Law School Case Brief
Pasquantino v. United States - 544 U.S. 349, 125 S. Ct. 1766 (2005)
The wire fraud statute prohibits using 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.S. § 1343. Two elements of this crime are that the defendant engage in a scheme or artifice to defraud and that the object of the fraud be money or property in the victim's hands.
Petitioners Carl J. Pasquantino, David B. Pasquantino, and Arthur Hilts carried out a scheme to smuggle large quantities of liquor into Canada from the United States to evade Canada's heavy alcohol import taxes. They were convicted of violating the federal wire fraud statute, 18 U.S.C.S. § 1343, for doing so, which 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." The Court of Appeals for the Fourth Circuit affirmed their convictions, rejecting petitioners' argument that their prosecution contravened the common-law revenue rule, which bars courts from enforcing foreign sovereigns' tax laws. The Fourth Circuit also held that Canada's right to receive tax revenue was "money or property" within § 1343's meaning. The United States SupremeCourt granted certiorari review.
Did the scheme to smuggle large quantities of liquor into Canada from the United States in order to defraud a foreign government of tax revenue violate the wire fraud statute?
Petitioners' conduct fell within the literal terms of the wire fraud statute as Canada's right to uncollected excise taxes was property and the failure to report the imports deprived Canada of that property. The common-law revenue rule did not bar prosecution under the wire fraud statute because judicial precedent at the time the statute was passed did not prevent a domestic sovereign from acting pursuant to authority conferred by a criminal statute nor bar actions aimed at deterring and punishing fraudulent conduct. Moreover, the wire fraud statute advanced the government's interest in punishing fraudulent domestic criminal conduct and the extent to which the revenue rule barred indirect recognition of foreign revenue laws was unsettled at the time of enactment. Prosecution of the wire fraud statute did not contravene the purposes of the revenue rule as there was little risk of international friction through judicial evaluation of foreign sovereigns' policies and Fed. R. Crim. P. 26.1 provided sufficient means to resolve the incidental foreign law issues. Finally, the wire fraud statute was not given extraterritorial effect as the offense was completed within the United States.
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