Mail and Wire Fraud
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.