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Pasquantino v. United States

Supreme Court of the United States

November 9, 2004, Argued ; April 26, 2005, Decided

No. 03-725


 [*352]  [**1770]   Justice Thomas delivered the opinion of the Court.

At common law, the revenue rule generally barred courts from enforcing the tax laws of foreign sovereigns. The  [*353]  question presented in this case is whether a plot to defraud a foreign government of tax [****10]  revenue violates the federal wire fraud statute, 18 U.S.C. § 1343 (2000 ed., Supp. II) [18 U.S.C.S. § 1343] Because the plain terms of § 1343 criminalize such a scheme, and because this construction of the wire fraud statute does not derogate from the common-law revenue rule, we hold that it does.

Petitioners Carl J. Pasquantino, David B. Pasquantino, and Arthur Hilts were indicted for and convicted of federal wire fraud for carrying out a scheme to smuggle large quantities of liquor into Canada from the United States. According to the evidence presented at trial, the Pasquantinos, while in New York, ordered liquor over the telephone from discount package stores in Maryland. See  336 F.3d 321, 325 (CA4 2003) (en banc). They employed Hilts and others to drive the liquor over the Canadian border, without paying the required excise taxes.  Ibid. The drivers avoided paying taxes by hiding the liquor in their vehicles and failing to declare the goods to Canadian customs officials.   Id., at 333.  During the time of petitioners' smuggling operation, between 1996 and 2000, Canada heavily taxed the importation of  [***632]  alcoholic beverages. See 1997 S. C., ch.  [****11]  36, §§ 21.1(1), 21.2(1); Excise Act Schedule 1.(1), R. S. C., ch. E-14 (1985); Excise Act 2001, Schedule 4, ch. 22, 2002 S. C. 239. Uncontested evidence at trial showed that Canadian taxes then due on alcohol purchased in the United States and transported to Canada were approximately double the liquor's purchase price. App. 65-66.

Before trial, petitioners moved to dismiss the indictment on the ground that it stated no wire fraud offense. The wire fraud statute prohibits the use of interstate wires to effect "any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises." 18 U.S.C. § 1343 (2000 ed., Supp II) [18 U.S.C.S. § 1343]. Petitioners contended that the Government lacked a  [*354]  sufficient interest in enforcing the revenue laws of Canada, and therefore that they had not committed wire fraud. App. 48-57. The District Court denied the motion, and the case went to trial. The jury convicted petitioners of wire fraud.

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544 U.S. 349 *; 125 S. Ct. 1766 **; 161 L. Ed. 2d 619 ***; 2005 U.S. LEXIS 3701 ****; 73 U.S.L.W. 4287; 96 A.F.T.R.2d (RIA) 2005-5392; 4 A.L.R. Fed. 2d 747; 18 Fla. L. Weekly Fed. S 237


Subsequent History: US Supreme Court rehearing denied by Pasquantino v. United States, 545 U.S. 1135, 125 S. Ct. 2931, 162 L. Ed. 2d 880, 2005 U.S. LEXIS 4984 (2005)


United States v. Pasquantino, 336 F.3d 321, 2003 U.S. App. LEXIS 14453 (4th Cir. Md., 2003)

Disposition: Affirmed.


wire fraud, courts, revenue law, taxes, common-law, cases, petitioners', domestic, foreign law, customs, restitution, smuggling, liquor, tax revenue, tax law, extraterritoriality, foreign government, foreign tax, prosecutions, sentences, evade, scheme to defraud, enforcing, defraud, wires, convictions, depriving, common law, defendants', fraudulent

Criminal Law & Procedure, Smuggling, Currency Smuggling, Elements, Fraud, Wire Fraud, General Overview, Tax Law, Federal Excise Taxes, Alcohol, Firearm & Tobacco Taxes, Alcohol, Governments, Legislation, Interpretation, State & Local Taxes, Administration & Procedure, Tax Avoidance & Evasion, Fraud Against the Government, Tax Fraud, Penalties, Goods Smuggling, Audits & Investigations, Fraud Penalties, Criminal Offenses & Penalties, Attempted Tax Evasion, International Taxes, Americans Operating Abroad, Tax Treaties, Failure to Pay, Civil Procedure, Judgments, Enforcement & Execution, Collection of Taxes, International Law, Authority to Regulate, International Regulation of Taxation, Dispute Resolution, Tribunals, Standards of Review, Harmless & Invited Error, Discovery & Inspection, Discovery Misconduct