You are here

946. Tangible versus Intangible Property Rights

In Carpenter, 484 U.S. 19, 25 (1987), the Court confirmed that "McNally did not limit the scope of § 1341 to tangible as distinguished from intangible property rights." The Court held that the intangible nature of "confidential business information" does not make it any less "property" protected by the mail and wire fraud statutes. Id. Carpenter accordingly distinguished intangible property rights, which were still protected by the mail and wire fraud statutes, and intangible non-property rights, which were not protected. Cf. United States v. Lemire, 720 F.2d 1327, 1336 (D.C. Cir. 1983) ("[A]lthough the scheme to defraud must threaten some cognizable harm to its target, that harm need not be a deprivation of tangible property or money; criminal fraud encompasses schemes to defraud persons of significant intangibles as well."), cert. denied, 467 U.S. 1226 (1984).

QUERY: Whether interests such as contract rights, licenses, permits, trade secrets, franchises, government grants, goodwill, market share, etc., are intangible or tangible property rights that can be the subject of a mail or wire fraud violation. See, e.g., Carpenter, 484 U.S. at 25 (suggesting that contractual right to honest and faithful services is too ethereal in itself to fall within the protection of the mail fraud statute); United States v. DeFries, 43 F.3d 707, 709-11 (D.C. Cir. 1995) (union ballots are tangible property); United States v. Henry, 29 F.3d 112, 114-15 (3d Cir. 1994) (fair bidding opportunity is not a property right); United States v. F.J. Vollmer & Co., 1 F.3d 1511, 1521 (7th Cir. 1993) ("It is well established that the government's regulatory interests are not protected by the mail fraud statute.") (citing cases concerning licenses and permits), cert. denied, 114 S.Ct. 688 (1994); United States v. Loney, 959 F.2d 1332, 1336 (5th Cir. 1992) (flight award coupons are property); United States v. Madeoy, 912 F.2d 1486, 1492 (D.C. Cir. 1990) (a FHA insurance commitment, by which the Government promises to pay the lender if the borrower defaults on the loan, is a "property interest," not an "intangible right" because it involves the Government's "control over how its money [is] spent."), cert. denied, 498 U.S. 1105 and 498 U.S. 1110 (1991). The United States Court of Appeals for the District of Columbia's decision in DeFries provides a brief survey of cases finding property interests in permits, city liquor licenses, medical licenses and other items. See generally, 43 F.3d at 709-10 and n. 2; see also Laura A. Eilers & Harvey B. Silikovitz, Mail and Wire Fraud, 31 Am. Crim. L. Rev. 703, 706-11 (1994) (discussing "traditional frauds" and "frauds involving intangible rights").

QUERY: How to determine whether an interest is property? See, e.g., United States v. D'Amato, 39 F.3d 1249, 1258 (2d Cir. 1994) (shareholder's property rights to information are defined by state law and the law of fraud); cf. Henry, 29 F.3d at 115 ("[T]o determine whether a particular interest is property for purposes of the fraud statutes, we look to whether the law traditionally has recognized and enforced it as a property right."); see also Eilers & Silikovitz, 31 Am. Crim. L. Rev. at 706 n. 19 (case cited).

[cited in USAM 9-43.100]

Updated June 9, 2015