McNally v. United States

McNally v. United States was a 1987 United States Supreme Court decision addressing the scope of the mail fraud statute, 18 U.S.C. § 1341. The Court narrowed federal fraud liability by holding that the statute protected only the right to property, prompting legislative response in the form of the Honest Services Fraud statute and sparking litigation concerning public corruption, corporate misconduct, and prosecutorial strategies. The ruling influenced cases involving United States Department of Justice, Congress of the United States, Supreme Court of the United States, Robert H. Bork, Antonin Scalia, Thurgood Marshall, Rehnquist Court, William J. Brennan Jr..

Background

In the early 1980s, federal prosecutors in Kentucky, Louisiana, and Florida pursued schemes involving alleged diversion of funds through insurers and contractors, drawing attention from legal scholars at Harvard Law School, Yale Law School, and Columbia Law School about the breadth of mail and wire fraud statutes. The case arose amid debates in the United States Congress over corruption scandals linked to figures in Tennessee, New York City, and Chicago, and followed earlier decisions such as Securities and Exchange Commission v. National Student Marketing Corp. and doctrinal developments after United States v. Aguilar. Defendants and prosecutors cited precedents from the Second Circuit Court of Appeals, Sixth Circuit Court of Appeals, and opinions by judges like A. Leon Higginbotham Jr. and William J. Brennan Jr. as courts wrestled with the proper reach of 18 U.S.C. § 1341.

Case Details

Petitioners were indicted under 18 U.S.C. § 1341 for using the mails to advance schemes alleged to deprive citizens of their intangible right to honest services; the indictments involved dealings between insurers, politicians, and private contractors in several county jurisdictions. Lower courts, including the United States Court of Appeals for the Sixth Circuit and trial courts in Louisville, Kentucky and New Orleans, Louisiana, affirmed convictions relying on jurisprudence interpreting mail fraud to encompass bribery and kickback schemes described in opinions from the Eighth Circuit Court of Appeals and Seventh Circuit Court of Appeals. The factual record referenced testimony from executives associated with Blue Cross Blue Shield, municipal officials from Nashville, Tennessee, and intermediaries linked to contracting firms whose corporate structures included subsidiaries registered in Delaware and board members connected to alumni of Georgetown University and Princeton University.

Supreme Court Decision

The Supreme Court, in an opinion by Justice White, held that 18 U.S.C. § 1341 was limited to schemes to defraud in which the object was the deprivation of money or property, not the deprivation of intangible rights such as honest services. The majority distinguished earlier decisions from the Ninth Circuit Court of Appeals and rejected an expansive reading that had been applied by prosecutors in cases involving public officials in Massachusetts and corporate officers in California. Justice O'Connor filed a concurrence; Justice Blackmun dissented, joined by Stevens and Marshall in parts. The ruling cited statutory interpretation principles from cases like Yates v. United States and relied on textualist arguments associated with scholars at University of Chicago Law School and decisions from the Rehnquist Court.

Legal Significance and Impact

The decision curtailed prosecutorial use of the mail fraud statute against schemes alleging deprivation of honest services, prompting rapid legislative action by members of the United States Senate and the United States House of Representatives. In response, Congress enacted 18 U.S.C. § 1346 to define "scheme or artifice to defraud" to include schemes to deprive another of the intangible right of honest services, linking statutory drafting debates to committees such as the Senate Judiciary Committee and the House Committee on the Judiciary. The ruling affected prosecutions of public corruption cases involving figures from Illinois, Pennsylvania, and Texas and influenced corporate enforcement matters pursued by the Securities and Exchange Commission and the Department of Justice's Public Integrity Section. Legal commentators from Stanford Law School, NYU School of Law, and University of Michigan Law School debated the decision's implications for separation of powers and federalism in articles referencing scholars like Cass R. Sunstein, Erwin Chemerinsky, and Laurence Tribe.

Subsequent Developments and Related Litigation

After Congress enacted 18 U.S.C. § 1346, courts revisited honest-services jurisprudence in cases such as Skilling v. United States, United States v. Sawyer (1978), and the body of decisions from the United States Courts of Appeals. The Supreme Court later narrowed the application of § 1346 in Skilling v. United States, limiting honest-services liability to bribery and kickback schemes, affecting prosecutions in jurisdictions including New Jersey, Florida, and Ohio. Litigation over application of honest-services fraud has involved defendants associated with companies listed on the New York Stock Exchange and politicians who served in state legislatures and municipal governments, provoking scholarship at Yale Law Journal, Harvard Law Review, and proceedings in the United States Senate Judiciary Subcommittee on Crime and Drugs. The doctrinal trajectory from the decision to subsequent cases continues to shape debates in legal clinics at Georgetown University Law Center and trial practice manuals used by prosecutors at the Department of Justice.

Category:United States Supreme Court cases Category:1987 in United States case law