Opinion ID: 510623
Heading Depth: 2
Heading Rank: 1

Heading: The Pre-McNally Decisions and McNally

Text: 18 In McNally, the Supreme Court assessed for the first time whether the statutory language and legislative history of the mail fraud statute, 18 U.S.C. Sec. 1341, see note 9 supra, would support a long line of court of appeals decisions that had interpreted the statute as proscribing schemes by government officials to defraud citizens of their intangible rights to honest and impartial government. 10 These decisions, including this court's contribution in United States v. Clapps, 732 F.2d 1148, 1152 (3d Cir.), cert. denied, 469 U.S. 1085, 105 S.Ct. 589, 83 L.Ed.2d 699 (1984), had held that because a public official owes a duty of honesty and integrity to his constituency, any misuse of his office for personal gain is a fraud. McNally, 107 S.Ct. at 2879-80. See generally Comment, The Intangible-Rights Doctrine and Political-Corruption Prosecutions Under the Federal Mail Fraud Statute, 47 U.Chic.L.Rev. 562, 563 (1980). These cases found a violation of the mail fraud statute where public officials had failed to perform their duties honestly, despite the fact that the acts by public officials were not aimed at causing deprivations of money or property. McNally, 107 S.Ct. at 2880. 11 Moreover, even a private individual who had no formal official duty to the public could be held to the honest and faithful standard required of an official, if others depended on him  'because of a special relationship in the government' and he in fact makes governmental decisions. McNally, 107 S.Ct. at 2879 (quoting United States v. Gray, 790 F.2d 1290, 1296 (6th Cir.1986) (quoting United States v. Margiotta, 688 F.2d 108, 122 (2d Cir.1982), cert. denied, 461 U.S. 913, 103 S.Ct. 1891, 77 L.Ed.2d 282 (1983) (political party leader)). 19 McNally involved a scheme by James Gray, a former member of the Governor of Kentucky's cabinet, Charles McNally, a private citizen, and Howard Hunt, former Chairman of Kentucky's Democratic Committee, whereby Gray, McNally and Hunt agreed to purchase a workmen's compensation policy for the Commonwealth of Kentucky from Wombwell Insurance Company in return for a promise from Wombwell that it would pay a portion of its commissions to other insurance agencies owned and controlled by McNally, Hunt and Gray. Upon discovery of this self-dealing scheme--which funnelled some $850,000 to agencies designated by Hunt--Gray and McNally were prosecuted on the theory that the scheme defrauded the citizens of Kentucky of their intangible right to honest government. 12 The jury instructions at issue in McNally referred to intangible, non-property losses by Kentucky as the basis for a mail fraud conviction. Gray and McNally were convicted of mail fraud and their convictions affirmed on appeal. United States v. Gray, 790 F.2d 1290 (6th Cir.1986). 20 After reviewing the statutory history of the mail fraud statute and after analyzing congressional intent, the Supreme Court in McNally overturned the line of cases based on the intangible rights theory, holding that the mail fraud statute clearly protects property rights, but does not refer to the intangible right of the citizen to good government. McNally, 107 S.Ct. at 2879. Although the Supreme Court acknowledged that the mail fraud statute's elements to defraud and for obtaining money or property by means of false or fraudulent pretenses, representation or promises are presented in the disjunctive and thus could be construed independently, it relied on its holding in Hammerschmidt v. United States, 265 U.S. 182, 188, 44 S.Ct. 511, 512, 68 L.Ed. 968 (1924) to conclude that the term to defraud commonly refer[s] to wronging one in his property.... McNally, 107 S.Ct. at 2880-81. 21 The Supreme Court also relied on the oft-invoked rule of construction which requires that when two rational readings of a criminal statute, one harsher than the other, are possible, the least harsh of the two must be chosen unless Congress has clearly spoken to the contrary. Id. 2881 (citing United States v. Bass, 404 U.S. 336, 347, 92 S.Ct. 515, 522, 30 L.Ed.2d 488 (1971)). The Supreme Court thus concluded that Congress' intent in passing the mail fraud statute was to prevent the use of the mails in furtherance of such [money- or property-depriving] schemes. Id.