Legal Document

531 U.S. 12121 S.Ct. 365148 L.Ed.2d 221 NOTICE: This opinion is subject to formal revision before publication in the preliminary print of United States Reports. Readers are requested notify Reporter Decisions, Supreme Court States, Washington, D. C. 20543, any typographical or other errors, order that corrections may be made goes press.CARL W. CLEVELAND, PETITIONERv.UNITED STATES No. 99-804 SUPREME COURT OF THE UNITED Argued October 10, 2000 Decided November 7, ON WRIT CERTIORARI TO APPEALS FOR FIFTH CIRCUIT Syllabus Louisiana law authorizes State award nontransferable, annually renewable licenses operate video poker machines. License applicants must meet suitability requirements designed ensure they have good character and fiscal integrity. The itself does not run machinery. In 1992, Fred Goodson his family formed a limited partnership, Truck Stop Gaming, Ltd. (TSG), participate business Louisiana. Petitioner Carl Cleveland, lawyer, assisted preparing TSG's initial subsequent license applications, each which identified Goodson's children as sole beneficial owners partnership. approved application, TSG successfully renewed its 1993, 1994, 1995. 1996, Cleveland were charged with money laundering under 18 U.S.C. § 1957 racketeering conspiracy §1962 connection scheme bribe state legislators vote manner favorable industry. Among predicate acts supporting these charges four counts violating mail fraud statute, §1341, proscribes use mails furtherance "any artifice defraud, for obtaining property by means fraudulent representations." indictment alleged that, because had tax financial problems could undermined their receive license, fraudulently concealed true applications mailed State. Before trial, moved dismiss on ground did deprive "property" §1341. District denied motion, concluding constitute even issued. A jury found guilty two predicated fraud. Fifth Circuit affirmed conviction, considering bound an earlier decision holding State's hands. Held: municipal general, Louisiana's particular, do rank "property," purposes hands official licensor. Pp. 5 14. (a) Section 1341 largely protection property. McNally v. 483 350, 360; Carpenter 484 U. S 19, 25. only nonproperty right protected §1341 "the intangible honest services," §1346, implicated this case. 7. (b) reach kind here involved, such government regulator's Whatever interests might said licenses, statute shows core concern regulatory: It certain conditions, engagement pursuits private actors undertake without authorization. Government offers reasons why also has interest licenses. rejects both stray from traditional concepts First, stresses receives substantial sum exchange continues payments licensee long remains effect. However, lion's share expected revenue while remain own hands, but after been issued licensees. Licenses pre-issuance merely entitle collect processing fee applicants. Were entitlement sufficient establish right, then would rights drivers' medical requiring upfront concedes purely regulatory. Tellingly, allege defrauded it was entitled law. If nature cannot economic. Government's second assertion significant control over issuance, renewal, suspension, revocation unavailing. Far composing "has recognized property," Carpenter, U.S., at 26, allocation, exclusion, amount no more less than paradigmatic exercises police powers. 7 10. (c) Comparison patent holder's unlicensed aid Government. Although involve exclude others, protects use, make, sell invention herself. conduct gaming operations itself, hold reserve prerogative, "sell" ordinary commercial sense, licensing authority. power franchisor's select franchisees fares better. While latter typically derives ownership some product trade open market, authority licensees rests similar asset. upon sovereign deemed unsuitable operations. 10 11. (d) reading invites approve sweeping expansion federal criminal jurisdiction absence clear statement Congress. Equating issuance permits deprivation prosecution wide range traditionally regulated local authorities. Unless Congress conveys purpose clearly, will read significantly changed federal-state balance crimes. E.g., Jones 529 848, 858. 11 12. (e) Finally, argues defines independent offenses: (1) defraud" (2) false . Proceeding argument, asserts licensee, hence "obtain[ed] property" thereby committed offense if But refused construe phrases identifying proscribed schemes independently. 358. Indeed, explained origin desire protect individual benefit holder. Id., 359, n. 8. 12 14.182 F.3d 296, reversed remanded. Ginsburg, J., delivered unanimous Court. Opinion Justice Ginsburg 1 case presents question whether reaches statements application license. pretenses, representations, promises." others prosecuted measure making applying Police permission We conclude qualify within §1341's compass. suffice, we clarify, object become recipient's hands; thing obtained victim. hold, 2 * allows businesses La. Rev. Stat. Ann. §§27:301 27:324 (West Supp. 2000). however, requires prospective machines apply §27:306. transferable, §27:311(G), annually, Admin. Code, tit. 42, §2405(B)(3) (2000). To applicant §27:310 3 truck stop Slidell, New Orleans required identify partners submit personal all partners. affirm listed partner held partnership agent nominee, intended transfer future. 4 adult children, Alex Maria, showed Cleveland's firm loaned Maria capital general manager. May 1995 pursuant Each renewal those Maria. FBI discovered evidence participated multiple well §1962. §1341.1 violated concealing three They interests, according Government, See §27:310(B)(1) (suitability requirements). 6 "licenses issued." 951 F. 1249, 1261 (ED 1997). (based 1994 renewals) laundering, racketeering, sentenced 121 months prison. On appeal, again argued relying several Appeals decisions relinquish when issues permit Shotts, 145 1289, 1296 (CA11 1998) (license bail bonds business); Schwartz, 924 F.2d 410, 418 (CA2 1991) (arms export license); Granberry, 908 278, 280 (CA8 1990) (school bus operator's permit); Toulabi 875 122, 125 (CA7 1989) (chauffeur's Dadanian, 856 1391, 1392 (CA9 1988) (gambling Murphy, 836 248, 254 (CA6 charitable bingo games). 8 nevertheless conviction sentence, Bankston, 182 309 (1999), Salvatore, 110 1131, 1138 (1997), Two Circuits concluded issuing unissued Bucuvalas, 970 937, 945 (CA1 1992) (entertainment liquor Martinez, 905 709, 715 (CA3 (medical license). 9 granted certiorari resolve conflict among Courts Appeals, 1017 (2000), now reverse Circuit's judgment. II 360 (1987), "limited scope rights." convictions individuals participating "a self-dealing patronage scheme" Kentucky citizens Commonwealth's affairs conducted honestly." 352. At time decided, prosecutors using attack various forms corruption deprived victims "intangible rights" unrelated property.2 Reviewing history original impetus behind people them property." 356. As first enacted 1872, further " 'any defraud.' Ibid. 1896, Durland 161 306, 313, covered "representations past present," "suggestions promises future." 1909, amended add phrase "or McNally, 357. 1909 amendment "codified Durland," id., 357, "simply unmistakable reached misrepresentations future frauds involving 359. Rejecting argument money-or-property requirement limit defraud aimed causing 358, signaled intent "depar[t] [the] common understanding" words 'to defraud' commonly refer wronging one rights,' 358 359 (quoting Hammerschmidt 265 182, 188 (1924)). Soon 25 stated only. upheld wire 1343 defendants who Wall Street Journal confidential information. Citing corporate treatise, observed "[c]onfidential information 26. 13 following year, specifically cover lower courts prior McNally: services." Anti-Drug Abuse Act 1988, §7603(a), 1346. Significantly, services though courts, dismissed, want monetary loss victim, prosecutions diverse public corruption, including fraud.3 III 14 case, there implicates services. presented whether, regulator parts For set out, Again, "[i]f desires go further, speak clearly has." 360. 15 begin with, think beyond genuine dispute whatever recognizes importance "public confidence trust activities honestly free corruptive elements." §27:306(A)(1) accordingly "legitimate providing strict regulation persons, practices, associations, related operation establishments licensed offer draw devices." assigns Office Police, part Department Public Safety Corrections, responsibility promulgate rules regulations concerning process. §27:308(A). deny, condition, suspend, revoke levy fines up $1,000 per violation rule, inspect premises where devices offered play. §§27:308(B), (E)(1). addition, penalties unauthorized devices, §27:309, prescribes detailed licensees, §27:310. 16 short, establishes typical regulatory program. regard, resembles characterized Ziffrin, Inc. Reeves, 308 132, 138 (1939) transport alcoholic beverages); Hall Geiger-Jones Co., 242 539, 558 (1917) stock); Fanning Gregoire, How. 524, 534 (1854) (ferry Cases, 504, 589 (1847) liquor) (opinion McLean, J.), overruled grounds, Leisy Hardin, 135 100 (1890). 17 Acknowledging Second, Without doubt, economic stake collects "processing fee" new §27:311(H)(2) 2000) ($10,000 stops), separate §27:311(H)(4) ($1,000 "annual device owner, §27:311(A)(4) ($2,000), additional "device operation" fee, §27:311(A)(5)(c) and, most importantly, fixed percentage net device, §27:311(D)(1)(b) (32.5% stops). hardly evident, tolls should make generate ongoing stream revenue. most, scarcely avoid conclusion fishing hunting Such concedes, "purely regulatory." Tr. Oral Arg. 24 19 nowhere alleges paid proper revenue, totaled $1.2 million, between 1993 20 Addressing concern, frustrated §§27:306, 27:308 "Louisiana's choose persons whom licenses." F.3d, 1140. far regulate. Notably, overlooks fact include distinctively impose violations scheme, §27:309 2000), §27:309(A). Even tied create sales levies liquor. States' 21 compares she yet licensed. exclude, congruence ends there. confers invention, 35 154 271(d)(1). sense. Furthermore, holder her patent, see §261 ("patents shall attributes property"), Instead better analogy Federal patent. That interest, like operations, surely role sovereign, Const., Art. I, §8, cl. 22 franchisees. view, represents venture into business. chosen says, decided franchise entities carry out instead. trademark, brand name, strategy, market. instead governing capacity appropriately labeled "property." Moreover, unlike entrepreneur shares losses gains arising venture, put labor risk through fee-laden scheme. decide business; permit, regulate, operators games. 23 reject theories simply resist us note regard unambiguously imposes applications. §27:309(A) reiterated last Term, 'unless balance' crimes." 858 (2000) Bass, 404 336, 349 (1971)). extent word ambiguous placed instructed "ambiguity ambit statutes resolved favor lenity." Rewis 401 808, 812 (1971). interpretive guide especially appropriate construing because, demonstrates, RICO, 1961(1) (1994 ed., IV), §1956(c)(7)(A). deciding what "it appropriate, harsher alternative, require spoken language definite." Universal I. T. Credit Corp., 344 218, 222 (1952). raised below urged alternate affirmance, contends Because 26 licenses,4 disagree "[b]ecause appear disjunctive, arguable construed independently." rejected construction modifies "ma[king] directly contradicting rights, holder." (emphasis added). reaffirm our McNally. Hilton South Carolina Railways Comm'n, 502 197, 205 (1991) ("stare decisis compelling" pure statutory construction" involved). correct offense, arm enormous submissions already stated, supra, 12, decline attribute so encompassing design clear. IV 27 victim's Absent Congress, place superintendence vast array policed States. Our vacated. Accordingly, judgment reversed, remanded proceedings consistent opinion. 28 ordered. NOTES: Title provides relevant part: "Whoever, having devised intending devise promises, executing attempting do, [uses causes used], fined title imprisoned five years, both." Racketeer Influenced Corrupt Organizations (RICO) prohibits participation pattern "racketeering activity," 1962(c), (d), activity" act indictable section 1341," §1961(1). conceal promote "specified unlawful §1956, (with exception here) activity constituting title," Clapps, 732 1148, 1153 1984) (electoral body's fair elections); Bronston, 658 920, 927 1981) (client's attorney's loyalty); Bohonus, 628 1167, 1172 1980) (right employee); Isaacs, 493 1124, 1150 1974) official). example, 1988), court overturned help organization obtain limitations" issue "distills consideration Tennessee's 'right object' respect constitutes 'property.' 253. certificate registration 'property' once issued, insofar concerned, certainly Tennessee Tennessee." 253 254. Notwithstanding declaration "[a]ny constitutions either Louisiana," §27:301(D) "[t]he state-law 'rights property' matter law," Drye 528 49, 58 (1999) (citing National Bank Commerce, 472 713, 727 (1985)). contexts, constitutionally state-issued essential pursuing occupation livelihood. See, e.g., Bell Burson, 402 535, 539 (1971) (driver's

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