Opinion ID: 197216
Heading Depth: 3
Heading Rank: 1

Heading: Scheme to Defraud IRS of Property

Text: 16 The government correctly notes that confidential information may constitute intangible property and that its unauthorized dissemination or other use may deprive the owner of its property rights. See Carpenter v. United States, 484 U.S. 19, 26, 108 S.Ct. 316, 320, 98 L.Ed.2d 275 (1987) (Confidential business information has long been recognized as property.... [A newspaper] had a property right in keeping confidential and making exclusive use, prior to publication, of the schedule and contents of a particular column.). Where such deprivation is effected through dishonest or deceitful means, a scheme to defraud, within the meaning of the wire fraud statute, is shown. See id. at 27, 108 S.Ct. at 321. Thus, a necessary step toward satisfying the scheme to defraud element in this context is showing that the defendant intended to deprive another of their protected right. 17 The government, however, provides no case in support of its contention here that merely accessing confidential information, without doing, or clearly intending to do, more, is tantamount to a deprivation of IRS property under the wire fraud statute. In Carpenter, for example, the confidential information regarding the contents of a newspaper column was converted to the defendants's use to their substantial benefit. See id. at 27, 108 S.Ct. at 321 (defendants participated in ongoing scheme to share profit from trading in anticipation of newspaper column). We do not think that Czubinski's unauthorized browsing, even if done with the intent to deceive the IRS into thinking he was performing only authorized searches, constitutes a deprivation within the meaning of the federal fraud statutes. 18 Binding precedents, and good sense, support the conclusion that to deprive a person of their intangible property interest in confidential information under section 1343, either some articulable harm must befall the holder of the information as a result of the defendant's activities, or some gainful use must be intended by the person accessing the information, whether or not this use is profitable in the economic sense. 7 Here, neither the taking of the IRS' right to exclusive use of the confidential information, nor Czubinski's gain from access to the information, can be shown absent evidence of his use of the information. Accordingly, without evidence that Czubinski used or intended to use the taxpayer information (beyond mere browsing), an intent to deprive cannot be proven, and, a fortiori, a scheme to defraud is not shown. 19 All of the cases cited by the government in support of their contention that the confidentiality breached by Czubinski's search in itself constitutes a deprivation of property in fact support our holding today, for they all involve, at a minimum, a finding of a further intended use of the confidential information accessed by the defendants. The government's best support comes from United States v. Seidlitz, 589 F.2d 152, 160 (4th Cir.1978), in which a former employee of a computer systems firm secretly accessed its files, but never was shown to have sold or used the data he accessed, and was nevertheless convicted of wire fraud. The affirming Fourth Circuit held, however, that a jury could have reasonably found that, at the time the defendant raided a competitor's computer system, he intended to retrieve information that would be helpful for his own start-up, competing computer firm. In the instant case, Czubinski did indeed access confidential information through fraudulent pretenses--he appeared to be performing his duties when in fact he used IRS passwords to perform unauthorized searches. Nevertheless, it was not proven that he intended to deprive the IRS of their property interest through either disclosure or use of that information. 20 The resolution of the instant case is complex because it is well-established that to be convicted of mail or wire fraud, the defendant need not successfully carry out an intended scheme to defraud. See, e.g., United States v. Serrano, 870 F.2d 1, 6 (1st Cir.1989) (defendant need only participate in a scheme to defraud with the intent to achieve its illicit objectives); Seidlitz, 589 F.2d at 160 (where circumstantial evidence suffices to prove intent to accomplish scheme to defraud, actual use of confidential information need not be shown). The government does not contend either that Czubinski actually created dossiers or that he accomplished some other end through use of the information. It need not do so. All that the government was required to prove was the intent to follow through with a deprivation of the IRS's property and the use or foreseeable use of interstate wire transmissions pursuant to the accomplishment of the scheme to defraud. See, e.g., United States v. Silvano, 812 F.2d 754, 760 (1st Cir.1987). In the case at bar, the government failed to make even this showing. 21 The fatal flaw in the government's case is that it has not shown beyond a reasonable doubt that Czubinski intended to carry out a scheme to deprive the IRS of its property interest in confidential information. Had there been sufficient proof that Czubinski intended either to create dossiers for the sake of advancing personal causes or to disseminate confidential information to third parties, then his actions in searching files could arguably be said to be a step in furtherance of a scheme to deprive the IRS of its property interest in confidential information. The government's case regarding Czubinski's intent to make any use of the information he browsed rests on the testimony of one witness at trial who stated that Czubinski once remarked at a social gathering that he intended to build dossiers on potential KKK informants. 8 We must assume, on this appeal, that Czubinski did indeed make such a comment. Nevertheless, the fact that during the months following this remark--that is, during the period in which Czubinski made his unauthorized searches--he did not create dossiers (there was no evidence that he created dossiers either during or after the period of his unauthorized searches); given the fact that he did not even take steps toward creating dossiers, such as recording or printing out the information; given the fact that no other person testifying as to Czubinski's involvement in white supremacist organizations had any knowledge of Czubinski's alleged intent to create dossiers or use confidential information; and given the fact that not a single piece of evidence suggests that Czubinski ever shared taxpayer information with others, no rational jury could have found beyond a reasonable doubt that, when Czubinski was browsing taxpayer files, he was doing so in furtherance of a scheme to use the information he browsed for private purposes, be they nefarious or otherwise. In addition, there was no evidence that Czubinski disclosed, or used to his advantage, any information regarding political opponents or regarding the person prosecuting his father. 22 Mere browsing of the records of people about whom one might have a particular interest, although reprehensible, is not enough to sustain a wire fraud conviction on a deprivation of intangible property theory. Curiosity on the part of an IRS officer may lead to dismissal, but curiosity alone will not sustain a finding of participation in a felonious criminal scheme to deprive the IRS of its property.