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Cleveland v. United States - 531 U.S. 12, 121 S. Ct. 365 (2000)

Rule:

The federal mail fraud statute, 18 U.S.C.S. § 1341, is limited in scope to the protection of property rights. 

Facts:

Louisiana law authorized the state to award nontransferable, annually renewable licenses to operate video poker machines. License applicants had to meet suitability requirements designed to insure that they had good character and fiscal integrity. The state itself did not run any video poker machinery. In 1992, a limited partnership was formed to participate in the video poker business in Louisiana. Defendant Carl W. Cleveland, a lawyer, assisted in preparing the partnership's initial and subsequent video poker license applications, each of which identified the children of another party as the sole beneficial owners of the partnership. Cleveland and another party were charged in federal district court with money laundering under 18 U.S.C.S. § 1957 and racketeering and conspiracy under 18 U.S.C.S. § 1962 in connection with a scheme to bribe state legislators to vote in a manner favorable to the video poker industry. Among the alleged predicate acts supporting these charges were four counts of violating the mail fraud statute (18 U.S.C.S. § 1341), which proscribed use of the mails in furtherance of any scheme or artifice to defraud, or for obtaining property by means of fraudulent representations. The indictment alleged that Cleveland: (1) had tax and financial problems that could have undermined his suitability to receive a video poker license, and; (2) fraudulently concealed that he was among the true owners of the partnership on the license applications mailed to the state. Before trial, Cleveland filed a motion to dismiss the mail fraud counts on the ground that the alleged fraud did not deprive the state of "property" under § 1341. The district court, in denying the motion, concluded that licenses constituted property even before they were issued. A jury found Cleveland guilty on two mail fraud counts and on other counts predicated on the mail fraud. On appeal, the United States Court of Appeals for the Fifth Circuit affirmed the conviction.

Issue:

Did a state video poker license qualify as property for purposes of the federal mail fraud statute?

Answer:

No.

Conclusion:

The Supreme Court of the United States reversed the appellate court's judgment, vacated Cleveland's conviction, and remanded the matter for further proceedings. The Court concluded that the state video poker license did not qualify as property within he meaning of § 1341. It did not suffice that the object of the fraud could have become property in the recipient's hands; for purposes of the mail fraud statute, the thing obtained must have been property in the hands of the victim. State and municipal licenses in general, and the video poker licenses in particular, did not rank as property, for purposes of § 1341, in the hands of the official licensor. Absent a clear statement by Congress, the Court declined to read the mail fraud statute to place under federal superintendence a vast array of conduct traditionally policed by the states.

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