21 Am. Crim. L. Rev. 1 (1983-1984)
The Metastasis of Mail Fraud: The Continuing Story of the Evolution of a White-Collar Crime

handle is hein.journals/amcrimlr21 and id is 9 raw text is: THE METASTASIS OF MAIL FRAUD: THE CONTINUING STORY OF THE
John C. Coffee, Jr.*
Justice Cardozo observed that legal principles have a tendency to expand to the
limits of their logic, and Judge Friendly has added the corollary that sometimes the
expansionary momentum carries the principle even beyond those limits.' So it has
been with the recent growth in the federal mail fraud law, as courts have applied a
standardized formula- known as the intangible rights doctrine- to a broad range
of fact patterns having relatively little in common. The result has been both to ex-
tend the net of the federal criminal sanction over an extraordinarily vast terrain and
to arm the federal prosecutor with a weapon substantially different in character
from any previously known to the substantive criminal law.
Under the intangible rights doctrine, a public or private fiduciary can be pros-
ecuted on the theory that his conduct has deprived his beneficiaries of their right to
his honest and faithful services.'2 Critical to this doctrine's significance is its asser-
tion that the nondisclosure of a conflict of interest by a person characterizable as a
fiduciary can amount to a deprivation of the honest and faithful services owed by
the fiduciary to the beneficiary.3 As a practical matter, the operative effect of this
* Professor of Law, Columbia University Law School; B.A. 1966, Amherst College; L.L.B. 1969,
Yale Law School.
1. United States v. Borelli, 336 F.2d 376, 380 (2d Cir. 1964) ([T] he instant case... exemplifies in Judge
Cardozo's phrase, the 'tendency of a principle to expand itself to the limit of its logic'-and perhaps
2. For a fuller discussion, see Coffee, From Tort to Crime: Some Reflections on the Criminalization of
Fiduciary Breaches and the Problematic Line Between Law and Ethics, 19 AM. CRIM. L. REV. 117 (1981)
[hereinafter cited as Coffee]. Among the cases that have recently recognized this doctrine, the following
are of particular importance: United States v. Margiotta, 688 F.2d 108 (2d Cir. 1982), cert. denied, 57
U.S.L.W. 3789 (1983); United States v. Newman, 664 F.2d 12 (2d Cir. 1981); United States v. Bronston,
658 F.2d 920 (2d Cir. 1981), cert denied, 102 S.Ct. 1796 (1982); United States v. Barta, 635 F.2d 999 (2d
Cir. 1980), cert. denied, 450 U.S. 998 (1981); United States v. Mandel, 591 F.2d 1347 (4th Cir. 1978), aff'd
in relevant part on reh'g en banc, 602 F.2d 653 (4th Cir. 1979), cert. denied, 445 U.S. 961 (1980); United
States v. Bush, 522 F.2d 641 (7th Cir. 1975), cert. denied, 424 U.S. 977 (1976).
This Article will not retrace the steps of my prior article. Further emphasis on the potential for incon-
sistent results or on the overbreadth latent in some judicial dicta interpreting the federal fraud statutes
seems unnecessary. Rather, the focus of this article will be on how to achieve sensible reform without
crippling the ability of the federal prosecutor to respond to serious instances of official corruption or in-
tra-corporate fraud.
3. In United States v. Bush, 522 F.2d 641, the Seventh Circuit formulated a test, which most subse-
quent courts have followed, that finds a violation of the mail fraud statute only when the breach of duty
is combined with a material misrepresentation. Id. at 648. See also United States v. Barta, 635 F.2d 999,
1006 (salesman in small securities firm under a duty to apprise his employer of material information con-
cerning trading in bonds by an undercapitalized firm in which he had interest; breach of duty subjects him
to prosecution for mail and wire fraud). In United States v. Mandel, 591 F.2d 1347, the Fourth Circuit
similarly stated that nondisclosure of material information by the fiduciary must be linked to some ac-
tionable fraud. Id. at 1363. However, the Fourth Circuit would find actionable fraud when a public
official fails to disclose the existence of a direct interest in a matter he is passing on or makes a
fraudulent statement of facts, with a deliberate concealment thereof to a public body, in order to receive
a benefit by action of the public body. Id. at 1363-64. As so defined, actionable fraud could arise even
where the public fiduciary remained wholly passive. For example, if a state governor held a hidden in-

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