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The mail fraud statute, 18 U.S.C.S. § 1341, does not reach schemes to defraud citizens of their intangible rights to honest and impartial government, and that the statute is limited in scope to the protection of property rights.
Petitioner R. Foster Winans was coauthor of a Wall Street Journal ("Journal") investment advice column which, because of its perceived quality and integrity, had an impact on the market prices of the stocks it discussed. Although he was familiar with the Journal's rule that the column's contents were the Journal's confidential information prior to publication, Winans entered into a scheme with petitioner Kenneth P. Felis and another stockbroker who, in exchange for advance information from Winans as to the timing and contents of the column, bought and sold stocks based on the column's probable impact on the market and shared their profits with Winans. On the basis of this scheme, Winans and Felis were convicted in federal district court for violating federal securities laws and of federal mail and wire fraud statutes, 18 U.S.C.S. §§ 1341, 1343, which prohibited the use of the mails or of electronic transmissions to execute "any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises. Petitioner David Carpenter was convicted of aiding and abetting. On appeal, the appellate court affirmed petitioners' convictions. Petitioners were granted writs of certiorari.
Did Winans violate 18 U.S.C.S. § 1341 by misappropriating the property of the Journal, his employer?
The Supreme Court of the United States concluded that the information passed along by Winans was the Journal’s property because it was confidential business information. Winans owed the Journal, as his employer, the fiduciary obligation to protect the confidential information obtained during the course of his employment. Because Winans committed fraudulent actions in misappropriating his employer's property and used the mail and wire services to perpetrate the crime, the court affirmed Winans' convictions. The Court likewise affirmed the convictions of Felis and Carpenter.