Most RICO cases are based on violations of the federal mail and wire fraud
statutes. Any fraudulent conduct that directly or indirectly uses the mails or
telephone is a violation of the federal mail and wire fraud laws. The courts use
a spacious definition of fraud in mail and wire fraud cases: “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.… As Judge Holmes so
colorfully put it ‘[t]he law does not define fraud; it needs no definition; it is as
old as falsehood and as versatile as human ingenuity.’” [
Gregory v. United
States, 253 F.2d 104, 109 (5th Cir 1958)
]
The Supreme Court reiterated the expansive reach of mail and wire fraud in the
1987 case of Carpenter v. United States. It affirmed the mail fraud conviction
of a Wall Street Journal reporter who used the paper’s confidential information
in an insider trading scheme. The reporter was held to have violated his
fiduciary obligation to protect his employer’s confidential information:
We cannot accept petitioners’ further argument that Winans’ conduct in
revealing pre-publication information was no more than a violation of
workplace rules and did not amount to fraudulent activity that is
proscribed by the mail fraud statute. [The statutes … reach any scheme
to deprive another of money or property by means of false or fraudulent
pretenses, representations, or promises.… [T]he words ‘to defraud’ in
the mail fraud statute have the ‘common understanding’ of ‘wronging
one in his property rights by dishonest methods or schemes,’ and
‘usually signify the deprivation of something of value by trick, deceit,
chicane or overreaching.’ [
Carpenter v. United States, 484 U.S. 19
(1987)]
The duty of fidelity between the employer and employee that was at issue in
this case is precisely the same type of common law fiduciary duty as that
between physician and patient. Providing incentives to physicians to change
the medical care offered their patients is a breach of fiduciary duty. The nature
of the motive behind such incentives is judged from the patient’s perspective,
not the persons offering the incentives. For example, it is common for
managed care plans to give physicians an incentive to reduce specialty
referrals in an effort to control medical care costs. Although this might be seen
as a laudatory action on the part of the managed care plan, the individual
patient denied a referral will probably see it as an improper interference with
the physician–patient relationship. Irrespective of the payers’ motive, these
incentives are legally indistinguishable from giving bribes to employees to
violate their duty to their employers.
