When we left off last time, we had considered the implications of the argument that legal rules and moral rules are different with respect to their relative determinacy. Thus, so the argument goes, allowing moral standards to bleed into legal analysis leads to uncertainty and unfairness. Nowhere is this contrast more apparent than when a person is indicted and found guilty of a federal crime for acting immorally. Under one standard formulation, a person can violate the federal mail and wirefraud statutes by acting contrary to “moral uprightness, fundamental honesty, and fair play.” This language traces to a 1958 Fifth Circuit case, Gregory v. U.S. In a version of the well-known past-post con, Gregory devised a scheme to win a contest for a black Cadillac sedan:

In the fall of 1954, Crosley Division of AVCO Manufacturing Corporation had a nationwide weekly football contest. Contestants had to obtain blanks from authorized dealers. To complete the blanks, the contestant had (a) to indicate the winner of each of twenty intercollegiate football games to be played on Saturday of that week, (b) predict the correct score of the "Gridiron Special," and (c) fill out the last line of the inevitable jingle. The entry had to be postmarked not later than Wednesday preceding the game—Saturday. The winner was to be selected by a professional contest manager, Donnelley Corporation, in Chicago, on the basis of (a) and if tied, on the closest score predicted for (b), and if still tied, on (c) the best jingle. Gregory was a railway postal clerk assigned to the Atlanta-Nashville run. Through access to railway postal cancelling stamps and mail receptacles, he had, aided by his wife, devised a scheme by which the entries would bear a timely postmark and appear to have been mailed by Wednesday, but in fact would have been prepared and mailed after the games had been played. This was to cheat Crosley, other contestants, or both, all of whom assumed that the contest was competition between honest predictions, not a report on a past event.

Gregory defended, in part, by arguing that he didn’t defraud anyone because Crosley “not only intended, but was anxious,” to give the car away, no other contestant had a property right that he usurped, and Donnelly Corporation has so much discretion in naming a winner that no person could ex post prove itself the winner. This reasoning was not wholly spurious in light of previous Fifth Circuit authority, but the Court appeared eager to keep Gregory on the hook. And finding itself in “unique” circumstances, it stretched the definition of fraud to net Gregory.

The aspect of the scheme to “defraud” is measured by a nontechnical standard. It is a reflection of moral uprightness, of fundamental honesty, fair play and right dealing in the general and business life of members of society. Crosley was entitled to determine on what basis, for what reason, and under what circumstances it wanted to give away its black Cadillac sedan. The terms generally were that all contestants would make and mail an honest guess not later than Wednesday. All were competing on that assumption. Gregory, on the jury verdict, found a way to gain an advantage. He pretended that his prediction was likewise made and mailed by Wednesday. What it was in fact was a report of known events—the scores and winners of games already played. This was to cheat and deceive, to pretend and misrepresent. As such, it was to defraud, for as Judge Holmes of the Fifth Circuit so colorfully put it “The law does not define fraud; it needs no definition; it is as old as falsehood and as versable as human ingenuity.”

Judge Holmes was of course wrong: the law plainly defines fraud, and as the U.S. Supreme Court recently reemphasized, “the fraud statutes do not vest a general power in the Federal Government … to enforce (its view of) integrity in broad swaths of state and local policymaking.” Despite admonitions of this sort, defendants continue to be charged and convicted under novel fraud theories. Why is that? The answer is at least twofold: first, because the federal fraud statutes are sufficiently “open textured” they admit of a large measure of interpretive latitude; second, these statutes are a powerful weapon in the prosecutor’s arsenal, one that can be easily deployed in fresh circumstances.

Let’s take these in turn, but first pause to look at the mail and fraud statutes in particular. Mail fraud is defined as:

Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, or to sell, dispose of, loan, exchange, alter, give away, distribute, supply, or furnish or procure for unlawful use any counterfeit or spurious coin, obligation, security, or other article, or anything represented to be or intimated or held out to be such counterfeit or spurious article, for the purpose of executing such scheme or artifice or attempting so to do, [uses the mails], shall be fined under this title or imprisoned not more than 20 years, or both. Similarly, wire fraud is defined as: Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, transmits or causes to be transmitted by means of wire, radio, or television communication in interstate or foreign commerce, any writings, signs, signals, pictures, or sounds for the purpose of executing such scheme or artifice, shall be fined under this title or imprisoned not more than 20 years, or both.

This language—especially, “having devised or intending to devise any scheme or artifice to defraud”—signals a departure from the elements of common-law fraud (and some other statutory fraud), which typically requires proof of a material misrepresentation that was relied on and caused injury. Pitched at this level of abstraction, the fraud statutes thus require a great deal of interpretation. Hart believed that legal rules, whether statutory or derived from case law, characteristically have a plain meaning at their core. As Brian Bix explains it,

The decision whether a rule applies to a particular situation often turns on delimiting the range of meaning of a general term. For example, the application of the rule, “No vehicles in the park,” will usually turn on whether a particular object is a “vehicle” for the purpose of the rule (or whether a particular area is a “park” for the purpose of the rule). In plain cases, “the general terms seem to need no interpretation … the recognition of instances seems unproblematic or ‘automatic’, ... there is a general agreement in judgments as to the applicability of the classifying terms.”

But there are often cases in the “penumbra” of a term’s meaning that are problematic and do not lend themselves to “automatic” application. For instance, is a toy car a “vehicle”? A skateboard? A wheelchair? Is a grassy median on a boulevard a “park”? The National Mall? The indeterminacy that creeps into rules that are generally clear is that crafting a rule that isn’t vague in the sense of having borderline cases remains largely aspirational. HLA Hart ascribes this phenomenon to the “open texture” of rules, which at bottom is a function of the slipperiness of language.

And as Bix notes, “Hart added that the ‘open texture’ of legal rules should be considered an advantage rather than a disadvantage, in that it allows rules to be reasonably interpreted when they are applied to situations and to types of problems that their authors did not foresee or could not have foreseen,” which brings us back to the matter at hand. How should a court interpret the fraud statutes and balance the “open texture” of their language with the long institutional history of “fraud” having a more-or-less settled meaning? Next time, we’ll look at a couple of signal U.S. Supreme Court cases, each of which tells in a different direction.

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