''McNally v. United States'', 483 U.S. 350 (1987), was a case in which the

United States Supreme Court The Supreme Court of the United States (SCOTUS) is the highest court in the federal judiciary of the United States. It has ultimate appellate jurisdiction over all U.S. federal court cases, and over state court cases that involve a point o ...

decided that the federal statute criminalizing

mail fraud Mail fraud and wire fraud are terms used in the United States to describe the use of a physical or electronic mail system to defraud another, and are federal crimes there. Jurisdiction is claimed by the federal government if the illegal activity ...

applied only to the schemes and artifices defrauding victims of money or property, as opposed to those defrauding citizens of their rights to good government. The case was superseded one year later when the

United States Congress The United States Congress is the legislature of the federal government of the United States. It is bicameral, composed of a lower body, the House of Representatives, and an upper body, the Senate. It meets in the U.S. Capitol in Washing ...

amended the law to specifically include

honest services fraud Honest services fraud is a crime defined in (the federal mail and wire fraud statute), added by the United States Congress in 1988, which states "For the purposes of this chapter, the term ''scheme or artifice to defraud'' includes a scheme or ...

in the mail and

wire Overhead power cabling. The conductor consists of seven strands of steel (centre, high tensile strength), surrounded by four outer layers of aluminium (high conductivity). Sample diameter 40 mm A wire is a flexible strand of metal. Wire is c ...

fraud statutes.

Background of case

Julian Carroll Julian Morton Carroll (born April 16, 1931) is an American lawyer and politician from the state of Kentucky. A Democrat, he served as the 54th Governor of Kentucky from 1974 to 1979, succeeding Wendell H. Ford, who resigned to accept a seat ...

became

Governor of Kentucky The governor of the Commonwealth of Kentucky is the head of government of Kentucky. Sixty-two men and one woman have served as governor of Kentucky. The governor's term is four years in length; since 1992, incumbents have been able to seek re-e ...

in 1974; that same year, Howard P. Hunt became the chairman of the

Kentucky Democratic Party The Kentucky Democratic Party is the affiliate of the Democratic Party in the U.S. state of Kentucky. The party is a longstanding institution in the Commonwealth; 45.7% of Kentuckians were registered as Democrats in 2022, more than the 44.8% who ...

. Kentucky purchased workmen's compensation insurance from Wombwell Insurance Agency; Hunt conspired with Robert Tabeling, the vice president of the insurance agency, to award the state's insurance business to Wombwell in exchange for

kickbacks A kickback is a form of negotiated bribery in which a commission is paid to the bribe-taker in exchange for services rendered. Generally speaking, the remuneration (money, goods, or services handed over) is negotiated ahead of time. The kickbac ...

being sent to other insurance agencies specified by Hunt. $200,000 in kickbacks made it to Seton Investments, Inc., which was nominally headed by Charles McNally but actually run by Hunt and Carroll's Secretary of Public Protection and Regulation, James E. Gray. McNally received $75,500 for acting as frontman for Seton, while Hunt and Gray used the rest of the money to purchase condominiums in

Florida Florida is a state located in the Southeastern region of the United States. Florida is bordered to the west by the Gulf of Mexico, to the northwest by Alabama, to the north by Georgia, to the east by the Bahamas and Atlantic Ocean, and to ...

and an automobile, among others. In 1983, Hunt, McNally, and Gray were

indicted An indictment ( ) is a formal accusation that a person has committed a crime. In jurisdictions that use the concept of felonies, the most serious criminal offence is a felony; jurisdictions that do not use the felonies concept often use that of ...

by a federal grand jury on charges of

for defrauding the citizens of

Kentucky Kentucky ( , ), officially the Commonwealth of Kentucky, is a state in the Southeastern region of the United States and one of the states of the Upper South. It borders Illinois, Indiana, and Ohio to the north; West Virginia and Virginia ...

of "their right to have the Commonwealth's business and its affairs conducted honestly, impartially, free from corruption, bias, dishonesty, deceit, official misconduct, and fraud", and of "money and other things of value", using the United States mail. Hunt pleaded guilty to mail and

tax fraud Tax evasion is an illegal attempt to defeat the imposition of taxes by individuals, corporations, trusts, and others. Tax evasion often entails the deliberate misrepresentation of the taxpayer's affairs to the tax authorities to reduce the taxp ...

, and he was sentenced to three years in prison. Six of the eight charges against the defendants were dismissed before the trial, but they were convicted by a jury on the remaining two counts of conspiracy and fraud.

Appeal

McNally and Gray appealed to the

United States Court of Appeals for the Sixth Circuit The United States Court of Appeals for the Sixth Circuit (in case citations, 6th Cir.) is a federal court with appellate jurisdiction over the district courts in the following districts: * Eastern District of Kentucky * Western District of ...

, arguing that Hunt's fraud, which they had been convicted of abetting, was not honest services fraud because he had no fiduciary duty to the people of Kentucky. The Sixth Circuit, noting Gray's fiduciary duty to the people of Kentucky as Secretary of Public Protection and Regulation, concluded that Hunt also had a fiduciary duty to the people of Kentucky as a ''de facto'' public official due to his substantial participation in governmental affairs and "''de facto'' control" of the awarding of the insurance contract to Wombwell. The appellants also argued that their rights to due process of law were violated by the indictment, contending that it failed to allege that Hunt and Gray had a fiduciary duty to the citizens of Kentucky, a fact of which they necessarily had to be informed in order to understand the elements of the charges against them. The Sixth Circuit rejected this argument as well, stating that the indictment contained sufficient information for the defendants to be apprised of the charges, including the identification of the roles Hunt and Gray played in the conspiracy to defraud. The Sixth Circuit affirmed the convictions on May 12, 1986. The Supreme Court of the United States granted certiorari and reversed the decision of the lower court; the case was argued before the Court on April 22, 1987, and decided on June 24 of that year.

Decision

Majority

Justice White wrote the opinion of the Court, holding that the federal

statute only protected money and property, not the public's intangible right to honest government:

Rather than construe the statute in a manner that leaves its outer boundaries ambiguous and involves the Federal Government in setting standards of disclosure and good government for local and state officials, we read 1341 as limited in scope to the protection of property rights. If Congress desires to go further, it must speak more clearly than it has.

The law, passed in 1872 during a postal law recodification, originally only criminalized "any scheme or artifice to defraud." In March 1909, Congress added another clause, reading "or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises." In ''McNally'', the Court therefore concluded that Congress intended the mail fraud statute's scope to be limited to protecting money and property, citing its ruling in ''United States v. Universal C. I. T. Credit Corp.'', which stated that "when choice has to be made between two readings of what conduct Congress has made a crime, it is appropriate, before we choose the harsher alternative, to require that Congress should have spoken in language that is clear and definite. We should not derive criminal outlawry from some ambiguous implication." The convictions of McNally and Gray were thus reversed.

Dissent

Justice Stevens wrote the dissenting opinion, arguing that "nothing in the words 'any scheme or artifice to defraud,' or in the purpose of the statute, justifies limiting its application to schemes intended to deprive victims of money or property."

References

External links

* {{DEFAULTSORT:Mcnally V. United States United States Supreme Court cases United States Supreme Court cases of the Rehnquist Court United States statutory interpretation case law 1987 in United States case law Honest services fraud case law United States federal public corruption crime case law Abrogated United States Supreme Court decisions Legal history of Kentucky Political corruption scandals in the United States