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The federal wire fraud statute makes it a crime to effect (with use of the wires) 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.S. § 1343. Construing that disjunctive language as a unitary whole, the United States Supreme Court has held that the money or property requirement of the latter phrase also limits the former. The wire fraud statute thus prohibits only deceptive schemes to deprive the victim of money or property. Similarly, the federal-program fraud statute bars obtaining by fraud the property (including money) of a federally funded program or entity. 18 U.S.C.S. § 666(a)(1)(A). So under either provision, the government must show not only that the defendant engaged in deception, but that an object of their fraud was "property."
During former New Jersey Governor Chris Christie’s 2013 reelection campaign, his Deputy Chief of Staff, Bridget Anne Kelly, avidly courted Democratic mayors for their endorsements, but Fort Lee’s mayor refused to back the Governor’s campaign. In order to punish the mayor, Kelly, Port Authority Deputy Executive Director William Baroni, and another Port Authority official, David Wildstein, decided to reduce from three to one the number of lanes long reserved at the George Washington Bridge’s toll plaza for Fort Lee’s morning commuters. Disguising their efforts at political retribution, defendants asked Port Authority traffic engineers to collect some numbers about the effect of the changes. At the suggestion of a Port Authority manager, they also agreed to pay an extra toll collector overtime so that Fort Lee’s one remaining lane would not be shut down if the collector on duty needed a break. The lane realignment ended when the Port Authority’s Executive Director learned of the scheme. Baroni and Kelly were convicted in federal court of wire fraud, fraud on a federally funded program or entity (the Port Authority), and conspiracy to commit each of those crimes. The Third Circuit affirmed. The defendants appealed.
By realigning the access lanes in order to punish the governor’s non-supporter, did the defendant public officials violate the federal program fraud or wire fraud laws?
The Supreme Court noted that the federal wire fraud statute made it a crime to effect any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises. Similarly, the federal program fraud statute barred obtaining by fraud the property of a federally funded program or entity. In this case, the Supreme Court concluded that defendant public officials could not have violated the federal program fraud or wire fraud laws because their scheme did not aim to obtain money or property. The government had to show not only that defendants engaged in deception, but that an object of their fraud was money or property. Defendants' realignment of toll lanes was an exercise of regulatory power, something the Court had already held failed to meet the statutes' property requirement. The employees' labor was just the incidental cost of that regulation, rather than itself an object of the scheme.