Is it a Federal Crime for a University to Submit Fake Numbers to U.S. News to Change Its Ranking?

A perspective from a former prosecutor.

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The U.S. Attorney's Office in Philadelphia recently brought a criminal indictment against the former Dean of Temple University's business school, Moshe Porat, for submitting false numbers to U.S. News to help the school's ranking.  I posted a long thread over at Twitter when the indictment was announced about legal challenges I see raised by the prosecution.   My friend Michael Levy, who is the former First Assistant U.S. Attorney and Interim U.S. Attorney in that office, and is now retired, also wrote in with some thoughts.

I thought Mr. Levy's views were worth a post of their own, and I am posting them with his permission.  His analysis follows:

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The indictment of Moshe Porat, the former dean of the Temple University business school (the Fox School of Business), by the U.S. Attorney's Office in Philadelphia raises several interesting issues about mail and wire fraud. Some of these depend upon the facts, while others are purely questions of law.

The indictment charges that Porat conducted a scheme to defraud Fox applicants, students, and donors of money and property. He allegedly did this by providing false information about the school's applicants and students to U.S. News and World Report to boost the school's ranking in the publication's school ratings. The indictment states that as the school's ranking rose, so did the size of its class.

This raises factual questions about whether the victims were defrauded. Even if the students opted to go to Fox because of the fraudulently obtained rating, they got what they paid for – a Fox business school education and MBA. The indictment even alleges that in one program the price of tuition decreased during the scheme, while in the other, it remained about the same. The false increase in the school's standing did not prompt the school to charge more for its product. The indictment does not suggest that the donor's money did not go to the coffers of the business school and it does not allege that Porat siphoned any money for his personal use.

The indictment implies that the students would not have applied to or matriculated at the school and that the donors would not have contributed, were it not for the false rating. However, it never states so. That will have to await testimony at trial. It does raise the question, whether this conduct is covered by the wire fraud statute. If a person is tricked into entering a transaction but gets what s/he pays for, has s/he been defrauded?

Cases such as United States v. Takhalov, 827 F.3d 1307, 1314 (11th Cir.), as revised (Oct. 3, 2016), opinion modified on denial of reh'g, 838 F.3d 1168 (11th Cir. 2016), would suggest that the answer is no. In Takhalov, a bar hired attractive women to hang out in the bar, acting as if they were patrons, to induce male patrons to buy them drinks. The government argued that the male patrons were defrauded because they were not aware that the women were in fact employees. The fraud was giving the men the impression that a drink might lead to a more romantic encounter. The court held that this was not a fraud and presented the following two hypotheticals to illustrate why.

Consider the following two scenarios. In the first, a man wants to exchange a dollar into four quarters without going to the bank. He calls his neighbor on his cell phone and says that his child is very ill. His neighbor runs over, and when she arrives he asks her to make change for him. She agrees; the quarters pass to the man; the dollar passes to the woman; and they part ways. She later learns that the child was just fine all along. The second scenario is identical to the first, except that instead of giving the woman a true dollar, he gives her a counterfeit one.

The first scenario is not wire fraud; the second one is. Although the transaction would not have occurred but-for the lie in the first scenario – the woman would have remained home except for the phony sickness – the man nevertheless did not intend to deprive the woman of something of value by trick, deceit, and so on.  But in the second scenario he did intend to do so.

Id, at 1313.

I expect that problem will be an issue in the Porat trial. If the students paid for a Fox education and degree, then they got it.

A second, legal issue is whether the object of the scheme was to obtain money and property, or if it was merely to obtain higher ratings and increased student enrollment (with its increase in tuition payments) was an incidental benefit. After the Bridgegate case (Kelly v. United States, 140 S.Ct. 1565 (2020)), it should be clear that obtaining property has to be the object of the scheme, and not just an incidental result of the scheme. Higher ratings could have resulted in an increase in the quality of the students without any increase in enrollment. Again, those students would have gotten what they paid for.

A third issue is what the courts have called the convergence problem – does the person deceived have to be the person defrauded? If A lies to B and as a result C loses money to A, is this conduct covered by the wire fraud statute. For example, a person lies to a regulatory agency and, as a result, the agency allows her to continue her occupation. Are the fees she obtains from her clients because of the continuing authorization, covered by the mail and wire fraud statutes? E.g., United States v. Lew, 875 F.2d 219, 221 (9th Cir. 1989). The courts are split on this issue and the Third Circuit has noted the split but never chosen sides. United States v. Bryant, 655 F.3d 232, 249-50 (3d Cir. 2011).

In this case, the lie to U.S. News and World Report was translated into a rating and passed on to the victims. If that is the government's theory, then there may be no convergence problem; the magazine was the unwitting transmitter of the false statements to the victims and the people deceived and the people defrauded were the same.

All of this will have to await the filing of motions, the development of a record, and even a trial.

NEXT: Thursday Open Thread

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  1. Except for C-SPAN, all media are fake. Under this government prosecution theory, all politicians should be arrested too. This lawyer profession has got to be the stupidest people in the country. For example, 7000 people out of 10 million got a cold. Let’s shut down the economy because of this Surge in COVID. A bunch of moribund people needing hospital level care in a nursing home died of pre-existing conditions. Now we have 300000 COVID deaths for the purpose of defeating Trump and for enriching tech billionaires by $1.7 trillion. Try prosecuting the greatest fraud heist in history you morons. Guy is shot in head, get $35000 from Medicare for the COVID diagnosis on the death certificate. We are sick of your failed profession destroying our country.

    1. Trump should have fired the entire DOJ his inauguration day.

  2. “opinion modified on denial of reh’g”

    I deciphered that fairly quickly, but I briefly wondered if that led to ritual combat with bat’leth. (Spot the non-lawyer!)

    On the one hand, increasing a school’s US News ranking is hard to understand as an end in itself, without the expected consequence of increased enrollment. On the other hand, the deceit would be due almost entirely to getting a different rating *relative to other schools*, and cheating in that ranking seems widespread, so it might be difficult to show that the end result is that much different than a fair evaluation.

  3. Seems like other schools are potential victims, not the individual students (as noted, they received their degree).

    1. Is the degree exactly what they paid for though? So from what I understand the online program was able to be actual number 1. So were students paying for a degree specifically from the number 1 program or simply for any old MBA?

      1. Surely the only difference the ranking actually could make is changing which universities they investigated more fully. Surely they based their decision on something besides the raw ranking. The school has teachers, buildings, actual study producing actual degrees. I suspect that of the schools on their shortlist, ranking is probably the last thing they considered. Cost , distance, location, dorms, student life, a zillion things outranked rankings.

        1. We’re talking about an online graduate program though.

          1. Then the question is faculty, breadth of course offerings, opportunities for practicums, etc. Any student making rankings a top consideration is not a actually losing anything because s/he did not even know what s/he wanted to buy.

            1. Isn’t the rankings a proxy/heuristic for “faculty, breadth of course offerings, opportunities for practicums, etc?”

              1. Perhaps IF you look that deeply into the constituent of the score.
                But in general, the overall score is a poor proxy for those items and a serious student will prefer to look at the course offerings and usual instructors the last several years, etc., especially if the student is aiming at a education tailored to hir professional interest.

    2. No, Apedad, and that misconception is currently being litigated in a different context, by students who were denied the residential educational environment due to COVID shutdowns, although they did get their degrees. I’m thinking particularly of the case against Stonehill College.

      Institutions love to fall back on the legal defense that they are “selling degrees” but that’s not what they advertise — and in the case of Stonehill, they advertise their residential campus experience, not a piece of paper.

      Imagine that I am selling what I claim to be “free range” eggs — laid by hens who each have a full acre of pasture to play about on — and instead my eggs are factory farmed with hens in shoebox-sized cages. That’s fraud, and my defense isn’t “well, you got your dozen eggs, didn’t you?”

      The business school was selling education, not degrees, and they fraudulently increased the market value of that education not unlike how people have been convicted of fraudulently inflating the value of their company stock.

      The students were defrauded because they purchased an education that wasn’t as valuable as advertised, and their employers, who hired them instead of the graduates of other (actually better) programs.

      1. Yabut if the rankings had been accurate and Temple was ranked lower, isn’t it possible/likely students would have applied to higher ranking schools, and therefore those schools would have benefited from increased enrollment, (eventually) increased endowments, increased prestige, etc.?

      2. Ed,
        your bait and switch is not on point.
        But then neither is your argument about Stonehill College.

        1. See: https://reason.com/volokh/2021/03/17/lawsuit-against-college-for-part-refund-of-fees-for-covid-19-shutdown-may-go-forward/

          I knew I saw it somewhere — just didn’t realize it was here.

          ““[As to the] university’s … argument that any breach resulting from the transition to online teaching was de minimis because the student still earned credits toward a diploma: ‘This is kind of like purchasing a Cadillac at full price and receiving an Oldsmobile. Although both are fine vehicles, surely it is no consolation to the Cadillac buyer that the ‘Olds’ can also go from Point A to Point B.’”

          1. Sure, students have sued? No one doubted that.
            The validity of the claim is what is in debate.
            If we are talking about Stonehill, then the student has already settled for a Chevy, not a Cadillac

            1. The fact that a student was bullied into settling does not negate the legitimacy of the claim.

      3. Ed,
        The 20 institutions that I worked with for a dozen years as director of a national graduate program were quite clear that what they were “selling” was their university’s credit.

        1. I thought I smelled administratum.

          I’ll bet they didn’t state that in their brochures…

  4. “Although the transaction would not have occurred but-for the lie in the first scenario – the woman would have remained home except for the phony sickness – the man nevertheless did not intend to deprive the woman of something of value by trick, deceit, and so on. But in the second scenario he did intend to do so.”

    I respectfully disagree — in both cases, there was “theft of time.”

    The Massachusetts minimum wage is now $13.50/hour (22.5 cents/minute) so the theft of slightly more than four minutes of her time (which this would have taken) is the theft of a dollar’s worth of her time — and if the theft of a dollar via counterfeit is wire fraud, then the theft of a dollar’s worth of time ought to be as well.

    And say she was a high priced attorney billing at $600/hour — this would be billable at $40, real money….

    1. So a lawyer suddenly finds himself at the pearly gates, and asks St Peter what happened. Why did he die at the prime of his career, only 35 years old? St. Peter flips through his records, and replies, “You died of old age. Based on your billed hours, you have to be at least 85 years old.”

      1. Sloth, rather: According to the billing for my divorce, the most expensive lawyer at the firm devoted himself to photocopying boilerplate, at a rate of one page every 20 minutes.

        I mean, it’s great that I got hours of his time, but I’d have rather he delegated to a flunky, and left me not bankrupt.

        1. I thought the legal system was biased against the male. Then, I spoke to a female doctor about the nightmare of her divorce from a stay at home lawyer. The legal system is biased against the productive party, to ransack its assets. Her judge asked her ex for a date after the divorce. The judge knew he had a lot of time to give her attention, and now, thanks to her, a ton of money. I offered to file a complaint against the judge, but the doctor just wanted to move on.

          1. I’m pretty sure this was actual bias against men; I went with ADAM, the American Divorce Association for Men, and made the stupid mistake of not turning around the instant I saw that everybody in the office was a woman.

            Reading reviews later, (I’d been too depressed to take proper care at the time.) I found that it was widely agreed by former customers that ADAM was something of a scam.

            1. At least you’re not a member of NAMBLA.

              Right?!?

            2. Statute of limitations on complaints to the bar?

            3. A scam? No.
              The organization just wanted to convince you to “shut up and take your beating like a man.”
              They see that as helping your mental health.

    2. Not to mention that the whole point of the exercise is that the man valued the four quarters more than the dollar. The fact that they are of nominally equal value ginns up an incorrect intuition.

    3. You’re totally correct. It’s an awful hypo both in the original case and to suggest a defense for this case. Everyone knows time is money, duh. Not only the inherent value of time, like in the min wage and attorney examples you gave, but also the diversion from whatever the woman was doing before she was interrupted by the man’s call. Case in point, we all know that while some businesses will agree to make change, others refuse because it’s not worth their … time!

  5. “If the students paid for a Fox education and degree, then they got it.”

    But they were paying for a degree from a school with a certain ranking, and they did not get it; through fraud.

    (on the other hand, to be sure, they got an education on trusting certain media outlets)

    1. That was my thought: What they paid for was not “an education”, it was “an education at the school that was described to them”.

      1. Right. It’s also significant that this is because the School gained the #1 spot in the rankings. They paid for the #1 ranked degree program. Saying they still got what they paid for isn’t a great characterization. That would be more defensible if temple juked the stats and moved from like 50-30, I think. Because no one would really think that’s such a large difference in quality or prestige that it is measurably different product. But here, there is a distinction in being number one that would matter to customers.

      2. they were paying for university credit for courses they selected toward a professional degree. If they chose well, they received enhanced benefit. If they chose poorly they got reduced benefit. It has nothing to do with the highly flaw US News ranking.

    2. I agree that it’s obviously fraud. The counterarguments are silly, although I guess that’s all Porat might be able to come up with. For example, the idea of a convergence problem is absurd. Isn’t the whole point of the gaming the rankings so that potential students will look at them? Does Porat go to the trouble if every issue of the rankings is simply locked in a vault immediately after it’s published? In the latter case, I think not.

      Likewise, suggesting that enrollment and tuition is only an incidental benefit doesn’t pass the laugh test. Again, is Porat just doing it for the personal satisfaction of seeing a higher number in the rankings, and doesn’t care less if there’s any increase in enrollment and tuition? I think it’s quite the opposite.

      But I don’t understand the criticism of the media outlets. They were deceived just as much as any potential students. Maybe they should do more diligence on their data inputs, but that doesn’t mean they deliberately engaged in falsehoods or acted in an untrustworthy manner.

    3. I disagree.
      Most in the business of professional education know that the rankings are highly manipulated. If they are a measurement at all, they are a measurement with a very low signal to noise ration. MBA students better learn such lessons very earlier in their career.
      The Temple students not only got what they paid for, they received a special educational bonus.

  6. “The indictment even alleges that in one program the price of tuition decreased during the scheme, while in the other, it remained about the same. The false increase in the school’s standing did not prompt the school to charge more for its product. The indictment does not suggest that the donor’s money did not go to the coffers of the business school and it does not allege that Porat siphoned any money for his personal use.”

    I’m reminded of John Silbur’s rants about the difference between price and cost — and the above involves three misconceptions about the economics of higher education.

    First, “price” is your tuition, what you charge to sit in the classroom, and “cost” is what it costs you to provide that seat in the classroom (and everything behind it). Your price remains the same if you have one student or a hundred students in the classroom, particularly if it is an on-line course.

    There are significant economies of scale, particularly if you hire (low paid) adjunct faculty as most of your costs are fixed. Hence more students means more money, even if you lower your price — it is the same thing as keeping the number of students constant and increasing price.

    Second, the quality (and hence value) of the education declines as a result of the economy of scale savings. The student in the classroom with a hundred other students (or sometimes as many as five hundred at UMass Amherst) doesn’t receive the personalized education of a student in a classroom of ten does.

    Third, a dean — not unlike a corporate CEO — benefits personally from his school’s success. It’s just like a coach with a winning season — he (a) isn’t fired, and (b) will likely get a salary increase. So his fraud benefits him personally.

    Don’t forget that most administrators do *not* have tenure — they can be (and often are) fired — traditionally they have had a tenured faculty slot to fall back on (at a lower salary and with way less prestige) but that’s not always the case. Nor are these ex-administrators always welcome in the departments forced to accept them…

    1. ” Your price remains the same if you have one student or a hundred students in the classroom, particularly if it is an on-line course.”
      False. Large classes require more teaching assistants and graders.
      Also your argument about “profit margin” is irrelevant. to whether the student receive a fair market value exchange for hir tuition

      1. Not necessarily — there’s no mandated ratio. Besides, TAs & graders are cheap.

        Be careful with that “fair market value” argument as it is going to come back to bite you.

    2. “Second, the quality (and hence value) of the education declines as a result of the economy of scale savings. ”
      An unproven and likely unprovable assertion

      “a dean — not unlike a corporate CEO — benefits personally from his school’s success…. So his fraud benefits him personally.”
      Beyond retaining his position at the same school, here again you offer no evidence beyond your assertion.

      Your point about administrators is irrelevant to the question at hand

      1. Are you really that stupid?

  7. Leaving aside other issues, the students enrolled in and paid for an education from the school ranked #N in the USNWR rankings. The school that they were in was in fact ranked #N by USNWR.

    For there to be an actual problem, I think you would have to prove that there is some way in which that school delivered an education that was materially worse than the schools that were previously higher ranked. I’m not sure that’s possible.

    USNWR rankings are a mix of proxies that they think reflect something important (some of which are caused in part by the ratings themselves*) and surveys of people coming out of the school. (I don’t know what “numbers” the school is alleged to have falsified.) It’s not at all clear to me that either of those categories is reliable as a means of determining anything fundamental about the education itself.

    That said, if they’re lying about how much debt a student has upon graduation (one of the USNWR metrics, btw), that could be seen as a substantive harm to the student, since there would be the possibility of reliance on that to the financial detriment of the student.

    Which is a long way of saying that I think there is a reasonable claim that USNWR rankings are valuable only because they are USNWR rankings, not because they reflect any substantive and objectively demonstrable difference in actual education.

    Though it might be entertaining to see the government try to prove that one school’s education is objectively better than another’s. I’ll have to buy some popcorn.

    * Hiring rates and compensation at graduation are a part of the ranking. A higher ranking for a school means (broadly) better-paid positions upon graduation for its students. So if your ranking goes up, your ranking will go up. This rise is not necessarily related to anything but the ranking number, however it might have been derived.

    1. “Which is a long way of saying that I think there is a reasonable claim that USNWR rankings are valuable only because they are USNWR rankings, not because they reflect any substantive and objectively demonstrable difference in actual education.”

      Why does that matter, as long as students are willing to pay for the difference?

  8. I’m not sure the bar analogy works. Suppose the bar owner had told the girls that the bar’s house wine was French, when it was really from Arizona, intending to deceive customers about the nature of the house wine.

    You’d say, well, the customers got what they paid for, a glass of house wine, but of course they’d been mislead about the nature of the house wine.

    That’s more in line with the facts of this case.

    1. Itis, and in more ways than you mentioned: wine tasters are notoriously susceptible to fake labels, shapes of bottles, and other factors which have nothing to do with the content, and extremely volatile in their rankings from day to day. I doubt the USNWR rankings are any more valid or useful.

  9. I’m also having a problem with the ‘they got the degree they paid for’ argument.

    Suppose I’m setting here considering my options …hmmm, UofX charges $10K tuition and is rated #1. UofY charges $8k but is rated #10. Well, I expect I’ll get better job offers if I graduate from the #1 rated school, so I’ll cough up the extra tuition.

    Now I have just graduated and am applying for jobs, and it turns out that the #1 rating was bogus, they were really #40. Employers read the newspapers too, and I’d expect their willingness to pay extra for a UofX degree just ended. It seems to me that UofX didn’t actually deliver the #1 ranked degree they said they were selling; they substituted a #40 ranked degree instead.

    1. If your at the botton half of your class, maybe (and only maybe) you have an argument. If your firm only hires in the top 5% of the class, the the school itself has only a marginal effect.
      In the programs that I have hired for, “saturating the system” was the most important factor after the evaluation of potential of the candidate.

      1. You do know that 50% are in the bottom half of their class…

  10. Isn’t this topic increasingly true of American universities in general?

    Parents and their children spend increasingly insane amounts of money on university educations that promise free and fearless education that will prepare youngsters for a productive career and life.

    Instead, in direct contradiction to what was promised, they actually receive one-sided leftist propaganda and indoctrination that leave them ill prepared to function.

    At what point can the universities be sued for failing to deliver?

    1. Exactly.

      It’s hard to sue a school, but it’s starting…

      1. So what.
        In the US, people sue about anything and everything, usually hoping for a settlement.

        1. And when We, Cheatem, & Howe finally get these suits down to boilerplate, there’ll be a *lot* of settlements…

  11. Sound optimization of business processes https://www.airslate.com/product/create-and-automate-workflows will help to correct the situation. First, fix the algorithm of existing actions, then form an ideal picture, and then find the shortest path between the ideal and reality. This path goes through reducing costs and increasing profits with the least resistance.

  12. I don’t buy the argument that the students got what they paid for. The entire point of the scheme was to raise the ranking of the school so that the school in turn drew in a more accomplished student body, a student body deceived into thinking they were going to a better school than they were. And specifically to defraud those students into purchasing tuition at their school instead of at another school.

    The customers did not get what they paid for, because what they paid for was an education at a US News Ranked Number X college, and instead what they got was a crappier education from what was really a US News Ranked Number X minus 30 school or something. They paid for a Mercedes and got a Yugo, and the wire fraud was the act of convincing consumers that if they parted with their money, they would receive a Mercedes instead of a Yugo.

    1. I don’t know if you can categorically say they got a crappier education. That’s one reason people think the ratings are bogus. Lawyers know this to be true: plenty of bad ones come out of the T-14 and plenty of good ones come out of the local state school ranked in the 100s.

      But they definitely got a degree that everyone now recognizes is much less prestigious than it was advertised as. To maybe return to the law school example: suppose Georgetown had been submitting fake info to USNWR for years to stay in the T-14, but actually they’re more like 30. It’s not like Georgetown is truly giving a crappier education than say Texas, but the prestige, and thus part of the value, certainly dipped.

      1. Right. Part of the thing is the credential is part of the education. So if the credential is less valuable, the consumers have been defrauded.

    2. ” instead what they got was a crappier education ”
      Your proclamation. It has nothing to do with ground truth.
      The US News rankings are highly flawed and are at least gamed by many top universities (for example Stanford). Those rankings do NOT change the quality of instruction one small bit.

      1. Spoken like a true administrator…

  13. “but the prestige, and thus part of the value, certainly dipped.”
    Actually you contradicted that in the first part of your comment.
    The value that the firm gets is NOT determined by the school rank, but by what the associate produces.

    1. DN, I completely understand that you think the rankings are worthless BS, and mostly agree. I also think Picasso is massively overrated and not better than random splatter.

      Nevertheless, if someone fraudulently passes off a painting as a Picasso, there has been some serious and actionable wrongdoing. It would be no defense to say the buyer got the canvas and the ugly paint splatters that s/he paid for.

      This case is a little different, since the school “really” was ranked where they said, it’s just that the ranking was obtained fraudulently. Maybe the better analogy would be someone tricking Picasso into signing some splatters, and then selling the result. In my opinion the buyer in such a case got something but not what they reasonably thought they were getting.

      1. In your case they buyer got just what s/he paid for, namely, Picasso’s scribble at the bottom of a canvas with paint on it.
        The manipulated ranking is hardly the same kind of fraud as many universities manipulate the rankings in a bit less dishonest fashion. Their deans do not get fired. However, at Temple the dean’s behavior is arguably academic misconduct and grounds for termination.

  14. USNWR asks the schools for data. Do they not request that the data be accurate in return for being rated? Doesn’t USNWR suffer when their ratings are known to be based on bogus data? If the data is not contractually accurate, then USNWR should state that up front and caveat emptor on whatever ratings result. If they data is promised as accurate, then there is a claim by USNWR.

    1. I didn’t know USN&WR was still in business — it once was a weekly magazine…

  15. Do people value a degree from highly ranked university over a lesser one? That seems to me to be a question that can be decided affirmatively by a jury. And if they do, then the stufents have been deprived of something of value.

    It seems obvious that universities can make fraudulent claims. What if they claim their professors all have Nobel prizes but none of them have in fact punlished a paper? What if they claim they are accredited but they do not? What if they claim they provide an education but simply package existing life experience and provide a degree?

    All of these students would get a degree regardless. It’s the same piece of paper in all these cases. The value lies entirely in what lies behind that piece of paper.

    It seems to me that if the school claims there is something behind its piece of paper that society generally regards as valuable and which isn’t there, then that claim has resulted in a deprivation of something of value, and is fraudulent.

    And it seems to me that a university’s claim to be highly ranked when it isn’t is as potentially actionable as a claim to be accredited when it isn’t, to teach classes when it doesn’t, to place graduates in top graduate schools, prestigious firms, or high-paying jobs when it doen’t or to make any other kind of fraudulent claim a university can make.

    1. “That seems to me to be a question that can be decided affirmatively by a jury. ”
      Why by a jury. A far more reliable approach would be to present the results of two independently prepared surveys, reviewed by experts in polling and survey interpretation.
      The decision cannot be determined by logic alone.

      1. Matters of accreditation, credentials of instructors and senior faculty all can be checked for accuracy. Nobel prizes can be counted; anyone with access to the internet can do that.

        Do universities lie? Sure they do. Harvard lied when it claimed to have a Native American on its law faculty.

        What is the dividing line between self-aggrandizement and actual fraud. That question I would leave to a jury

  16. What if a person claims to have genuine Bitcoin when it’s fake? One receives a bunch of electronic blips in both cases. One could argue that since Bitcoin is completely intangible any value placed on Bitcoin is entirely subjective, there’s no deprivation of value.

    Value is often based on a community’s joint subjective perceptions. If an ordinary person (or an ordinary specialist in a specialized area) would regard something as valuable, then I think it is capable of being regarded as valuable for purposes the law of fraud.

  17. When thinking about fraud, be specific. In the courts dollar-change example, the woman is defrauded in both scenarios. In the first, she loses something of value in her time and the expense of travel in an attempt to provide gratuitous assistance; in the second, she also loses a dollar. Then the next step is to look at the thing of value that the miscreant has gained (a person at their doorstep with the requisite specie, without having to pay gas, tolls, and the hourly UberChange rate) and see if it’s substantial enough to fall within the statute’s reach. (NB, not considering the actual law here, just the concept of fraud, so none of this is advice.)

    If a company provided bogus financials to an objective outside auditor as part of a plan to sell underwater orange groves in Florida, and this outside auditor then directly communicated their assessment to third party investors, and these investors were identified as a class ex ante, known as a class to rely on the auditor’s judgment, and the company could say with some assurance that every person who ended up buying a share in these proto-hydroponic orange groves would have consulted this outside auditor’s report, it’s hard to see how this conduct wouldn’t be considered a fraudulent use of the wires.

    The argument that the students received what they had contracted to receive is a complete canard. Every investor might actually hold title to a hide or two of Florida swampland at the end of the day, but that certainly doesn’t mean that they haven’t been hornswaggled. And given the present level of corruption in the professional schools, these outside auditors’ rankings are the only way of properly implementing the bi-modal salary distribution scheme that has made this country great. (In part.)

    Mr. D.

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