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Misappropriation vs. Alteration: Post-Kelly Efforts to Criminalize Fraud Targeting Confidential Government Information

By Luke Urbanczyk

The federal wire and mail fraud statutes criminalize “any scheme or artifice to defraud” that uses interstate wires or mailings to obtain “money or property by means of false or fraudulent pretenses, representations, or promises.” But what exactly counts as property, triggering the statutes’ criminal penalties? In Carpenter v. United States, the Supreme Court held that confidential business information is property for purposes of the fraud statutes. In Cleveland v. United States and Kelly v. United States, the Court established that a scheme to alter a regulatory choice—which implicates the government’s role as a sovereign—does not deprive the government of property. The Court has left unclear, however, whether confidential government information can satisfy the fraud statutes’ property requirement.

After highlighting the uncertain status of the law governing schemes that misappropriate confidential government information, this Note argues that as a matter of property theory, the government has a property interest in its confidential information because it has the right to exclude others from this information and that Kelly represents a mere application of Cleveland’s narrow exception to this rule. Finally, this Note proposes a test to distinguish schemes that target government property from those that implicate the government’s sovereign capacity: when fraudulent schemes seek to misappropriate confidential government information they target property, but when they seek to alter a governmental decision, they do not.

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