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McNally v. United States - 483 U.S. 350, 107 S. Ct. 2875 (1987)

Rule:

The mail fraud statute clearly protects property rights, but does not refer to the intangible right of the citizenry to good government. 

Facts:

Defendants Gray, a former Kentucky official, and McNally, a private individual, along with one Howard Hunt, the former chairman of the Commonwealth's Democratic Party, were charged with violating 18 U.S.C.S. § 1341, which prohibited the use of the mails to execute "any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises." Specifically, the Government alleged that defendants devised a scheme to defraud the Commonwealth's citizens and government of their "intangible right" to have the Commonwealth's affairs conducted honestly, and to obtain money by means of false pretenses and the concealment of material facts. At trial in federal district court, after informing the jury of the charges, the court instructed the jury that defendants' alleged scheme could be made out either by finding: (1) that Hunt had de facto control over the award of the Commonwealth's workmen's compensation insurance contract; that he obtained commission payments from the company awarded this contract, which were mailed to a company he owned and controlled with his co-defendants, without disclosing his ownership interest to commonwealth officials; and Gray and McNally aided in the scheme; or (2) that Gray had supervisory authority over the insurance when his company received payments; that he did not disclose his interest in the company to commonwealth officials; and that McNally aided and abetted him. The jury convicted defendants. An appellate court affirmed, relying on a line of decisions holding that § 1341 proscribed schemes to defraud citizens of their intangible rights to honest and impartial government.

Issue:

Was mail fraud statute applicable to frauds involving money or property and not the intangible right of the citizenry to good government?

Answer:

Yes.

Conclusion:

The Supreme Court of the United States held that the mail fraud statute was intended to protect property rights. As there were no constructive offenses and the statute was limited to property rights, defendants' actions were beyond the scope of the statute. The mail fraud statute was not applicable to the intangible right of the citizenry to good government. The Court reversed the convictions and remanded for further consistent proceedings.

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