacate the convictions o n these t wo counts and remand for such 4 further proceedings as m ay be appropriate. 5 R e m a n d ed fo r d i smi ssa l o f t h e s ubst a n t i v e co un t s a n d Co un t Two ; v a ca t e d a n d 6 r emanded for further proceedings on Counts One and Seventeen. 7 Judge Walker joins t he majority opinion and concurs in a separate concurring 8 o pinion, in which Judge Kearse joins. 9 Judge Sullivan dissents, in a separate opinion.

10 ERIC J. FEIGIN, Deputy Solicitor Gene r a l , United States 11 Department of Justice, Washington, D.C. (Elizabeth B. 12 Prelogar, Acting Solicitor General, United States 13 Department of Justice, Washington, D.C.; Audrey 14 Strauss, United States Attorney for the Southern District 15 of New York, Ian McGinley, Joshua A. Naftalis, Won S
. 16 Shin, Assistant United States Attorneys, New Y ork, New 17 York, on the brief), for Appellee

. 18 DONALD B. V ERRILLI, JR., Washington, D.C. (Elaine J. 19 Goldenberg, Jonathan S. M eltzer, Dahlia Mignouna, 20 Jacobus P. va n de r Ven, M unger, Tolles & O lson, 21 Washington, D.C., David Esseks, Eugene Ingoglia, 22 Alexander Bussey, Allen & Overy, New York, New York, 23 on the brief for Defendant-Appellant Robert Olan ; Daniel M. 24 Su lliv an, James M. McGuire, Holwell Shuster & 25 Goldberg, New York, New York, Stephen F ishbein, John 26 A. Nathanson, Shearman & Sterling, N ew York, New 27 York, on the b rief for Defendant-Appellant C hristopher 31 Worrall ; Alexandra A.E. Shapiro, Daniel J. O'Neill, Eric S. 2 Olney, Shapiro Arato Bach, New York, New York, Barry 3 H. Berke, Dani R. James, Kramer Levin N afta lis & 4 Frankel, New York, New York, on the brief for Defendant5 Appellant Theodore Huber ; C olle en P. Cassidy, Barry D. 6 Leiwant, Federal Defenders o f New Y ork, New York, 7 New York, on the brief for Defendant-Appellant David 8 Blaszczak ), for Defendants-Appellants

. 9 KA T H ERINE R. GOLDSTEIN, New York, New Y ork (Akin 10 G u mp Strauss Hauer & Feld, New York, N ew York, on 11 the brief), Court-appointed Am icus Curiae, in support of 12 reinstatement of this Court's decision of affirmance

. 13 Pe ter N eiman, New York, New York (Nicholas Werle, Wilmer 14 Cutler Pickering H ale a nd Dorr, Ne w Y ork, New York, 15 Jessic a Lutkenhaus, Wilmer Cutler Pickering H ale and 16 Dorr, Washington, D.C.; Lindsay A. L ewis, Committee of 17 the National Association of Criminal Defense Lawyers, 18 New York, New York, of counsel), submitted a brief f o r 19 Amicus Curiae National Association of Criminal D efense 20 Lawyers in support of reversal

. 21 Roman M artinez, Wa sh i n g t o n , D
. C. ( M i ch a el Clemente, Latham 22 & W atkins, Washington, D.C., Jason M. Ohta, L atham & 23 Watkins, San Diego, California; Stephen R. Cook, Brown 24 Rudnick, Irvine, California, Justin S. Weddle, Weddle 25 Law, New Y ork, N ew York, of counsel), submitted a brief 26 for Amicus Curiae Jeffrey Wada in support of Defend a nts27 Appellants and reversal

. 28 Michael H. McGinley, Philadelphia, Pennsylvania (Micha e l P. 29 Corcoran, Dechert, Philadelphia, Pennsylvania, of 30 counsel), submitted a brief for Amicus Curiae T

h e Alternative 31 Investment Management Association in support of reversal

.

41 K EARSE, Circuit Judge : 2 This a ppeal returns to u s on r e m a nd from the United States Supreme 3 Cou rt f or f urther consideration, in light of Kelly v. United States , 1 40 S
. Ct. 1565 (2020 ) , 4 o f this Court' s pr ior a f firmance of judgments of the United States District Court for 5 t he Southern District of New York convicting def e ndants David B laszczak, Theodore 6 H uber, Rob e r t Olan, and Christopher Worrall of conversion o f g overnment property 7 in v iola tion of 18 U.S.C. § 641 and wire fraud in violation of 18 U.S.C. § 1343; and 8 convicting Blaszczak, Huber, a nd Ola n of securities fraud in violation of 18 U.S.C. 9 § 1 348 ("Title 18 securities fraud"), conspiracy to commit wire fraud a nd Title 18 10 securities fraud in viola tion of 18 U.S.C. § 1349, a nd conspiracies in violation of 11 18 U.S.C. § 371 to, inter alia , convert government p roperty and defraud the United 12 S tates, all originating from misappropriation of confidential i nformation from the 13 Centers for Medicare & Medicaid Services ("CMS"), see United States v. Blaszczak , 947 14 F .3d 19 (2d Cir. 2019) (" Blaszczak I "), v acated and remanded , 141 S. C t. 1040, 2021 WL 15 7 8 043 (Jan. 11, 2021). On this remand: (A) de fendants contend that their argument 16 t hat the CMS i nformation a t is s u e does not constitute "property" or a "thing of value" 17 within the m e a ning of t he above statutes is supported by the S upreme Court's decision 18 i n Kelly ; (B) t he government, concurring in tha t c ontention, confesses error as to those 19 substantive counts and as to a conspiracy count premised only on crimes concerning

51 " property" (Count Two); and it agrees that either the defendants' conv ic tions on those 2 counts should be reversed, or the cases should be r e m a nde d to the district court so 3 t hat the government can dismiss those c ou nts pu r suant to Fed. R. Crim. P. 48(a); a n d 4 (C) t he government seeks affirmance on the r e m aining conspiracy counts o n which one 5 o r more defendants were convicted (Counts One a nd Seventeen). 6 For the reasons that follow , given the Supreme Court's decision in Kelly 7 a n d the prosecutorial discretion to which the Executive Branch o f the government is 8 entitled, we grant the g overnment' s r e q ue st to remand the cases to the d istrict court 9 for dismissal of t he substantive counts and the conspiracy cha r ge d i n Count Two. As 10 t o Counts O ne and Sevente en, the verdicts do n o t reveal whether the jury found that 11 t he charged defendants conspired to engage in alleged conduct other t han that which 12 t he government no l onger contends was criminal. Accordingly, we vacate the 13 convictions on these two counts a n d remand f or su c h further proceedings as may be 14 a p propriate.

15 I. BACKGROUND

16 The h istor y of this prosecution, summarized briefly here, is set out in 17 B laszczak I

, 947 F.3d 19, familiarity with which is a ssumed.

61 CMS is an agency w ithin the United States Department of Health a n d 2 H uman Services. CMS administers Medicare and Medicaid, including inter alia , issuing 3 r ules setting reimbursement rates for healthcare providers. The r ules m a y impact the 4 stock prices of companies that offer products and services covered by t he rates. 5 Worrall was an employee at CMS; Blaszczak, a consultant for hedge 6 funds , w a s a former CMS employee. Huber and Olan were partners in a hedge fund 7 ("Deerfield"). At various times between 2009 a nd 2014, Worrall g ave Bla s z c z ak 8 n onpublic information about the timing and substance of proposed CMS rule changes 9 t hat would change r eimbursement r ates for certain types o f medical c are for various 10 h ealth conditions. B l aszczak gave that inf or m ation to Huber, O l an, or another 11 Deerfield partner, following which Deerfield engaged i n profitable short s a le s of s hares 12 o f companies that would be n egatively a ffected by reimbursement r ate reductions 13 when they became effective. Be tw e en 2010 and 2013, Blaszczak also gave such 14 information to another h edge fund client, following which that fund profitably 15 maintained its short positions and purchased pu t- options in shares of such companies.

16 A. The Prosecution and the Convictions 17 With respect to the above activities, d efendants w e r e indicted and tried 18 on s u b s ta ntive charges of Title 18 securities fraud i n violation of § 1348, securitie s

71 fraud in v iolation of 15 U.S.C. § 78j(b) a nd 78ff, and 17 C.F.R. § 240.10b-5 (collectively 2 " Title 15 securities fraud"), wire fraud in v iola tion of 1 8 U.S.C. § 1343, and conversion 3 o f United States prope r ty ( i
. e . , the CMS information) in violation of 1 8 U.S.C. § 641. 4 All four defe nda nts were charged with conspiracy, in violation of 18 U.S.C. § 371, to 5 commit Title 15 se cu r itie s fraud, to convert government property, and to defraud the 6 United States (Count One), and conspiracy in viola tion of 18 U.S.C. § 1349 to commit 7 wire f r a u d a nd T itle 18 securities fraud (Count Two). Blaszczak was charged in Count 8 S eventeen with conspiracy in viola tion of § 371 to convert g overnment property a n d 9 t o defraud t he United States. 10 The jury acquitted all of the defendants on all s ub s tantive counts of Title 11 1 5 securities fraud. On t h e other substantive cha r ge s , all four defendants were 12 convicted on at least one count of § 641 property conversion a n d at least one count 13 o f § 1 34 3 wire fraud: Blaszczak was convicted on a total of three counts of § 641 14 p roperty conversion, two counts of § 1343 wire fraud, and two counts of Title 18 15 securities fraud. Huber a n d Olan were each convicted on one count o f § 641 property 16 conversion, one count of § 1343 wire fraud, and one count of Title 18 securities fraud. 17 W orrall was convic te d only on one count of § 641 property conversion and one count 18 o f § 1343 wire fraud. As to the conspiracy counts, Blaszczak, Huber, a nd Olan were 19 convicted on Counts One and Two; Blaszczak was convicted on Count Seventeen.

81 On appeal, defendants challenged the ir c onvictions on the principal 2 g round that §§ 1343 and 1348 apply to fraudulent schemes to o b ta in "money o r 3 p roperty" and that § 641 applies to conv e r s ion of "money[] or [a] t hing of value" of 4 t he g overnment, and that CMS's confidentia l information as to its plans for announcing 5 changes in medical service reimbursement rates was not government "property" or a 6 " thing of value" within the meaning of those statutes. The majority in Blaszczak I 7 d isagreed, and the convictions were a ffirmed.

8 B
. T

he Supreme C ourt's Decision in Kelly 9 Following denial of defendants' petitions for rehearing i n this Court a n d 10 a stay of their time to seek further revie w , de f e ndants p etitioned the S upreme Court 11 for certiorari. In the meantime, the Supreme Court had decided Kelly

. 12 Kelly involved politically motivated conduct by officials in the 13 a d ministration of New Jersey's then-Governor Chris Christie to cause significant traffic 14 g r idlock for several days in Fort Lee, New Jersey--terminus o f t he George Washington 15 B ridge to Manhattan--by reducing t he Bridge's toll plaza lanes accesse d f r om Fort Lee 16 from three lanes t o o n e, in retribution for the r e f u s al of Fort Lee's mayor to endorse 17 Christie's bid for reelection. The plan was executed under the guise of a traff ic s t udy; 18 i ts exposure a s a sham l ed to the officials' criminal prosecution.

91 The officials were charged with wire fraud in violation of 18 U.S.C. 2 § 1 3 43 (which prohibits schemes "for obtaining m oney or property"), fraud on a 3 federally funded entity ( i.e. , the Por t A u thor ity, which administered the Bridge) in 4 v iolation of 18 U.S.C. § 666(a)(1)(A) (whic h pr ohibits fraudulently " obtain[ing]

. . . 5 p roperty" from such an entity), and conspiracy to commit those crimes. After the 6 d efendants were convicted and their convictions were a ffirmed on a ppeal, the Supreme 7 Court reversed. 8 T he Court held that the defendants' conduct did not fall within the s c ope 9 o f § 1343 or § 6 66 ( a ) ( 1 ) ( A ) because their scheme did not aim to deprive t he Port 10 Authority of money or property. The Court noted that t he federal fraud statutes are 11 " limited in scope to the protection of p roperty rights , " Kelly , 140 S. Ct. at 1571 (internal 12 q uotation m a r ks om itted), and do not "criminaliz[e] all acts of dishonesty," id

. Thus, 13 t he government was req u ir e d t o prove, inter alia , that the object of the defendants' 14 fraud was money o r property, see id

. at 1571-72. Instead, the Court concluded, the 15 K

elly defendants, by deciding the distribution of l anes for drivers on the toll road, h ad 16 exercised the government's regulatory rights of "'allocation, exclu s ion, a nd control.'" 17 Id

. at 1573 (quoting Cleveland v. United States , 531 U.S. 1 2, 23 (2000)). The Court sta te d 18 t hat such regulatory rights "do 'not c r e a te a property interest,'" Kelly , 140 S. Ct. a t 1573

101 (quoting Clev e l a nd , 531 U.S. at 23), a n d t hus, "a scheme to alter such a regulatory 2 choice is not o ne to appropriate t he government's property," Kelly , 140 S. Ct. at 1572. 3 The Court rejected the government's arguments t hat the pr operty aspect 4 o f § 1343 and § 666(a)(1)(A) was satisfied either because the physical lanes that the 5 d efendants "'commandeer[ed]'" were government property, id ., or because their project 6 r equired expenditures of time and labor by Port Au thor ity employees. The Court held 7 t hat for conduct to be within those statutes, property must be more than an incidental 8 a spect of the fraud; it "must be an 'object of the fraud.'" Id

. at 1573 (quoting 9 P asquantino v. United S tates , 544 U.S. 349, 355 (2005)). As the obj e ct of the de fendants' 10 scheme was clearly to alter "a regulatory decision about the toll p laza's use" for 11 p olitical r etaliation, rather t han to take the lanes from the government or to convert 12 t hem to non-public use, the lanes as property played no more than a "bit part in [the] 13 scheme

. " Kelly , 140 S. Ct. at 1573. Similarly, in contrast to a misuse of public 14 employees to renov ate an o fficial's home, the defendants merely altered a regulation; 15 " [ e ] v e ry regulatory d ecision" involves some employee labor, and that expended by the 16 Port Authority employees was "only an incidental byproduct o f the scheme

. " I d

. 17 a t 1573-74.

111 C. The Parties' Positions on Remand in L ight of Kelly 2 In the present case, defendants successfully petitioned for ce r tiorari, with 3 some s u ppor t from the government: "At the request of the Acting Solicitor General, 4 t he Supreme Court granted the petitions" of defendants for certiorari, "v a cated this 5 Court's judgment, and remanded the case for further consideration in light of Kelly ." 6 (Government brief on remand at 2.) 7 Defenda nts on this remand renew their principal contention that the CMS 8 i nformation at issue does not c ons titu te "property" or a "thing of v alue" within the 9 meaning of the fraud and conversion statutes, a nd they contend that that conclusion 10 is su ppor te d by the Supreme Court's d ecision i n Kelly

. Their opening brief on remand 11 urges that all of their convictions be reversed. 12 The government on remand, insofa r as the substantive counts of 13 conviction are concerne d, a gr ees with defendants that those counts cannot stand. It 14 states t hat, 15 [i]n light of the S u pr e me Court's holding in Kelly , it is now 16 the position of the Department of Justice that in a case involving 17 confidential gov e r nment information, that information typically 18 must have economic value in the hands of the r elevant 19 government entity to constitute "pr ope r ty" for purposes of 20 18 U.S.C. §§ 1 3 43 a nd 1348.
. . . A r elated, though not necessarily 21 identical, analysis applies when determining w ha t confidential 22 information is a "thing of value" under 1 8 U .S
. C
. § 6 41. The 23 Department h a s determine d that the confidential information at 24 issue i n this case does not cons titu t e "property" or a " thing of 121 value" under the relevant statu tes after Kelly

. To be sure, this 2 Court recognized that "CMS does have an econom ic interest in its 3 confidential predecisional information" because the agency "invests 4 t i m e a n d r e s o u r c e s i n t o g e n e r a t i n g a n d m a i n t a i n i n g t h e 5 conf identiality of" that information, and leaks affect the "efficient 6 use of its limited time and resources." B laszczak[ I ] , 9 47 F.3d 7 at 33. But in t he Department's view, shaped b y Ke lly , the CMS 8 em ployee time at issue in t his case did not constitute "an object of 9 the fraud," and thus the associated "labor costs could not s u s ta in 10 the conviction[s]" here. Kelly , 140 S. Ct. at 1573. 11 (Government brief on remand at 7-8 (emphas is in brief).) "Accordingly," the 12 g overnment states, " this Office is constrained to confess error at the direction of the 13 S olicitor General's Office" ( id

. at 8; see al s o i d

. at 2 ("This brief was prepared in 14 consultation with the Of fice of the Solicitor General to reflect the Department of 15 Justice's post- Kelly position on t he scope of 'property' under 18 U.S.C. §§ 1343 a n d 16 1 3 48 , a nd a ' thing of value' under 18 U.S.C. § 641, which this Office is constrained to 17 follow .") )
. The government urges that we either "reverse

. . . the convictions" for 18 conversion of United States property (Counts Three, Thirteen, and Eighte e n), wire 19 fraud (Counts N ine and Fifteen), Title 18 securities fraud (Counts Ten a nd S ixteen), 20 a n d conspir a cy to commit wire fraud and Title 18 securities fraud (Count Two) 21 (Government brief on remand a t 8-9), or t hat we remand the m a tte r to the district 22 court in or de r to permit the government to h ave those eight counts dismissed 23 p u r s u a nt to Federal Rule of Criminal Procedure 48(a) (Government response to brief 24 o f Court-appointed amicus curiae at 8). 131 The government ar gu es, h owever, that the conspiracy convictions on 2 Counts One and Seventeen should be affirmed. Count One, on whic h Blaszczak, 3 H uber, and Olan were convicted, allege d tha t defendants' objectives were not only to 4 convert government prope r ty in violation of § 6 41, but a l so to commit Title 15 5 se c u r ities fraud and to defraud the United States i n violation of 18 U.S.C. § 371. And 6 Cou nt Seventeen, alleged only against Blaszczak, alleged that his objectives were b oth 7 conversion of g overnment property and defrauding the United S tates. The gov e rnment 8 a cknowledges that "[i]n light of [ its ] confession of error, . . . the Government is 9 constrained to concede t h at the § 641 objects are legally inv a lid," but it argues that 10 " the § 371 defraud-clause o bjects were n ot affected by Kelly and remain le ga lly valid." 11 (Government brief o n rem a n d at 10.) The government also concedes that the jury's 12 " general verdict[ s] " on Counts One a n d Seventeen, and "the p resence of both l egally 13 i nvalid and legally valid objects giv e s r is e to error" ( id

. (citing Y ates v. United States , 14 3 5 4 U.S. 298 (1957 ) ) ). How e ver, it argues that the error is h armless in light of the 15 " overwhelming evidence" that Blaszczak conspire d w ith Huber and Olan (the Deerfield 16 p a r tne rs ) to defraud the United States in connection with Deerfield's stock trading 17 (Count One), and that B laszczak conspire d w ith another client to defraud the United 18 S tates in connection with that client's stock trading (Count Seventeen).

141 In reply, defendants concur in the government's propos a l to have the 2 substantive counts and Count Two dismissed. Blaszczak, H ube r , a nd Olan, in reply 3 t o the gov e r nm ent's contention that their conviction(s) on Counts One a nd Seventeen 4 should be affirmed, dispute the government' s c ontention that any l ack of clarity as to 5 the b a sis o f the jury verdicts on these counts was harmless. They argue that it is 6 i nstead likely that the jury based its conspiracy verdicts on t he § 641 allegations , giv e n 7 t hat t he governm e nt e nde d its rebuttal summation by urging "the jury to 'take the jury 8 form and mark guilty on Count One , b e ca use that is a conspiracy to steal government 9 infor m a t i o n .' " (Defendants' reply brief o n remand at 1 3 (quoting trial transcript 10 (emphasis in b r ie f ) )
. ) They argue t hat the convictions on Counts One and Seventeen, 11 i f not reversed, must at least be vacated.

12 II. DISCUSSION

13 For the reasons that follow , given the Supreme Court's decision in Kelly 14 a n d the prosecutorial discretion to which the Executive Branch o f the government is 15 entitled, we grant the government's request to remand these cases to the district c ou r t 16 for dismissal of the seven substantive c ounts o f conviction and t he conspiracy 17 conviction in Count Two. In light of the lack of clarity as to whether the jury's

151 v erdicts of guilt on Counts One and Seventeen were b a s ed on findings of conspiracy 2 t o violate § 641 or instead on conspiracy to defrau d the government in violation of 3 § 371 (or in Count One on conspiracy to commit Title 1 5 securities fraud), we v acate 4 the j u dgments on Counts One and Seventeen and remand for such further proceedings 5 o n these counts as may be appropriate.

6 A. The Government's Confession of Error in Light of Kelly 7 "[O]ne o f the core powers of the Executive B r anch o f the Federal 8 Government [is] the power t o prosecute." United S tates v . Ar m st r o ng , 517 U.S. 456, 467 9 (1996). "'[S]ubject to constitutional constraints,'" id

. at 464 ( q u oting United States v. 10 B atchelder , 442 U.S. 114, 125 (1979)), such as prohibitions aga ins t invidious 11 d iscrimination, see generally Armstrong , 517 U
. S
. a t 464-65, or vindictive prosecution, see 12 g enera l l y U nited S tates v . Goodwin , 457 U.S. 368, 373-74 (1982), the United States 13 " Attorney General and United States Attorneys retain 'broad discretion' to enforce the 14 N ation's criminal la w s ," Armstrong , 517 U.S. at 464 (quoting Wayte v. United States , 470 15 U.S. 598, 607 (1985) (other i nternal quotation marks omitted)). 16 In the ordinary case, "so long as the p rosecutor has probable cause 17 to believe that the a cc u sed committed a n offense defined by 18 statute, the decision whether or not to prosecute, and what charge 19 to file or bring before a grand ju ry, generally rests entirely in his 20 discretion."

161 A rmstrong , 517 U.S. at 464 (quoting Bordenkircher v. Hayes , 43 4 U
. S. 3 57, 364 (1978) 2 (emphasis ours)). 3 This broad discretion rests largely on the r ecognition that the 4 decision to prosecute is particularly ill-suited to judicial review. 5 Such factors as the strength of the case, the prosecution's g eneral 6 deterrence value, the Government's enforcement priorities, and the 7 ca s e 's relationship to the Government's o verall enforcement plan 8 are not r eadily susceptible to t he kind of analysis the courts are 9 competent to undertake. 10 Wayte , 470 U.S. at 607; see also United States v. Knox , 32 F.3d 733, 7 39 n .3 (3d Cir. 1994) 11 ("[A] p rosecutor always has broa d discretion to decide the circumstances that warrant 12 p rosecution of a person for what the prosecutor fairly believe s is u nla wful conduct. 13 W hen the prosecutor dec ide s to prosecute, . . . i t is the exclusive function of the 14 judiciary to determine whether the conduct c ha r ged is unlawful unless the prosecutor 15 then withdraws the prosecution ." (emphasis added)). 16 The Federal Rules of Criminal Proc e du r e provide, a s pertinent here, that 17 " [t]he gov e r nm e nt m a y, with leave of court, dismiss an indictment

. . . ." F ed. R. 18 Crim. P. 48(a). 19 The principal object of the "leave of court" r equirement is 20 apparently to protect a defe ndant against p rosecutorial harassment, 21 e.g. , charging, d ismissing, a nd r echarging, when t he Government 22 moves to dismiss a n indictment ove r t he defendant's objection.

. . . 23 But the Rule has als o b een held to permit the court to deny a 24 Governm e nt dismissal motion to which the defendant has 25 consente d if the motion is prompted by considerations clearly 26 contrary to the public interest
. 171 Ri na l d i v. United S tates , 434 U.S. 22, 29-30 n.15 (1977) (emphasis added); see gene r a l l y 2 United States v. Cowan , 524 F .2d 504, 509-11 ( 5 th Cir. 1 975) (" C owan ") (the "leave of 3 court" requirement was added by the S upreme Court to the originally pr oposed 4 v ersion of Rule 48(a), which had required the gov ernment merely to give a statement 5 o f i t s reasons for dismissing a prosecution), cert. denied sub nom . Woodruff v. United 6 S tates , 425 U.S. 9 71 (1976). 7 The government may elect to e s chew or d i scontinue prosecutions for any 8 o f a n umber o f reasons. Rarely w ill the judiciary overrule the Executive Branch's 9 exercise of these prosecutorial decisions. For example, in Petite v. United States , 361 10 U.S. 5 29 (1960), the government, while not opposing the defendant's ce r tior a ri petition 11 challenging his p rosecution a nd c onviction on the ground of double jeopardy, informed 12 t he Supreme Court that the Department of Jus tic e ( "Department" or "Justice 13 Department"), " wholly apart from the question of the le ga l v alidity of the claim of 14 d ouble jeopa rdy, " was considering whether t he second prosecution of the defendant 15 was consistent with Department policy for the control of government litigation. Id

. 16 a t 530. Thereafter, the Solicitor G e ne r a l having announced a g eneral policy against 17 multiple prosecutions a rising out of a single tr a ns a c tion or against a federal 18 p rosecution tha t would be duplicative of a state prosecution, see id

. at 530-31, the 19 g overnment moved for , a nd the Supreme Court granted, a " r emand[] t o the Court of

181 Appeals to vacate i ts judgment [of affirmance] a nd to direct the District Court to 2 v acate its judgment [of conviction] and to dismiss the i ndictment," id

. at 531. 3 Even when a defendant has been tried, convicted, and sentenced in a 4 p rosecution that, under the Petite policy, would not have been brought if the Justice 5 Department's internal procedures had been proper ly or timely followed, the courts 6 h ave g ranted the government's eventua l motion t o vacate the conviction and have the 7 i ndic tm e nt dismissed. See , e.g. , Rinaldi , 434 U.S. at 23, 29-30; United States v. Houltin , 8 5 5 3 F.2d 991, 991-92 (5th Cir. 1977). 9 In G aona-Rom e ro v. Gonzales , 497 F.3d 694 (5th Cir. 2007), a government 10 motion see king te r mination o f a p roceeding reflected a change in a different Justice 11 Department policy. The governm e nt moved t o vacate a court of appeals decision 12 upholding the r e m ov a l of a n alien who had been convicted of a controlled substances 13 o ffense, but whose conviction had been vacated. The gov e r nm e nt reviewed its policy 14 with regard to such cases, and de c ided to follow a revised Board o f Immigration 15 Appeals ("BIA") interpretation of "conviction," see 8 U.S.C. § 1101(a)(48) ( A ) , to exclude 16 conv ic tions that were vacated on the basis of procedural or substantive error. The 17 court of appeals granted the motion and " r emand[ed] to the BIA s o tha t the 18 g overnment m a y f ollow through on its pledge t o withdraw the charge of 19 r emovability." Id

. at 695.

191 In cases i n which the government itself has come t o t he v iew that a given 2 d efendant may not have been g uilty of the c r im e of w hich he was convicted, the 3 g overnment has similarly moved to discontinue or d i smiss t he p rosecution. For 4 example, in U ni t e d St a t es v. Weber , 721 F.2d 2 66 (9th Cir. 1 9 83), after Weber and his 5 code f endants had been convicted and sentenced, the Assistant United States Attorne y 6 who had prosecuted the case interviewed Weber, received new information, a n d 7 r eexam ined the evidence. As a result he "develop[ed] a serious and substantial doubt 8 a s to Weber's guilt," id

. at 268, and the government moved unde r R u le 48(a) to 9 d ismiss the indictment against Weber. The district court, w hile s tating that it h ad "no 10 dou b t" as to the prosecutor's "good faith doubt regarding W eber's guilt," id ., d enie d 11 t he motion, apparently believing such a motion could n ot be gra nte d a fter the 12 d efendant had been convicted, see id

. at 2 69. 13 The court o f appeals reversed, h olding that "[s]eeking dismissal because 14 o f the exis te nce of such a reasonable doubt" as to the defendant's guilt is "not clearly 15 contrary to the manifest public interest." Id

. (inte r na l quotation marks omitted); see 16 also United States v. DiMattina , 571 F. App'x 50, 50 (2d Cir. 2014) ("D ef e nda nt Frank 17 DiMattina argues t hat his conviction for extortion is invalid because he did not 'obtain' 18 a n y property for pu r pos e s of the Hobbs Act. The Government, in its brief on appeal, 19 agr ee s and concedes that the judgment must be v acated in all respects. T he

201 Government n ow s ee ks remand to the District Court 'so that [it] can move to dismiss 2 the indictment with prejudice under Rule 48(a) o f t he Federal Rules of Cr im ina l 3 Procedure.' Appellee Br. 11. We agree that is the appropriate course o f action."). 4 In United S tates v. Smith , 55 F.3d 157 (4th Cir. 1995) (" Smith "), Smith, who 5 h ad originally p leaded not guilty and wa s b e ing tried with four codefendants, decided 6 mid-trial to ple ad gu i lty and agreed to testify against his codefendants. He testified 7 t ruthfully, but the codefendants were acquitted. The government then moved under 8 Rule 48(a) t o dismiss the i ndictment against Smith, stating two reasons. 9 First, [it] pointe d to the acquittal of Smith's four codefendants and 10 e xpressed the opinion that if Smith had not p leaded g uilty, he , 11 too, c ertainly would have been acquitted. S econd, the United 12 Sta te s A ttorney pointed o ut t hat after pleading g uilty Smith 13 cooperated with the government and testified truthf u lly. The 14 United States Attorney emphasized that dismiss a l promoted 15 credibility i n future attempts to enlist defendants to plead g uilty, 16 cooperate with the government, and t ruthfully testify in return for 17 lenient treatment. He summed up his reasons as follows: 18 "Ob v iou s ly, it is not only in the public i nterest to do what is fa ir 19 and r i ght, but it is also in the public's interest to encourage 20 persons with knowledge to cooperate with the United States." 21 Id

. at 160. The district court, however, while finding no ba d faith on t he part of the 22 United States Attorney, d enied the motion, based on the court's " o wn assessment" tha t 23 i t "wou ld be clearly contrary to [the] manifest public interest" t o dismiss the 24 i ndictment against S mith given tha t "Smith's guilty plea and corroborating testimony 25 constituted substantial evidence of his g uilt." Id

. 211 T he court of appeals reversed. While noting that the district court' s ow n 2 d ecision w a s reviewable for abuse o f discretion, it pointed out that the exercise of 3 judicial d iscretion in this regard must r espect the p rosecutorial discretion conferred on 4 t he Executive Branch: 5 The court's discre tion must be exercised in conformity with Rule 6 4 8(a) and the construction t hat the Supreme Court has plac e d on 7 the rule. Because the discretion granted by Rule 48(a) inv olv es the 8 constitutional iss u e of the S eparation of Powers Doctrine, a 9 reviewing court must carefully scrutinize the district court's action. 10 In Newman v . United States , 3 82 F.2d 479, 480 ( D. C
. C ir
. 1967), Chief 11 Justice Burger, t hen a circuit judge, wrote : "Few subjects are less 12 adapted to judicial review t han t he exe r c ise by the Executive of his 13 discretion i n de c iding when and whether to institute criminal 14 proceedings, or what precise charge shall be m a de, or whether to 15 dismiss a proceeding once brought." 16 S mith , 55 F.3d at 158. 17 "Rule [48(a)] was n ot promulgate d to shift absolute power from 18 the E x ecutive to the J udicial B ranch. Rather, it was intended as 19 a power t o check power. T he Executive remains the absolute 20 judge o f whether a prosecution should be initiated and the first 21 and presumptively the b e st judge of whether a pending 22 prosecution should be terminated. The exercise o f its discretion 23 with res pe c t to the termination of pending p rosecutions should not 24 be judicially disturbed unless clearly contrary to manifest public 25 interest. In this way, the essential function of each branch is 26 synchronized to achiev e a balance that serves both practical and 27 constitutional values." 28 S mith , 55 F.3d at 158-59 (quoting Cowan , 524 F.2d a t 513).

221 The dispos i t ion of a government's motion to dismiss an 2 indictment should be decided by determ i ni ng whether the prosecutor acted 3 in g ood faith at the time he moved for d ismissal

. A motion that is not 4 motivated by bad faith is not clearly contrary to manifest public interest, 5 and it must be granted

. . . . [T]he trial cour t has little d iscretion in 6 consider ing a government motion to dismiss made p ursuant to 7 Federal Rule of Criminal Proc e du re 48(a). It must grant the motion 8 absent a finding of bad faith or disservice to t h e p ub l i c interest
. . . . 9 The disservice to the public interest must be found, if at all, in the 10 m o t ive of the prosecutor
. Examples of d i sservice to the pu b lic 11 interest include the prosecutor's acceptance of a bribe, personal 12 dislike of t h e victim, and dissatisfaction with the jury impaneled. 13 S mith , 55 F.3d at 159 (internal quotation marks omitted (emphases ours)); see , e.g. , 14 Rinaldi , 434 US. at 30 (regardless of the government's reasons for initia ting or 15 maintaining a prosecution, the " salient issue" a s to its l ater d ec is ion t o terminate it is 16 whether t he request to dismiss the indictment i s "tainted with i mpropriety"). 17 The Sm ith court of appeals reversed t he denial of the government's Rule 18 4 8 (a) motion, concluding that the district court's "ow n a s s essment o f the public 19 i nterest" and " [w]eighing [of] these interests d[id] not give adequate r e c ognition to the 20 Executive i n t he context of the Separation of Powers Doctrine as it exercises its du ty 21 i n good faith to take care that the laws are faithfully executed." 55 F.3d at 160. 22 In United S tates v. Fokker S ervices, B. V
. , 8 1 8 F.3d 733 (D.C. Cir. 2016) 23 (" Fo k k er "), the government h a d entered into a deferred prosecution agreement ("DPA ") 24 with a defendant and had agreed not to prosecute certain persons. The district court 25 r egarded the DPA as an inappropriately "anem ic []" response t o "egregious conduct" 231 o ver "a sustained period of time and for the benefit o f one of our country's worst 2 enemies," and it r efused to exclude DPA cooperation time from the speedy trial clock 3 a s a u thorized by the Speedy Trial Act ("Act"). The court of a ppeals granted the 4 g overnment's petition for mandamus: 5 [T]he Act confers n o authority in a court t o withhold exclusion of 6 time pursuant to a DPA based on concerns that t he g overnment 7 should b r ing dif f e r e nt cha r ge s or shou ld charge different 8 defendants. Congress, i n providing for courts to approve the 9 exclusion of time pursuant to a DPA, acted a ga inst the backdrop 10 of long-settle d understandings about the independence of the 11 Executive with regard to charging decisions

. Nothing in the 12 statute's t erms or structure suggests any intention to subvert those 13 constitutionally rooted principles so as to enable t he Judiciary to 14 second

- g ue s s the Executive's exercise of discretion over the initiation and 15 dismissal of criminal charges

. 16 Id

. at 738 (emphasis added). 17 Finally, close to home, this Court h onored the g overnment' s decision in 18 l ight of Kelly t o end its pursuit of a § 6 41 prosecution in United States v. Aytes , No. 19 1 9 -3981, Dkt. No. 70 (2d C ir
. Apr. 13, 2021) (" Aytes "). Aytes, after a jury trial in 2018, 20 was found guilty of theft of government property i n violation of § 6 4 1 for her 21 unauthorized taking from the Feder a l Deposit Insurance Corporation ("FDIC") of paper 22 a n d electronic copies o f documents that detailed plans, in the eve nt of a severe 23 financial crisis, for the rapid and orderly liquidation o f four b a nks regulated by the 24 F DIC. Aytes succes s f u lly moved p ursuant to Federal Rule of Criminal Procedure 29

241 for a judgment of acquittal, see United States v. Aytes , No. 18 CR 132, 2019 WL 5579485 2 (E.D.N.Y. Oct. 29, 2019); the government, with the approval of the Solicitor General, 3 a ppe a le d. While Aytes's appeal was pending, the Supreme Court decided Kelly a n d 4 g ranted certiorari in the present cases for reconsideration in light of Kelly ; and the 5 g overnment in the p resent cases, upon instructions from the S olicitor General, 6 confessed error a nd r e quested reversal o f t he convictions o f--or dismissal of the 7 i ndictment counts against--the present d efendants on the § 641-rela te d a nd other 8 p roperty-related counts. 9 The United States Attorney's Office that prosecuted Aytes, upon c onf e r r ing 10 with the Solicitor General, was instructed that the § 6 41 charges against he r we r e not 11 meaningfully distinguishable from the property-related charges in the p resent cases and 12 t hat the government s hou ld move to dismiss its appeal from Aytes's judgment of 13 a cquittal. See Aytes , No. 1 9-3981, Dkt. No. 65 (gover nm e n t motion, Apr. 12, 2 021). 14 Accordingly, the government so moved; and t his Court summarily granted the 15 g overnment's motion a nd its appeal w a s dismissed, t hereby ending pursuit against 16 Aytes of charges for theft of government regulatory information unde r § 6 4 1 , see A ytes , 17 N o. 1 9-3981, Dkt. No. 70 (order of dismissal, Apr. 13, 2021).

251 With these considerations in mind, we conclude that the government's 2 d ecision to seek the dismissal of the seven substantive counts convicting defendants 3 under §§ 1343, 1 348, a nd 6 41, along with the conspiracy charges i n Count 2, is 4 a p propriate and owed deference. Nonetheless, we a r e also mindful that the 5 g overnment's confe s sion of error "does n ot a utomatically govern an appellate court's 6 d isposition of an appeal." United S t a t e s v . Vasquez , 85 F.3d 5 9, 60 (2d Cir. 1996) 7 (collecting cases); see also Young v. United States , 3 15 U.S. 2 57 (1942). 8 In Y oung --a 1 942 case arising prior to the adoption of Rule 48(a) with 9 r espect to the government's desire to dismiss a prosecution- -a physician convicted of 10 failing to maintain records required by the Harrison N arcotics Act, 2 6 U.S.C. §§ 2551(a) 11 a n d (b), contended that his conduct fell b e yond the r ecord-keeping requirement. The 12 g overnment confe s s e d error, and requested reversal and remand to the d istrict court 13 with direction to dismiss that count of the indictment. The Supreme Court declined 14 t o reverse without considering the merits: 15 The p ublic trust r e posed in the law enforcement officers of 16 the G ov e rnment requires that they be q uick to confess error when, 17 in their opinion, a miscarriage of justice may result from their 18 remaining silent. But such a confession does not relieve this Court 19 of t h e performance of the judicial function. The considered 20 judgment of t h e law enforcem e nt officers that reversible error has 21 been committed is entitled to great weight, but our judicial 22 obligations compel us to examine inde pendently the errors 23 confessed. See Parlton v. United States , 64 App.D.C. 169, 75 F.2d 24 7 7 2. T he public interest that a result be reached which promotes 261 a well-ordered society is foremost in e very criminal proceeding. 2 That interest i s entrusted to our consideration and protection as 3 well as that of t he enforcing of f ic ers. Furthermore, our judgments 4 are precedents, and the proper administration of the criminal law 5 cannot be left merely to the stipulation of parties. 6 Y

oung , 315 U.S. at 258-59. 7 To the e xte nt that this Court is required to address the merits of the 8 convictions on the counts a s t o which the g overnment confesses er r or and/or requests 9 a r emand for dismissal, see generally Young , we conclude tha t in l ight of Kelly , §§ 1343, 10 1 3 48, and 641 d o not apply to the conduct that was at i ssue here.

11 B
. T

he Confidential Information and the Timing of Agency Action Are Not CMS's 12 " Property" 13 As indicated in Part I.B. above, the Kelly Court n oted that the relevant 14 federal fraud statutes such as § 1 3 43 are "limited in s c ope to the protection of 15 p roperty rights" and do not "c r iminaliz[e] all acts of d ishonesty," and that the 16 g overnment therefore was required t o p rove, inter alia , that the object of the 17 d efenda nts ' f r audulent scheme was money or property, K elly , 140 S. Ct. at 1 571-72 18 (internal quotation marks omitted)

. Kelly h eld that t he defendants' conduct a ffecting 19 t he ope r a tion o f the Port Authority did not fall within t he scope of § 1343 o r 20 § 666(a)(1)(A) because "[t]he wire fraud statu te thus prohibits only deceptive "'schemes 21 t o deprive [ the victim of] mone y or property.'" 140 S. Ct. at 1571 (quoting McNally v. 271 United States , 483 U.S. 350, 35 6 ( 1 9 8 7 )) (brackets in Kelly ; emphasis o urs); see , e.g. , 2 C leveland , 531 U.S. at 1 5 ("the thing obtained must b e property in the hands of the 3 v ictim"); and the obje c tive o f the Kelly d efendants' scheme was neither t o deprive the 4 Port Authority of its money or property nor to utilize for defendants' own purposes 5 tha t a ge nc y's employees' paid time, but rather to reallocate the Bridge's access lanes. 6 K

e l ly c onc luded that "a scheme to alter such a regulatory choice is not one to 7 a p propriate the government's property," Kelly , 1 40 S. Ct. at 1572 (emphasis added). 8 In the present cas e the s a m e is true with respect to the counts charging 9 v arious defendants with fraud in violation of §§ 1343 and 1348 or w ith c onversion of 10 g overnment property in violation of § 641. In contrast, as to the counts of the 11 indic tm e nt that charged violations of the Title 15 securities laws, the actual and 12 i ntended victims of the alleged frauds would ha v e been i nvestors in t he market for 13 securities of the companies whose fortunes w ou ld be affected by the regulations 14 p romulgated b y CMS. Indeed, as noted by the Court-appointed amicus curiae, "[a]t 15 i ts core, this was a case about i ns ide r t rading--an act already understood to be 16 wrongful under [Title 15]." (Brief of Court-appointed amicus curiae a t 19.) But the 17 ju r y ac q u itted defendants on all of t hose Title 15 substantive counts; and in the 18 r emaining substantive counts at issue here, on which the jury convicted--the fraud

281 sections, §§ 1 343 and 1 3 4 8, a nd t he section prohibiting " conver[sion]" of "money," o r 2 a "thing of value" from " the U nited States or any department or agency thereof," 3 1 8 U
. S.C. § 641--the purported victim would h ave been the g overnment agency CMS. 4 Thus, defendants could not properly be convic ted of violating §§ 1 343, 1348, or 641 5 unless the objective of t heir schemes and conduct was money o r p roperty of CMS. 6 The Supreme Court in Kelly note d that it had previously established that 7 a gov e r nment agency's "exercise of regulatory power . . . fails to meet the [feder a l 8 fraud] statutes' property requir e ment." 140 S. Ct. at 1568-69; see id

. at 1572 (with 9 r egard to "a deceptive scheme to inf lu e nce, t o h is own benefit, [a governmental 10 entity' s ] issuance of g aming licenses," "this Court has already held that a scheme to 11 a l ter such a regulatory choice is not one to appropriate the gov e rnm ent's property " 12 (citing Cle ve l and , 531 U.S. at 23) (emphasis added)). No greater property interest was 13 i nvolved in the CMS i nformation at issue in the present case. 14 W hile confidential i nformation may constitute property of a commercia l 15 entity such a s t he publisher victim in Carpe nt e r v . U ni ted States , 484 U.S. 1 9 (1987)--for 16 which confidential information was its "stock in trade, to be gathered a t the c ost of 17 enterprise, organization, skill, lab or, a nd money, a nd to be distributed and sold to those 18 w ho [would] p a y m o ne y for it ," id

. a t 26 (internal quotation marks omitted; emphasis

291 o urs)--the s a m e i s not true with respect to a regulatory agency such as CMS. CMS 2 i s not a commercial entity; it does not sell, or offer for sale, a service o r a product. 3 CMS adopts regu la tions that affect, inter alia , business organizations o r 4 h ealth industry entities, whether the affected persons or entities favor the regulations 5 or not. And while CMS seeks to maintain confidentiality as to its planned regulations6 -and the regulations can plainly ha v e e ither a favorable or an adverse effect on certain 7 busine ss e ntities' fortunes--a planned CMS regulation, even if disclosed to outsiders 8 p rematurely, remains within the e xc lu s iv e control of CMS. And if it is prematurely 9 d isclosed to o thers, the disclosure has no direct impact on t he government's f isc, 10 a l though it might well impact CMS's su bs eq u e nt regulatory choices. CMS can adhere 11 t o its planned regulation, or it can a l ter or a bandon it; it can publish the regulation 12 at the time it had planned, or it can postpone or a dvance the announcement or the 13 r egulation' s ef f e c tive date. As the Supreme Court recognized in Cleveland a n d 14 emphasized in Kelly , the government's right to dete r mine "who should g et a benefit 15 a n d who should not . . . do[es] 'not create a p rope rty interest.'" Kelly , 140 S. Ct. 16 a t 1572 (quoting C leveland , 531 U.S. at 23)). The information reflecting su c h a decision 17 a n d t he timing o f that disclosure are re gu la tor y in character and do not constitute 18 money or property of the victim; and they are n ot a "thing of value" to CMS that is 19 susceptible to being "convert[ed]," 18 U.S.C. § 641.

301 We disagree with the dissent's contention that the present decision 2 conf lic ts w ith this Court's precedent in United States v. Girard , 601 F.2d 69 (2d Cir. 3 1 9 79). That case involv ed a dr ug d ealer's attempt to purchase confidential records of 4 t he United States Drug Enforcement Administration ("DEA") as to what persons were 5 DEA informants in certain DEA i nvestigations. W e ruled that such confidential 6 i nformation was a "thing of value" to the DEA within t he meaning of § 641. See 601 7 F .2d at 71. And logically so: Such information has inherent value to the D EA in 8 i nvestigations and preparation f or prosecutions; its theft would interfere with those 9 o perations, by allowing the targets of investigations to, f or e xa m ple, better conceal 10 t heir criminal conduct, hide their contraband, or flee f r om a r rest, as well a s by 11 i mperiling the well-being o f the undercover agents and confidential informants used 12 i n t hose operations. We cannot agree that such inherently valuable law enforcement 13 i nformation is comparable to the regulatory i nformation a t issue in the prese nt c a s e , 14 which was t he r eimbursement rates that CMS would announce for certain health 15 services and the planned dates o f the announcements. 16 In sum, in Kelly , the scheme sought to alter the a ge nc y's exercise of its 17 r egulatory power. In the present case, the goal of the conduct at issue was a step 18 r emoved from any attempt at alteration; de f e nda nts i nstead schemed t o obtain a n d 19 p romptly utilize advance information as to h ow the r egu la tory power would be

311 exercised by CMS. As the conduct in Kelly --altering a regulation--doe s not constitute 2 a deprivation of government property, a fortio r i merely obtaining advance information 3 a s to what the agency's preferred regulation wou ld b e , a nd when it would be 4 a n nounced, cannot pr ope r ly be considered the agency's money or property or a thing 5 o f value that could be " convert[ed]." 6 We respect the Executive's "de cisions about whether to initiate charges, 7 whom to prosecute, which charges to bring, and wh ether to dismiss charges once brought ." 8 F okker , 818 F.3d at 737 (emphase s a dde d)

. T he jury found defendants not guilty on 9 a n y of the substantive counts alleging Title 15 securitie s fr aud--the core of the case. 10 The government's election, in light of Kelly , not to pursue the case f u r ther as one for 11 conversion of, or fraud to obtain, government "property" is entitled t o deference. A nd 12 o ur independent r eview confirms that the dismissals r equested by t he government are 13 r equired following Kel ly

. Accordingly, these cases will be remanded to the district 14 court for dismissal of the substantive counts and the Count Two conspiracy charges.

15 C. The Remaining Conspiracy Counts 16 The only remaining counts of the indic tment a re Count One, on which 17 B laszczak, Huber, and Olan were convicted of conspiring, in violation of 18 U.S.C. 18 § 3 71, to convert p roperty belonging to the United States in violation of 18 U.S.C.

321 § 641, to c om mit Title 15 securities fraud, and to defraud the United States in 2 v iolation of § 3 71; and Count Seventeen, on which Blaszczak wa s convicted of 3 conspiring, in v i olation of 18 U.S.C. § 371, to violate § 6 4 1 a nd to defraud the United 4 S tates. 5 As to these counts, the jury was not given questions to answer that 6 would reveal which one or more o f the a lleged conspiratorial goals it found proven. 7 And since the g overnment has confessed error as to charges that defendants' conduct 8 was within the scope of § 641, and it no longer seeks to sustain these conspiracy 9 convictions on the basis of § 641 prope rty-conversion goals, the government 10 a cknowledges that the v erdicts on these counts a re "'flawed'" (Government brief on 11 r emand at 1 2 (quoting Skilling v. United S tates , 5 61 U.S
. 3 5 8 , 41 4 ( 2 010))); see id

. a t 414 12 (quoting Ya t e s v . United States , 354 U.S. 2 98 (1957) ("constitutional error occurs when 13 a j u r y is instructed on alternative theories of g uilt and returns a g eneral verdict that 14 may rest on a legally i n v a lid theory")). 15 The governm e nt contends, however, that the convictions on Counts One 16 a n d Seventeen can be affirmed on the ground tha t the error was harmless. We 17 d isagree. In harmless-error analysis, t he government bears the burden o f proof, see , 18 e.g. , United States v. Vonn , 5 35 U.S. 55, 6 2 (2002); United States v. Groysman , 766 F.3d 19 1 4 7, 1 55 (2d Cir. 2 0 14); and it mu st s u s ta in that burden beyond a reasonable doubt,

331 see genera l l y N e d er v. United States , 527 U.S. 1, 15-19 (1999) (conviction may be affirmed 2 i f, after "a thorough examination of the record," the court "c onclude[s] beyond a 3 r easonable doubt that t he jury v erdict would have been the s a m e absent the error," 4 id

. at 19); see United States v. Coppola , 671 F.3d 220, 237-38 (2d Cir. 20 1 2) (a Yates error 5 would be harmless where "the jury necessarily would h ave h ad to" convict defendant 6 o n the basis of the v a lid ground). Given t he emphasis the governm e nt pla c e d on theft 7 i n its rebuttal summation t o the j u r y, a nd the fact that the only substantive crimes on 8 which the jury returned v erdicts of gu ilty w ere the alleged property crimes under 9 § 641 , § 1 34 3 , and § 1348, we cannot conclude that the government has carried its 10 burden. Despite t he fact that a plurality of the i ndictment's c ou nts alleged substantive 11 counts of Title 15 securities fraud--and "[a]t its core, " tha t is what this case was about12 -the jury acquitte d each defendant on every such count in which he was charged. We 13 see no basis on which to infer that i f there had been no c ha r ge s o f property crimes 14 o r conspiratorial goals to commit property crimes, the jury would necessarily have 15 fou nd tha t any of the defendants conspired to commit Title 15 securities fraud or to 16 d efraud the United S tates. We cannot conclude t hat the i nclusion of § 6 4 1 c onversion 17 a s a goal of t h e conspiracies alleged in Counts One a nd Seventeen was an error that 18 was harmless.

341 On the other hand, we are not persuaded by defendants' a rgument that 2 t he convictions on these counts should simply be reversed. Counts One a n d 3 S evente e n allege § 371 conspiracies to defraud the United States; Count One alleges 4 a n additiona l ob jective of committing Title 15 securities fraud. Section 371 5 encompasses not just conspiracies to com mit property crimes, but conspiracy to commit 6 " any offense agains t the United States" and any conspiracy to "defraud the United 7 S tates, or any agency thereof in a ny manner or for any purpose." 18 U
. S
. C
. § 371; 8 McNally v. United States , 483 U
. S
. 3 5 0 , 3 5 8 n.8 (1987) (the defraud clause of § 371 9 " reaches conspiracies other than those directed at property inte r es ts "). The record 10 contained sufficient evidence for submission of these counts to the jury. 11 We conclude that the convictions on C o unts One and Seventeen should 12 be vacated, a nd the cases against Blaszczak, Hu b e r , a nd Olan are remanded for such 13 fu r the r proceedings as may be n ecessary on these counts, which may include a new 14 t rial.

15 CONCLUSION

16 We have considered all of the p arties' arguments in su pport of their 17 r espective positions on this remand. For the reasons d i scussed above, t hese cases are

351 r emanded to the district court to permit t he governm e nt to dismiss Counts Two, 2 Three, Nine, Ten, Thirteen, Fifteen, Sixteen, and E i ghteen. The convictions of 3 B laszczak, Huber, a nd Olan on Count One and o f Blaszczak on Count Seventeen are 4 v acated, and the cases are remanded to the district court for such further proceedings 5 o n these two counts as may be appropriate.

361 

### J OHN 

### M. W ALKER 

### , J R 

### ., Circuit Judge , joined by Judge Kearse, 1


### c oncurring: 2 

### I join Judge Kearse ’s opinion in full. I write separately to 3 

### highlight an anomaly in a separate ruling in Blaszczak I 1 

### that , while 4 

### not discussed by today’s majority opinion because it is no longer 5 

### outcome determinative , nevertheless deserves attention. In Blaszczak 6 

### I , the panel held that a criminal conviction for tipper

- tippee insider 7 

### trading securities fraud prosecuted under 18 U.S.C. § 1348 does not 8 

### require proof that the tipper received a “personal benefit.” 2 

### This 9 

### holding stands in contrast to the requirement of proof of a tipper’s 10 

### personal benefit when the government seeks criminal or civil 11 

### penalties for insider trading under Section 10( b) of the Securities 12 

### Exchange Act of 1934 3 

### and SEC Rule 10b

- 5 promulgated thereunder 4


### . 13 

### If that strikes one as odd, it should. Reasonable minds can 14 

### certainly differ on how the law can best prevent insider trading 15 

### without unduly impairing the normal functioning of security analysts 16 

### as informational intermediaries between companies and the market

. 17 

### But traditional notions of fair play are offended by the present 18

1 United States v. Blaszczak , 947 F.3d 19 (2d Cir. 2019) , judgment vacated sub nom. Olan v. United States , 141 S. Ct. 1040 (2021), and judgment vacated , 141 S. Ct. 1040 (2021) (“ Blaszczak I ”)
. 2 Id. at 45. 3 15 U.S.C. § 78j(b). 4 17 C.F.R. § 240.10b

- 5.2 

### incongruence in this c ircuit between civil and criminal deterrence

. It 1 

### should not require f ewer elements to prove a criminal conviction than 2 

### to impose civil penalties for the same conduct. This asymmetry 3 

### deserves the further attention of our court, the Supreme Court, and 4 

### Congress
. 5



### * * * 6 

### The government can punish insider trading in two ways: 7 

### through civil penalties under Rule 10b

- 5 or criminal prosecution 8 

### under either Rule 10b

- 5 o r 18 U.S.C. § 1348 . These laws broadly 9 

### prohibit schemes or artifices to defraud in connection with the 10 

### securi ties market

. N either provision expressly mentions insider 11 

### trading, but both can be used to police it , although under different 12 

### standards and elements. 13 

### Start with the text of § 10(b)

. The section prohibits any person 14 

### from “us[ing] or employ[ing], in connection with the purchase or sale 15 

### of any security .

. . any manipulative or deceptive device or 16 

### contrivance in contravention of such rules and regulations as the 17 

### [Securities and Exchange] Commission may prescribe.” 5 

### Acting upon 18 

### its authority to implement § 10(b), the SEC promulgate d Rule 10b

- 5, 19 

### which makes it unlawful, inter alia , “to employ any device, scheme, or 20 

### artifice to defraud” and “ to engage in any act, practice, or course of 21

5 15 U.S.C. § 78j(b).3 

### business which operates or would operate as a fraud or deceit upon 1 

### any person, in connection with the purchase or sale of any security.” 6 2 

### T he text s of the statute and the regulation do not exp licitly proscribe 3 

### insider trading

. Courts , however, have located the proscription 4 

### within § 10(b)’s broad prohibition against using “any

. . . deceptive 5 

### device ” as well as the “inherent unfairness” that arises when a person 6 

### “secret[ly] profits” from informational asymmetries “intended to be 7 

### available only for a corporate purpose

. ” 7 

### But “ n ot every instance of 8 

### financial unfairness constitutes fraudulent activity under § 10(b)” and 9 

### Rule 10b

- 5. 8 

### The elaboration of these anti

- fraud provisions to cover 10 

### insider trading has evolved through a process of judicial accretions 11 

### and enforcement decisions that reflect “judgments as to why insider 12 

### trading is or is not fraudulent, deceptive or manipulative.” 9 13 

### C ourts have tethered § 10(b) and R ule 10b

- 5 liability to a breach 14 

### of a fiduciary duty in connection with the purchase or sale of a 15 

### security. 10 

### Under the “classical” theory, l iability for insider trading is 16 

### predicated on a n insider ’ s breach of the duty of trust and confidence 17

6 17 C.F.R. §§ 240.10b

- 5(a), (c). 7 Dirks v. SEC , 463 U.S. 646, 654 (1983) (quoting In re Merrill Lynch, Pierce, Fenner & Smith, Inc. , 43 S.E.C. 933, 936 (1968)). 8 Chiarella v. United States , 445 U.S. 222, 232 (1980). 9 U nited S ta tes v. Chestman , 947 F.2d 551, 573 (2d Cir. 1991) (en banc) (Winter, J., concurring in part and dissenting in part ); cf. Blue Chip Stamps v. Manor Drug Stores , 421 U.S. 723, 737 (1975) (in the context of private actions under Rule 10b

- 5, courts “deal with a judicial oak which has grown from little more than a legislative acorn”). 10 Chestman , 947 F.2d at 570 ; see also Chiarella , 445 U.S. at 231

- 32
.4 

### that he owes , as an insider, to purchasers and seller s of his company’s 1 

### stock . An insider violates § 10(b) and Rule 10b

- 5 when he trades 2 

### based on material, non

- public information. 11 

### The insider can also be 3 

### liable as a “tipper” when he divulges

— or tips

— that inside 4 

### information to outsiders. 5 

### For an outsider, m ere possession of an issuer’s nonpublic 6 

### market information does not create a duty

. 12 

### But an outsider who 7 

### acquire s a company’s inside information ( a “tippee” ) may still be 8 

### prohibited from trading on that information if he receive d it from a 9 

### tipper who has breached her fiduciary duties and t he tippee knows of 10 

### the tipper’s breach

. It is the tipper’s predicate breach that allows a 11 

### tippee who trades with knowledge of the tipper’s breach to be held 12 

### derivatively liable

. The touchstone for whether the tipper has 13 

### breached those duties is whether the tipper received a “ personal 14 

### benefit ” in exchange for providing the inside information. 13 15 

### Again, nothing in the text of § 10(b) or Rule 10b

- 5 requires that 16 

### the tipper receive a “personal benefit

. ” But the Supreme Court , since 17

11 United States v. O’Hagan , 521 U.S. 642, 651

- 52 (1997). O’Hagan recognized a second theory of insider t rading liability

— the “misappropriation theory”

— premised on a breach of a duty a corporate “outsider” owes to the source of the information. Liability may attach when a person who owes no duty to company shareholders but to whom inside information has been entrusted “misappropriates [that] information for securities trading purposes.” Id. at 652

- 53. 12 Dirks , 463 U.S. at 654 (quoting Chiarella , 445 U.S. at 235). 13 United States v. Newman , 773 F.3d 438, 447

- 48 (2d Cir. 2014), abrogated on other grounds by Salman v. United States , 137 S. Ct. 420 (2016).5 

### Dirks v. SEC , 14 

### has imposed such a requirement. In a civil enforcement 1 

### action against a tipper for a violation of § 10(b) and Rule 10b

- 5 , 15 

### the 2 

### government must prove that a tipper “(1) tip[ped] (2) material non

3 

### public information (3) i n breach of a fiduciary duty of confidentiality 4 

### owed to shareholders .

. . or to the source of the information .

. . (4) for 5 

### personal benefit to the tipper.” 16 6 

### Likewise, a tippee may be civilly liable when : 1) he k new or had 7 

### reason to know that the tipper disclosed that information in breach of 8 

### a duty and received a personal benefit in the process and 2) the tippee 9 

### use d that information by trading or tipping for his own benefit in 10 

### disregard of that knowledge. 17 

### T he precise nature of the “personal 11 

### benefit” in a particular case “will not always be easy for courts” to 12 

### determine. 18 

### But at least in theory, the Dirks test provides a “simple 13 

### and clear ‘guiding principle’ for determining tippee liability.” 19 14

14 463 U.S. at 662; see also Salman v. United States , 137 S. Ct. 420 (2016). 15 17 U.S.C. § 78u

- 1 (authorizing the SEC to seek civil penalties). 16 SEC v. Obus , 693 F.3d 276, 286 (2d Cir. 2012). 17 Id. at 289; see also Dirks , 463 U.S. at 660 (noting that tippee liability in the civil context may be predicated when the tippee knows or “should know” of the tipper’s breach)

. Cf. Salman , 137 S. Ct. at 423 (requiring knowledge of the tipper’s breach and the personal benefit for criminal prosecutions); United States v. Martoma , 894 F.3d 64, 76 (2d Cir. 2017) (“ Martoma II ”) (requiring that a tippee in a criminal prosecution be aware “not only that the tipper breached a fiduciary duty in disclosing inside information, b ut also that the tipper received a personal benefit”). 18 Salman , 137 S. Ct. at 429. 19 Id. at 428 (quoting Dirks , 463 U.S. at 6 64). A p ersonal benefi t “may be indirect and intangible and need not be pecuniary at all.” Martoma II , 894 F.3d at 75. Most recently, this court recognized that a personal benefit can exist based on, inter alia , “a relationship between the insider and the recipient that sugges ts a quid pro quo from the latter, or .

. . an intention to benefit the particular recipient.” Id. at 74.6 

### Now we turn to the text of 18 U.S.C. § 134 8, which provides a 1 

### broad criminal prohibition against securit ies fraud and thus insider 2 

### trading. 20 

### F or the government to secure a criminal conviction for 3 

### violations of 18 U.S.C. § 1348 , it must prove that a defendant 4 

### knowingly engaged in a “ scheme or artifice to defraud any person in 5 

### connection with ” a registered security or commodity of a publicly 6 

### traded company

. 21 

### Like § 10(b) and Rule 10b

- 5, nothing in the text of 7 

### 18 U.S.C. § 1348 requires proof of a personal benefit. 22 8 

### The j udicial accretion to § 10(b) and Rule 10b

- 5 requiring a 9 

### personal benefit to the tipper and knowledge of such by the tippee is 10 

### absent from our interpretation of § 1348. I n Blaszczak I the panel 11 

### declined to “graft the Dirks personal

- benefit test onto the elements of 12 

### Title 18 securities fraud” in a tipper

- tippee insider trading 13 

### prosecution
. 23 

### Because 18 U.S.C. § 1348 requires no proof of a 14

20 18 U.S.C. § 1348. Congress enacted § 1348 with full knowledge of the jurisprudence regarding insider trading violations under Title 15. And, in 2009, when Congress amended the statute, Congress broadened its scope to include schemes to defraud that involved commodities futures. Pub. L. 107

- 204, Title VIII, § 807(a), 116 Stat. 804 (2002) (amended 2009). 21 18 U.S.C. § 1348(1). Section 1348 also m akes it a crime “to obtain, by means of false or fraudulent pretenses, representations, or promises, any money or property in connection with the purchase or sale of any

. . . security.” 18 U.S.C. § 1348(2). T his provision is not relevant to this concurr ence. 22 The texts of the provisions do differ. Unlike § 10(b)’s requirement that a scheme have a nexus with a “purchase or sale” of a security, § 1348(1) broadly captures schemes “in connection with” any security. But the definition of “security” is more circum scribed for purposes of 18 U.S.C. § 1348 than in the Securities Exchange Act

. Compare 18 U.S.C. § 1348(1) with 15 U.S.C. § 78c (a)(10). 23 Blaszczak I , 947 F.3d at 37.7 

### personal benefit, the panel observed that the statute gives the 1 

### government “a differen t

— and broader

— enforcement mechanism” 2 

### than is available under § 10(b) and Rule 10b

- 5
. 24 3 

### C onsider some of the potential consequences of a legal scheme 4 

### that requires fewer elements to convict someone criminally than to 5 

### penalize someone civilly for the same conduct. The risk of 6 

### overdeterrence looms large: The government has expressly 7 

### acknowledged that securities analysts, who routinely “ferret out and 8 

### analyze information” from corporate insiders to price accurately a 9 

### security , are critical to a functioning market. 25 

### But w hen the bounds 10 

### of permissible condu ct are not clearly delineated , parties are 11 

### prevented “from ordering their actions in accord with legal 12 

### requirements.” 26 

### The personal benefit test creates at least some legal 13 

### distinction between those who gave and obtained tips fraudulently 14 

### and those who appropriately engaged in the honest disclosure and 15 

### collection of corporate information . In this way, the element provides 16 

### corporate insiders and analysts (and their attorneys) with notice of 17 

### “when the line is cross ed.” 27 

### Without it, c orporate insiders may be 18 

### more reticent to share information with analysts in the ordinary 19

24 Id. at 36 (emphasis added). 25 Dirks , 463 U.S. at 658 n.17 (citing government’s brie f). 26 Id. 27 Id

.8 

### course of business and analysts who do receive company information 1 

### may be less likely to act on it for fear of running afoul of § 1348
. 2 

### Beyond the problem that lawful market analyst activity may be 3 

### inhibited in the wake of the Blaszczak I decision, 18 U.S.C. § 1348(1)’s 4 

### cri minal prohibition stands to capture more instances of tipper

- tippee 5 

### insider trading than would be civilly sanctionable. In the Blaszczak 6 

### trial it was no accident that the jury convicted the defendant s of 7 

### insider trading fraud by violating 18 U.S.C. § 1348 but acquitted them 8 

### of the same conduct under § 10(b) and Rule 10b

- 5. 28 

### Under Blaszczak I , 9 

### the government may prosecute someone as a tippee when he trades 10 

### on company information that he knows to be material and non 11 

### public , without proving that the source of that information was 12 

### engaged in self

- dealing. 29 13 

### To be sure, the higher standard of proof to secure a criminal 14 

### conviction may mitigate this incongruence to a degree

. But th e threat 15 

### of criminal exposure (or a referral from the SEC to a United States 16 

### Attorney’s office) is a weighty cudgel in plea bargaining and in 17 

### extracting civil settlements. It also poses a challenge to the lawyer 18

28 See Blaszczak I , 947 F.3d at 26. Of course, with our opinion today, we vacate those convictions under § 1348 for the separate reason that the government failed to prove that the information the defendants obtained was “property” within the meaning of the statute

— an element distinct from the receipt of a “personal benefit.” 29 Id. at 36
.9 

### advising the security analyst who has no desire to run afoul of the law 1 

### but wants to be able to do his job effectively

. 30 2



### * * * 3 

### We are taught that judges must “take the statute as we find it ” 31 4 

### and that we should “assume that Congress is aware of existing law 5 

### when it passes legislation,” including statutes and judicial “gloss”

— 6 

### such as Dirk s ’s personal benefit test . 32 

### Thus I understand the Blaszczak 7 

### I panel’s decision, in the absence of Supreme Court guidance, not to 8 

### import a personal benefit element to securities fraud prosecutions 9 

### under 18 U.S.C. § 1348 . I write separately , however, to highlight a 10 

### glaring anomaly that the panel’s decision creates and that warrants 11 

### further attention by Congress and the courts. 12

30 The dissent purports to explain the discrepancy between 18 U.S.C. § 1348 and § 10(b ) and Rule 10b

- 5 by reference to the enacting Congress es ’ purpose. See Dissenting Opp. at 31

- 34
. It does not address , however, the troubling effects on the heretofore legitimate conduct of securities analysts in the market who could not be subject to criminal or even civil liability under § 10b and Rule 10b

- 5, but may be prosecuted criminally for the same conduct under 18 U.S.C. § 1348 , which are the focus of this concurrence. 31 Anderson v. Wilson , 289 U.S. 20, 27 (1933) (Cardozo, J.). 32 Miles v. Ap ex Marine Corp. , 498 U.S. 19, 32 (1990).

### R ICHARD 

### J. S ULLIVAN 

### , Circuit Judge, dissenting: For the reasons set forth below and in th is Court’s 2019 opinion, I remain convinced that the defendants’ convictions should be affirmed. See United States v. Blaszczak (Blaszczak I) , 947 F.3d 19 (2d. Cir. 2019 )
. As the jury concluded beyond a reasonable doubt, t he defendants participat ed in a multi

- milli on - dollar scheme to misappropriate and trade on confidential information in the possession of the Centers for Medicare and Medicaid Services (“CMS”) concerning the timing and content of contemplated changes to the agency’s reimbursement rules. To my mind, nothing in the Supreme Court’s subsequently issued opinion in Kelly v. United States , 140 S. Ct. 1565 (2020), alters the conclusion that “CMS information

. . . constitute[d] ‘property’ in the hands of the government for purposes of the wire [

- ] fraud and Ti tle 18 securities [

- ] fraud statutes , ” Blaszczak I , 947 F.3d at 26. The majority opinion effectively permits sophisticated insiders to leverage their access to confidential government information and sell it to the highest bidders

– in this case, hedge funds that used the confidential information to make millions shorting the stocks of public companies affected by CMS’s regulations. In addition to running roughshod over CMS’s obvious “property interest in

. . . its [own] private records,” id. at 33 (quoting United States v. Girard , 601 F.2d 69, 71

### 2 (2d Cir. 1979) ) , the majority opinion also threatens to upend dec ades of settled precedent concerning frauds premised on the theft of intangible property and suggests

– in what amounts to dicta

– a curious and troubling rule of deference that would require federal courts to acquiesce whenever the government

announces a new, post
- conviction statutory interpretation
. Equally troubling is the concurrence , which

– also in dicta

– offers a gratuitous advisory opinion on a subject that clearly exceeds the scope of the Supreme Court’s remand order and, not surprisingly, was n either briefed nor argued by the parties on remand. In addition to its overreach, the concurrence is also wrong on the merits. For all these reasons, I respectfully dissent. I. The m ajority opinion concludes that confidential information held by a government agency is not property. See Maj. Op. at 2 7

– 32
. That conclusion cannot be square d with the language of t he federal fraud statutes at issue in this case . In particular , 18 U.S.C. § 1343 , the wir e - fraud statute, pro vides: 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

### 3 or causes to be transmitted b y 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 ye ars, or both

. 18 U.S.C. § 1343. Similarly, section 1348 , the Title 18 securities

- fraud statute, provides in relevant part : Whoever knowingly executes, or attempts to execute, a scheme or artifice

– (1) to defraud any person in connection with any commodity for future delivery, or any option on a commodity for future delivery, or any security of an issuer

. . . ; or (2) to obtain, by means of false or fraudulent pretenses, representations, or promises, any money or property in connection with the pu rchase or sale of

. . . any security of an issuer
. . . ; shall be fined under this title, or imprisoned not more than 25 years, or both. Id. § 1348. 1 

### Ne ither statute distinguishes between tangible and intangible property , or in any way suggests that information in the possession of a government agency as opposed to a private entity is beyond the scope of the statute

. Each statute merely require s that the object of the fraud be “property” in the hands of the victim. See

1 The superseding indictment charged the d efendants with violating both subsections (1) and (2) of 18 U.S.C. § 1348, either of which may independently support a conviction. While only subsection (2) uses the term “property , ” the d efendants do not argue that the object of a “scheme

. . . to defrau d” in subsection (1) can be anything other than “property

. ” 18 U.S.C. § 1348. I have thus assumed, for purposes of this case, that the “property” requirement in subsection (2) also applies in subsection (1). Id.

### 4 Cleveland v. United States , 531 U.S. 12, 26 (2000) ; s ee also Neder v. United States , 527 U.S. 1, 20

– 21 (1999) ( noting that Title 18 mail

- , wire

- , and bank

- fraud statutes should be analy zed similarly). Here, the object of the defendants’ fraud was CMS’s confidential, proprietary information, and the Supreme Court’s decision in Kelly does not compel the vacatur of the defendants’ convictions. A. For nearly four decades, courts have recognized that confidential information constitutes property under the mail

- and wire

- fraud statutes. Nowhere is this better illustrated than in Carpenter v. United States , in which the Supreme Court held that the publication schedule and contents of for thcoming columns in T he Wall Street Journal were the Journal ’s “property” because “[t]he Journal had a property right in keeping confidential and making exclusive use” of the information before publication

. 484 U.S. 19, 26 (1987) . The Supreme Court noted that “[c]onfidential business information ha s long been recognized as property.” Id. T he Supr eme Court also stressed that the Journal “ha[d] been deprived of its right to exclusive use of the information” and that “ exclusivity is an important aspect of confidential business information and most private property for that matter .” Id. at 26

– 2 7 (emp has e s added). The Supreme Court therefore

### 5 concluded that the Journal employee fraudulently misappropriated his employer’s “property” in violation of the mail

- and wire

- fraud statutes when he knowingly disclosed the Journal ’s confidential , pre - publication information to a stockbroker who traded on it. Id. at 28. The Supreme Court reached a similar conclusion in United States v. O’Hagan , 521 U.S. 642 (1997) . There, a corporate partner at a law firm was convicted on fifty

- seven counts of mail fraud, securities fraud, and money laundering after he traded the securities of his client’s acquisition target before the acquisition became public

. I d. at 647
. The Supreme Court upheld the convictions and recognized a “misappropriation theory” of fraud , under which a defendant’s “undisclosed misappropriation of [confidential] information[] in violation of a fiduciary duty

. . . constitutes fraud akin to embezzlement.” Id. at 654. Applying the misappropriation theory, the Supreme Court reasoned that the defendant ’s convictions were valid, since the defendant breached the “duty of trust and confidence he owed to his law firm

. . . and its client” when he “traded on the basis of nonpublic information regarding” the potential acquisition. Id. at 653 (emphas is added)

.

### 6 Decades later, i t is difficult to see a meaningful distinction between T he Wall Street Journal ’s pre

- publication information in Carpenter , the law firm ’s and its client’s pre

- acquisition information in O’Hagan , and CMS’s pre

- publication information concerning changes to its reimbursement rates here

. In each case, the

owner of the information “had a property right in keeping confidential and making exclusi ve use” of the information before publication. Carpenter , 484 U.S. at 26. And i n each case, the defendants endeavored to misappropriate that information without the owner’s knowledge and trade on it without the owner’s consent . B. L ike the dissent in Blaszczak I , t he majority opinion relies heavily on Cleveland v. United States to s uggest that confidential information in the possession of the government is somehow entitled to less protection tha n comparable confidential information in the hands of private entities. See Maj. Op. at 2 8
. But Cleveland bears little resemblance to this case and creates no such immunity for the theft of governmental property. In Cleveland , the defendants were indicted for mail fraud under 18 U.S.C. § 1341 for fraudulently concealing information from the s tate of Louisiana in their applications to obtain poker

- machine licenses. 531

### 7 U.S. at 17. The Supreme Court concluded that the defendants’ convictions could not stand because an unissued license in the hands of the state is not property. Id. at 27. As the Court explain ed, p rior to a license’s issuance, the state ’s “core concern” is the “ regulatory ” decision , made in its capacity as sovereign, concerning whether to grant or deny the license. Id. at 20

– 21 (emphasis in original)

. A ccording to the Court, a scheme to influence “ a typical regulatory program” is not a scheme to deprive the government of its property. Id. at 21. Clearly, the scheme in Cleveland to influence the government’s licensing decision s had little in common with the Blaszczak defendants’ scheme to misappropriate the government’s confidential information

. The goal of the defendants in this case was not to influence the government’s licensing decision or alter the government’s reimbursement policy

– each of which obviously is a regulatory act . It was instead to misappropriate confidential information in CMS’s possession so that the defendants could trade on it. Nowhere in Cleveland did the Supreme Court suggest that government entities are incapable of having property interest s in such confidential information ; the Court merely held that the government’s decision whether to issue licenses

– the object of the defendants’

### 8 fraudulent sc heme there

– w as not itself property
. In the end, Cleveland has little to say about this case

. C. T he m ajority opinion nevertheless doubles down on its reading of Cleveland by insisting that the Supreme Court’s decision in Kelly v. United States has radically truncated the government’s property rights in its own confidential information. Again, I am not persuaded. In Kelly , the defendants were government employees who reallocated access to the George Washington Bridge in an effort to exert poli tical pressure on a recalcitrant mayor. 140 S. Ct. at 1569

– 7 1 . For decades, three lanes feeding onto the bridge had been reserved for commuters coming from Fort Lee , New Jersey during the morning rush hour

. See i d at 1568. But as a form of political payback for the mayor’s failure to endorse the incumbent g overnor in an upcoming election , employees in the New Jersey Governor’s office created a horrific traffic jam by reducing the number of lanes dedicated to Fort Lee from three to one . See i d. at 1569. The Supreme Court, relying principally on Cleveland , unanimously held that this was not a scheme that “aim[ed] to obtain money or property

. ” I d. at 1574. As the Court observed, t he defendants did not “walk away with the lanes” or

### 9 “conve rt[] them to a non

- public use”; they merely closed two of the three traffic lanes , which “was a quintessential exercise of regulatory power.” Id. at 1572. Finding that “a scheme to alter such a regulatory choice is not one to appropriate the government ’ s property , ” i d. (citing Cleveland , 531 U.S. at 23) , th e Supreme Court overturned the defendants’ convictions under the federal fraud statu t es , i d. at 1574. T he differences between this case and Kelly are obvious. Here, CMS ’s confidential information more closely resembles the misappropriated property recognized in Carpenter than the allocation of traffic lanes at issue in Kelly or the licensing decision at issue in Cleveland . Like T he Wall Street Journal , CM S ha d a “property right in keeping confidential and making exclusive use [of] ” its nonpublic, pre

- publication information. Carpenter , 484 U.S. at 26. In stark contrast to a state’s right to allocate traffic lanes in Kelly or issue poker license s in Cleveland

– each a “paradigmatic exercise[] of the [state’s] traditional police powers , ” Cleveland , 531 U.S. at 23

– the government ’s right to exclude the public from accessing its confidential information concerning the content and timing of its reimbursement rates for various medical procedures squarely implicates its role

as a property holder, not as sovereign. See Loretto v. Teleprompter Manhattan CATV

### 10 Corp. , 458 U.S. 419, 435 (1982) (“The power to exclude has traditionally been considered one of the most treasured strands in an owner ’ s bundle of property rights

. ”); Cedar Point Nursery v. Hassid , 141 S. Ct. 2063, 2073 (2021) (describing the “central importance to property ownership of the ri ght to exclude”). This view is consistent with decisions from this and other c ircuits. See , e.g. , Girard , 601 F.2d at 70

– 71 (concluding that “the [g]overnment has a property interest in certain of its private records,” including the “ confidential ” information contained in those records); United States v. Czubinski , 106 F.3d 1069, 1074 ( 1st Cir. 1997) (holding that the IRS’s confidential taxpayer information “ma y constitute intangible ‘property’” under the wire

- fraud statute (citing Carpenter , 484 U.S. at 26)). Curiously, t he m ajority opinion r epeated ly quotes Kelly ’s holding that “a scheme to alter . . . a regulatory choice is not one to appropriate the government’s property . ” Maj. Op. at 10 , 2 8 , 2 9 (quoting Kelly , 140 S. Ct. at 1572 ) . But that line from Kelly only highlights the difference between the two cases . Here, the d efendants had no interest in “alter [ing]” CM S ’s “ regulatory choice [ s ]
. ” Id. Rather, t heir goal was to gain access to CM S ’s confidential , pre - publication reimbursement rates without being discovered so that they could trade on the information before it was disclosed to the public. In fact, the d efendants’ scheme

### 11 depended on keeping those choices

– the timing and content of the reimbursement rates

– unaltered. After all, onl y if the pre

- publication information remained the

same could they trade on the inside information for a profit before it became public. The majority opinion insists that “altering” the government’s regulation and “obtaining” the government’s information amount to the same thing for purposes of sections 1343 and 1348

. Maj. Op. at 31
. But t he verbs that the m ajority opinion

uses – “altering” and “obtaining”

– underscore the problem with conflating the government’s two distinct roles

. Id. “Altering” suggests the exertion of power upon another , see Alter , Oxford English Dictionary (3d ed. 2010) (“To make (a person or thing) otherwise or different in some respect.”) , whereas “obtaining” suggests the acquisition of a thing from another , see Obtain , Oxford English Dictionary (3d ed. 2010) (“To come into the possession of; to procure; to get, acquire, or secure.”). While the former points to interfering with the state’s regulatory role as sovereign, the latter points to inte rfering with the state’s role as

a property holder. Fundamentally, the m ajority opinion ’s view obliterates the distinction

– drawn by the Supreme Court in both Cleveland and Kelly

– between

### 12 the government’s exercise of regulatory authority and the government’s possession of property in aid of its regulatory agenda

. See Cleveland , 531 U.S. at 23

– 24 (“[T]he [s]tate’s interest in licensing video poker operations . . . implicates the [state’s] role as sovereign, not as property holder.”); Kelly , 140 S. Ct. at 1572 (“The defendant’s fraud implicated the [g]overnment’s role as sovereign wielding traditional police powers

– not its role as property holder. ” (alteration and internal quotation marks omitted)). To acknowledge that distinction is to acknowledge that the government can be a property holder. Indeed, the Kelly Court’s hypothetical examples of what would have amounted to fraudulently obtaining government property there

– “walk[ing] away with the lanes” or “converting them to a non

- public use,” 140 S. Ct. at 1573

– aptly describes what the defendants actually did here. Worral “walk[ed] away with [CMS’s confidential data ] ,” and Blaszczak “convert[ed] them to

. . . non - public use” in H uber and Olan’s scheme to profit from shorting stock in companies that would be adversely impacted by CMS’s yet

- unannounced reimbursement decisions. Id. ; see Blaszczak I , 947 F.3d at 26

– 27 (describing this scheme).

### 13 Finally, the majority follow s the govern ment ’s lead in invoking Kelly for the notion that confidential government information “ typically must have economic value

. . . to constitute ‘property
. ’” Maj. Op. at 1 2
. But the Supreme Court in Kelly simply held that a fraudulent scheme against the government must aim not just to “alter a regulatory decision,” 140 S. Ct. at 1574, but “to obtain money or property,” id. at 1573. T he Supreme Court said nothing about the definition of property , let alone that it must have economic value

. Because the object of the defendants’ scheme in this case was to misappropriate CMS’s confidential information, I see no reason to vacate the defendants’ convictions on the basis of the Supreme Court’s decision in Kelly

. D. Unable to rely on Kelly , t he m ajority opinion resorts to other justifications for its holding that CMS’s confidential information is not property

– and not entitled to the same protections afforded to T he Wall Street Journal ’s pre - publication information in Carpenter
. N one is convincing.

### 14 1. The majority opinion suggests that a government agency cannot have a property interest in confidential information because it “is not a commercial entity.” Maj. Op. at 2 9

– 30 . There are two problems with this reasoning. As a threshold matter , such a conclusion is inconsistent with

– and would effectively overrule

– our precedent holding that “the [g]overnment has a property interest in certain of its private records,” inclu ding the confidential information contained in those records. Girard , 601 F.2d at 71. Obviously, “one panel of this court may not overrule the decision of a prior panel,” Finkel v. Stratton Corp. , 962 F.2d 169, 174

– 75 (2d Cir. 1992), unless “an intervening Supreme Court decision casts doubt on the prior ruling,” Doscher v. Sea Port Grp. Sec., LLC , 832 F.3d 372, 378 (2d Cir. 2016) (citation omitted), abrogated on other grounds by Badgerow v. Walter s , 142 S. Ct. 1310 (2022). H ere, as explained above, Kelly casts no doubt on the well

- established rule that government entities can and do have property rights

. T he majority attempts to sidestep the clear holding of Girard by insist ing that Girard is distinguishable from the case before us . It is not. In Girard , we affirmed the defendants’ convictions under 18 U.S.C. §§ 641 and 371 for selling and conspiring to sell confidential information about informants working for the

### 15 Drug Enforcement Administration ( the “DEA”)

. See Girard , 601 F.2d at 7 0
. Although t he majority opinion concedes that the DEA’s informant records in Girard w ere “inherently valuable” to the DEA , it conclusorily asserts that CMS’s reimbursement rates are not “comparable ” to the DEA’s informant records

. Maj. Op. at 31. In fact, both this case and Girard concern whether the government has a property interest in the “intangible” contents of its “confidential , ” “unpublished writings.” Girard , 601 F.2d at 71. Like the informant records in Girard , which the majority opinion deems to have “ inherent value to the DEA in investigations and preparation for prosecutions,” Maj. Op. at 31 , the reimbursement rates here were integral to CMS ’s administration of “ federal

. . . healthcare financing programs , ” App’x at 464
. And just as the “theft [of the informant records in Girard ] would interfere with [the DEA’s] operations,” Maj. Op. at 31 , the pre - publication leak of CMS’s reimbursement rates here would “risk[] hampering the agency ’ s decision

- making process” by encouraging “ unbalanced lobbying efforts , ” “making it more difficult to manage the [information] process flow,” and “requir[ing] the agency to tighten up its internal information

- sharing processes , ” Blaszczak I , 947 F.3d at 33 ( internal quotation marks omitted) (citing App’x at 467)
. Fundamentally, nothing in Girard justifies the majority ’s conclusion that the

### 16 government can have a property interest in the DEA’s confidential informant information but not in CMS’s pre

- publication reimbursement rates

. T he majority ’s disclaimer that it is not overruling Girard is therefore hard to reconcile with the clear similarity between the facts and logic of the two cases . Nevertheless, even if th is panel had the power to overrule Girard , the majority opinion offers no rationale for a rule that would protect the property rights of commercial entities but not those of governmental agencies possessing comparable information. Why, one might ask, would the fraud statutes prohibit schemes to gain access to a manufacturer’s confidential information concerning the costs of production for assorted medical devices, bu t not extend that same protection to the government’s confidential information regarding the reimbursement rates for those very devices? Certainl y, no such distinction appears on the face of sections 1343 or 1348, and it defies common sense to think that Congress would give fraudsters carte blanche to misappropriate the “confidential information” of any and every “regulatory agency.” Maj. Op. at 2 9
. 2. As in the Blaszczak I dissent, the majority opinion also implies that entiti es cannot have a property interest in confidential information unless the confidential

### 17 information constitutes their “stock in trade”

– a phrase plucked from Carpenter
. Maj. Op. at 2 9 (quoting Carpenter , 484 U.S. at 26). But while the Carpenter court did use that phrase to help illustrate the Journal ’s interest in the property, it never made that a prerequisite for information to be considered property. Indeed, there are myriad cases in which the misappropriated property

– whether press releases , earning s reports , or merger information

– was deemed to be property for purposes of the mail

- , wire

- , and securities

- fraud statutes even though the information in question was clearly not part of the victim’s “stock in trade.” See , e.g. , United States v. Khalupsky , 5 F.4 th 279, 285 (2d Cir. 2021) ( affirming wire

- and securities

- fraud convictions based on trades using “information from stolen, pre

- publication press releases” of various publ icly traded companies ) ; SEC v. Dorozhko , 574 F.3d 42, 44 (2d Cir. 2009) ( vacating the district court’s denial of the SEC’s motion for an asset
- freeze injunction in an enforcement action based on the defendant’s hacking activities to gain access to a health care company’s “ earnings reports ” ) ; O’Hagan , 521 U.S. at 672 ( upholding mail

- and securities

- fraud convictions for “fraudulent trading on material, nonpublic information ” regarding “ the tender offer” for a major grain and foodstuffs producer )
. In none of these cases did the misappropriated information relate to the core business

– or “stock in trade”

– of

### 18 the defrauded entities. The majority opinion ’s “stock [

- ] in [

- ] trade” requirement would effectively undermine each of these cases without offer ing any principled basis for doing so. 3. Additionally, the majority opinion suggests that property interest is limited to goods that can be “distributed and sold to those who would pay money for it.” Maj. Op. at 2 9 (quoting Carpenter , 484 U.S. at 26) (alt erations omitted). But the law does not suggest that a property interest exists only in things that can be monetized. See Phillips v. Washington Legal Found. , 524 U.S. 156, 170 (1998) (“While the interest income at issue here may have no economically rea lizable value to its owner, possession, control, and disposition are nonetheless valuable rights that inhere in the property.”). Indeed, there are many items

– tangible and intangible

– that have no market value but are clearly recognized as property. Fo r instance, there may not be any market value for the baby shoes, diaries, or old photos of our non

- celebrity relatives, but there is no question that we own those things after they are passed down to us. See, e.g. , Restatement (Second) of Torts §§ 222A, 911 cmt. e (Am. L. Inst. 1979) ( noting that for purposes of liability and damages for conversion, “[s]ome things may have no exchange value but may be

### 19 valuable to the owner”). In short, the ability to monetize property does not define property rights. Relatedly, t he m ajority opinion stresses the fact that the disclosure of a government agency’s confidential information has no effect on the public fisc. Maj. Op. at 30
. That of course is true but beside the point. Whether the victim is economically harmed by the misappropriation is immaterial to whether the misappropriated information is in fact property. There was no evidence in Carpenter to suggest that The Wall Street Journal ’s bottom line was affected by the misappropriation of its columns , or that its ability to publish articles or retain subscribers was in any way compromised. Regardless of any economic harm that it may suffer as a result of the misappropria tion , the owner still retains its property right in the c onfidential information and may exclude others from accessing and using it.

* * * In short, the majority opinion’s efforts to distinguish between the pre - publication information in Carpenter and CMS ’s confidential information here are not persuasive. Kelly only reinforces that governments

– like corporations, partnerships, and individuals

– can possess property rights in confidential

### 20 information

. It logically follows that schemes to misappropriate such information are clearly within the scope of the federal mail

- , wire

- , and securities

- fraud statutes. I therefore see no basis for the majority ’s conclusion that CMS’s confidential information did not constitute “property” for purposes of 18 U.S.C. §§ 1343 and 1348. 2 

### II. T he bulk of the majority opinion , however, focuses not on Kelly ’s application to this case , but rather on the “deference” that we purportedly “owe[]” to “the Department of Justice’s post

- Kelly position on the scope of ‘ property’ under 18 U.S.C. §§ 1343 and 1348.” Maj. Op. at 13 , 2 6 (quoting Gov’t Suppl. Br. at 2). The portion of the majority opinion addressing that issue

– which was neither briefed nor argued by the parties

– is dicta

. It is “a point of law [that] might have been decided either way without affecting” the majority’ s bottom

- line “decision ”; it

2 T he majority opinion also holds that CM S’s confidential information concerning its reimbursement rates did not constitute a “thing of value” for purposes of 18 U.S.C. § 641. See Maj. Op. at 30 . Our case law defines the phrase “thing of value” under section 641 by reference to case law interpr eting the term “property.” See Girard , 601 F.2d at 71. But, as discussed, Girard also defines both “thing of value” and “property” to include certain private government records, including the “ confidential ” information contained in those records. Id. The majority opinion has not articulated any reason to depart from Girard , and I would continue to follow this Court’s precedent and hold that CMS’s confidential information constitutes both a “thing of value” and “property” under the relevant statutes.

### 21 therefore “cannot be binding.” Jimenez v. Walker , 458 F.3d 130, 142

– 43 (2d Cir. 2006) (quoting Carroll v. Lessee of Carroll , 57 U.S. (16 How.) 275, 286

– 87 (1853)) (other citation omitted). Indeed, the majority opinion appears to recognize as much. After nearly twenty pages spent straining to establish that “the prosecutorial discretion [of] the Executive Branch” is a reason “to remand the cases to the district court for dismissal , ” Maj. Op. at 6 , the majority opinion ultimate ly acknowledges that we may in fact be “required to address the merits of the convictions,” id. at 2 7

– and then decides the appeal on the basis that the defendants’ convictions cannot be sustained in light of Kelly

. In any event, I disagree with the majority opinion ’s suggestion that “the Department of Justice’s post

- Kelly position on the scope of ‘property’ under [sections] 1343 and 1348” is “owed deference” of any form. Maj. Op. at 1 3 , 2 6 (quoting Gov’t Suppl. Br. at 2). From the outset, t hat sugg estion is in tension with the Supreme Court’s repeated admonitions that “criminal laws are for courts, not for the [g]overnment, to construe,” Abramski v. United States , 573 U.S. 169, 191 (2014), and that accordingly, the “[g]overnment’s reading of a crimi nal statute” is not “entitled to any deference,” United States v. Apel , 571 U.S. 359, 369 (2014). Indeed, “court[s] ha[ve] an obligation to correct” the Department of Justice ’s

### 22 “error[s]” in interpreting criminal statutes, regardless of “[w]hether the [g] overnment interprets a criminal statute too broadly or too narrowly .” Abramski , 573 U.S. at 191 (emphasis added). The majority opinion attempts to maneuver around these precedents by characterizing “the government’s decision” to “confess[] . . . error” and “seek the dismissal of the . . . counts convicting defendants ” as an exercise of “the prosecutorial discretion to which the Executive Branch of the government is entitled.” Maj. Op. at 1 5 , 2 6
. But as the Supreme Court has explained

– and the majority opinion itself acknowledges

– “such a confession [of error] does not relieve . . . [c]ourt[s] of the performance of the judicial function,” id. at 21 (quoting Young v. United States , 315 U.S. 257, 258 (1942) ) , which of course “is emphatically

. . . to say what the law is ,” Marbury v. Madison , 5 U.S. (1 Cranch) 137, 177 (1803) (emphasis added). In other words, since “our judgments are precedents” that implicate “[t]he public interest

. . . in every criminal proceeding,” the “p roper administration of the criminal law cannot be left merely to the stipulation of parties.” Young , 315 U.S. at 259 (emphasis added) . For that reason, “[i]t is the uniform practice of [the Supreme] Court to conduct its own examination of the record in all cases where the [f]ederal [g]overnment . . . confesses that a

### 23 conviction has been erroneously obtained.” Sibron v. New York , 392 U.S. 40, 58 (1968); see also Young , 315 U.S. at 258

– 59 (“[O]ur judicial obligations compel us to examine independently th e errors confessed.”). T he Supreme Court’s recent decision in Terry v. United States is instructive on this point

. 141 S. Ct. 1858 (2021). There , a prisoner petitioned the district court for a resentencing pursuant to the First Step Act, arguing that h e fell within the category of crack

- cocaine offenders covered by that Act. See i d. at 1862. The district court denied his motion, the Eleventh Circuit affirmed, and the Supreme Court granted certiorari. See i d. On the day the government’s brief was due, the Solicitor General informed the Supreme Court that , “after the change in administration , ” th e government “would no longer defend the judgment” of the Eleventh Circuit. Id. But t he Supreme Court did not blindly acquiesce in the Solicitor General ’s request to summarily reverse the Eleventh Circuit. Instead, the Court rescheduled argument and appointed an amicus curiae to argue in support of the judgment

– which the Supreme Court ultimately affirmed in a unanimous opinion. See id. at 1864. The Su preme Court appoints an amicus to argue a case about once a year,

see Katherine Shaw, Friends of the Court: Evaluating the Supreme Court ’ s Amicus

### 24 Invitations , 101 Cornell L. Rev. 1533, 1548 (2016), often in situations where the government does not oppose t he position advanced by its adversary, see, e.g. , Terry , 141 S. Ct. at 1864; Seila Law LLC v . CFPB , 140 S. Ct. 2183, 2195 (2020) (appointing an amicus when the government declined to oppose its petitioner’s arguments ). This practice would be nonsensical

– not to mention unconstitutional

– under the m ajority opinion ’s theory that separation

- of

- powers principles compel us to defer to the government whenever it confesses error. While there can be no doubt that the government has broad discretion in deciding which cases to prosecute and how to prosecute those cases, once the government has involved the judiciary by obtaining an indictment or a conviction, its discretion is tempere d by the courts’ independent obligations. In other words,

we cannot tell the government who m to prosecute . S ee United States v. Armstrong , 517 U.S. 456, 464 (1996) (“[S]o long as the prosecutor has probable cause to believe that the accused committed an offense defined by statute, the decision whether or not to prosecute . . . generally rests entirely in his discretion.”); see also Wayte v. United States , 470 U.S. 598, 607

– 08 (1985) (examining the “substantial concerns that make the courts properly hesit ant to examine the decision whether to prosecute ” (emphasis added)) . T he government likewise cannot tell us whether to vacate a

### 25 duly obtained conviction
. S ee Young , 315 U.S. at 258

– 59 (“The public trust reposed in the law[

- ]enforcement officers of the [g]overnment requires that they be quick to confess error when, in their opinion, a miscarriage of justice may result from their remaining silent. But
. . . our judicial obligations compel us to examine independently the errors confessed.”)

. The majori ty opinion ’s citations to cases in which courts have “honored the government’s decision . . . to end its pursuit of a . . . prosecution,” Maj. Op. at 2 4 ; see generally id. at 1 6

– 2 7 , only under score that the government’s broad discretion to “terminate” an o ngoing prosecution, id. at 18, 19 (citations omitted), stops short of binding appellate courts “to treat a confession of error by the United States as an appellate nolle prosequi,” Cachoian v. United States , 452 F.2d 548, 550 (5 th Cir. 1971). Upon closer inspection, those cases are readily distinguishable from the one before us

. Here, we are asked to decide whether final judgments of conviction entered after a jury trial and sentencing should be vacated because the government

now contends that they were based on an alleged legal error

. M ost of the cases cited in the majority opinion , however, were in materially different procedural

### 26 postures. 3 

### And in the few cases in which courts agreed with the government ’s request to dismiss a n indictment or vacate a judgment of conviction , those courts did so only after fulfilling their obligation to independently assess the underlying validity of the indictments or convictions at issue
. See, e.g. , Rinaldi v. United States , 434 U.S. 22, 23, 29

– 30 (1977) (dismissing indictment); United States v. DiMattina , 571 Fed. App’x 50 (2d Cir. 2014) (vacating conviction)

. 4 

### A gain, to quote the Supreme C ourt in Young , the government’s confession of error “does not relieve [courts] of t he performance of the judicial function”

– rather, “our judicial obligations compel us to examine independently the errors confessed

. ” 315 U.S. at 258

– 59 ; see also Petite v. United States , 361 U.S. 529, 533 (1960) (Brennan, J. , concurring) (“Even where the Government confesses error, [the Supreme] Court examines the case on the merits itself.”).

3 See Gaona

- Romero v. Gonzales , 497 F.3d 695 (5th Cir. 2007) (vacating a prior panel’s decision affirming a final order of removal by the Board of Immigration Appeals); United States v. Fokker Servs. B.V. , 818 F.3d 733, 738 (D.C. Cir. 2016) (vacating the district court’s denial of a joint motion to exclude time under the Speedy Trial Act); Order Dismissing Appeal, United States v. Aytes , No. 19

- 3981 , Doc. No. 70 (2d Cir. Apr. 13, 2021) (granting the government’s motion to dismiss its appeal of the district court’s judgment of acquittal).

4 See also United States v. Weber , 721 F.2d 266, 268

– 89 (9th Cir. 1983) (considering whether dismissal was “clearly contrary to manifest public interest”); United States v. Smith , 55 F.3d 157, 160 (4th Cir. 1995) (concludin g that there was “[a] substantial, reasonable doubt about the guilt of [the] defendant ”).

### 27 T he majority opinion gets it backward s by suggesting that “the [s]eparation of [p]owers,” Maj. Op. at 23 (citation omitted), might compel us “to accept [th e government’s] view blindly,” Sibron , 392 U.S. at 59. In actuality, the principles of the separation of powers cut in precisely the opposite direction. T o “blindly” defer to the government’s confession of error “would be . . . an abdication of our oblig ation to lower courts to decide cases upon proper . . . grounds in a manner which permits them to conform their future behavior to the demands of the [federal criminal law].” Id. Moreover, “it ill behooves this Court to defer to the Solicitor General’s s uggestion that a [district court] may have been in error after another representative of the Executive Branch and the Justice Department has persuaded the [district court] to reach the result which it did.” Mariscal v. United States , 449 U.S. 405, 406

– 07 (1981) (Rehnquist, J. , dissenting)

. In short , w e may not mechanically defer to the government in determining whether a d efendant ’ s convictions should be vacated. “We sit in this case not to enforce the requests of the Department of Justice but to review the action of a lower court,” Casey v. United States , 343 U.S. 808, 811 (1952) (Douglas, J. , dissenting) , now “in light of Kelly [’s]” guidance, Blaszczak v. United States , 141 S. Ct. 1040 (2021)
. The question we must ask

– which only we may answer – is whether

### 28 Kelly compels the vacatur of the defendants’ convictions. Because I see nothing in Kelly to alter our prior conclusion that “CMS information

. . . constitute[d] ‘property’ in the hands of the government for purposes of the wire [

- ] f raud and Title 18 securities [

- ] fraud statutes,” Blaszczak I , 947 F.3d at 26, I would affirm. III. I turn finally to the concurrence, which similarly offers pages of dicta on a subject that is not even properly before us

– Blaszczak I ’s holding that 18 U.S.C. § 1348 does not require proof that the tipper of non

- public information received a personal benefit for the tip. The concurrence suggests that this issue was “not discussed by today’s majority opinion because it is no longer outcome determinative” in light of the majority’s conclusion that the confidential information at issue was neither “property” nor a “thing of value” in the first place. Con currence at 1. That alone is a reason not to delve into the personal

- benefits issue . “Courts are essentially passive instruments of government” that “should not[] sally forth each day looking for wrongs to right,” United States v. Sineneng

- Smith , 140 S. Ct. 1575, 1579 (2020) (citations omitted), “decide abstract questions,” Socialist Lab. Party v. Gilligan , 406 U.S. 583, 586 (1972), or “give opinions advising what the law would

### 29 be upon a hypothetical state of facts,” Chafin v. Chafin , 568 U.S. 165, 172 (2 013) (internal quotation marks and alteration omitted). Instead, the Constitution “limit[s]” our “role” to deciding “actual cases or controversies.” Spokeo, Inc. v. Robins , 578 U.S. 330, 337 (2016) (citation omitted). From that constitutional limitation springs “ the cardinal principle of judicial restraint” : “ if it is not necessary to [say] more ” to dispose of a case, then it generally “ is necessary not to [say] more.” Miller v. Metro. Life Ins. Co. , 979 F.3d 118, 124 (2d Cir. 2020) (quoting PDK Lab’ys v. DEA , 362 F.3d 786, 799 (D.C. Cir. 2004) (Roberts, J. , concurring)) (emphasis added) . There are also sound pragmatic reasons to avoid “making pronouncements that have no consequence for the dispute”: as one of our colleagues has persuasively argued, “ courts are more likely to exercise flawed, ill

- considered judgment, more likely to overlook salutary cautions and contraindications, [and] more likely to pronounce flawed rules, when uttering dicta than when deciding the[] cases” that are actually before t hem. Pierre N. Leval, Judging Under the Constitution: Dicta About Dicta , 81 N.Y.U. L. Rev. 1249, 1255, 1267

– 68 (2006). In sum, courts are simply not free to opine on hypothetical topics , regardless of whether those topics “warrant[] further attention by Congress and the courts.” Concurrence at 1 1
.

### 30 M ore importantly, the issue raised in the concurrence is, in fact, completely outside the scope of the Supreme Court’s remand order, which vacated Blaszczak I and remanded the case back to us “for further consideration in light of Kelly v. United States. ” Blaszczak , 141 S. Ct. at 1040. “Any reconsideration at this juncture of our earlier opinion must be limited to the scope of the Supreme Court’s remand.” Escalera v. Coombe , 852 F.2d 45, 47 (2d Cir. 1988). Thus, because the Supreme Court specifically “va cated our opinion and remanded for reconsideration in light of [ Kelly ],” we may “not reconsider issues that are not directly implicated by the Supreme Court’s decision in [ Kelly ].” Id. ; accord Robinson v. Ariyoshi , 854 F.2d 1189, 1189

– 90 (9 th Cir. 1988) ; Kotler v. Am. Tobacco Co. , 981 F.2d 7, 12

– 13 (1 st Cir. 1992); United States v. Duarte

- Juarez , 441 F.3d 336, 340 (5 th Cir. 2006). I am therefore reluctant to engage with the substance of the concurrence’s musings on section 1348 and the asserted anomalies created by the Second Circuit’s now vacated opinion in Blaszczak I. I respond only to address several of the most troubling aspects of the concurrence, lest future litigants and courts mistakenly conclude that its pronouncements are uncontested.

### 31 T he conc urrence notes that the scope of liability under Rule 10b

- 5 and 18 U.S.C. § 1348 differ. Under Dirks v. SEC , tipper

- tippee liability under Rule 10b

- 5 requires evidence of a personal benefit , whereas under Blaszczak I , which has been vacated, we held that there was no personal

- benefit requirement for liability under section 1348. 463 U.S. 646 (1983). The concurrence finds this difference “anomal[ous]” and troubling because, perhaps, it may be easier for the government to criminally prosecute a defend ant under section 1348 than it would be under Rule 10b

- 5
. Concurrence at 1. But this difference is not surprising , and certainly not unique in American law

. See, e.g. , William J. Stuntz, The Pathological Politics of Criminal Law, 100 Mich. L. Rev

. 505, 600 n.62 (2001) ( “ [T]here are 325 separate prohibitions of fraud, misrepresentation, or both in the federal code.”) Indeed, “[t]he Federal Criminal Code is replete with provisions that criminalize overlapping conduct,” and so “[t]he mere fact that two fed eral criminal statutes criminalize similar conduct says little about the scope of either.” Pasquantino v. United States , 544 U.S. 349, 358 n.4. (2005). One might argue as a matter of policy or equity that the standards under section 1348 and Rule 10b

- 5 should be the same. But there is nothing in the statute s or case law that compels such a conclusion

.

### 32 Moreover, the personal

- benefit test under Rule 10b

- 5 is a judge

- made rule premised on the statutory purpose of the Securities Exchange Act of 1934 (the “Exchange Act”) . As Dirks explained, to protect the free flow of information into the securities markets, Congress enacted the Title 15 fraud provisions with the limited “purpose of . . . eliminat[ing] [the] use of inside information for personal advantag e .” 463 U.S. at 662 (emphasis added and internal quotation marks omitted). Dirks effectuated this purpose by holding that insider s could not be prosecuted for breach ing their fiduciary duties by tipping confidential information unless they did so in exch ange for a personal benefit. Id. at 662

– 64; see also United States v. Chestman , 947 F.2d 551, 581 (2d Cir. 1991) (en banc) (Winter, J. , concurring in part and dissenting in part) (observing that the “ Dirks rule is derived from securities law, and . . . [i s] influenced by the need to allow persons to profit from generating information about firms so that the pricing of securities is efficient”); United States v. Pinto

- Thomaz , 352 F. Supp. 3d 287, 298 (S.D.N.Y. 2018) (Rakoff, J. ) (“Although [the Dirks personal

- benefit test] was novel law, the Court reasoned that this test was consistent with the ‘purpose of the [Title 1 5] securities laws

. . . to eliminate use of inside information for personal advantage.’” (quoting Dirks , 463 U.S. at 662)). Because t he Dirk s personal

- benefit test effectuate s the purpose of

### 33 the Exchange Act, codified in Title 15 , there is no obvious reason to extend that rule to a different statutory provision under Title 18
. While the concurrence acknowledges that “nothing in the te xt of [section] 1348 requires proof of a personal benefit,” it insists that there is something troubling about interpreting the statute to “give[] the government a different

– and broader

– enforcement mechanism than is available under [section] 10(b) and Rule 10b

- 5
. ” Concurrence at 6

– 7 (internal quotations omitted)

. But section 1348 was passed in the wake of the 2008 financial crisis and designed to “provide[] [f]ederal investigators and prosecutors with significant new criminal and civil tools to assist in holding accountable those who have committed financial fraud

. ” Presidential Statement on Signing the Fraud Enforcement Act of 2009, 1 Pub. Papers 689 (May 20, 2009). The history and purpose of section 1348 therefore make it far more plausible t hat Congress did not intend for it to be a mere carbon copy of the Title 15 securities

- fraud statute. And since our task is merely to ascertain the meaning of section 1348

– not to second

- guess Congress ’s wisdom or motives in enacting it

– we need not spe culate, as the concurrence does, about the “troubling effects ” that may result from broadening the scope of criminal

### 34 liability beyond what is provided for under section 10b and Rule 10b

- 5
. Concurrence at 10 n.30
. 5 

### IV. For all the reasons discussed above, I respectfully dissent. I firmly believe that the majority’s holding

– that CM S ’s confidential non

- public information concerning the timing and content of the agency’s reimbursement rates is not property

– is wrong and not compelled by Un ited States v. Kelly. I also believe that the remaining dicta in the majority and concurring opinions will lead to confusion among litigants, lawyers, and lower courts alike . I fear that the only winners in this appeal will be the defendants

– sophistica ted insiders who misappropriated confidential government information to enrich themselves and their associated

5 In a similar vein, t he majority opinion announces that “the actual and intended victims of the alleged [insider trading scheme] would have been investors in the m arket for securities of the companies whose fortunes would be affected by the regulations promulgated by

. . . CMS.” Maj
. Op. at 2 3 . That is not the case . Under either Title 1 5 or Title 1 8 , investors in the market are not the victims of insider trading ; t he only victim of insider trading is the entity whose non

- public information was misappropriated. See , e.g. , Carpenter , 484 U.S. at 24 (“[T]he victim of the fraud [was] the Journal , . . . not a buyer or seller of the stoc ks traded in or otherwise a market participant.”); Obus , 693 F.3d at 291 (identifying the “victim” of the insider

- trading scheme as the company whose business proposal had been misappropriated ) ; Marc I. Steinberg & Ralph C. Ferrara , 25 Secs. Prac. Fed. & S tate Enforcement, App. 2F (2022) (When “the plaintiff alleged that it was defrauded

. . . by having information secretly stolen,” clearly, “the plaintiff corporation was a victim of the defendant’s misappropriation.”)

. The victim here is obviously CMS

– p recisely because its confidential, intangible property was misappropriated.

### 35 hedge fund s – and those like them who will be emboldened by today’s decision to believe that the broad proscriptions of the federal fraud statute s do not in fact mean what they say. It is clear , to me at least , that the defendants are not the victims of prosecutorial overreach or vague statutes ; they are instead the beneficiaries of a windfall generated by a flawed legal analysis

.