Today in Supreme Court History: February 26, 1869

2/26/1869: The 15th Amendment is submitted to the states.

Comments

[Dan Schiavetta]

Intel Corp. Investment Policy Committee v. Sulyma, 589 U.S. — (decided February 26, 2020): 3-year statute of limitations for ERISA suit begins when plaintiff actually knew employer had improperly invested funds, not when it could be deduced from those annual reports nobody reads

United States v. Apel, 571 U.S. 359 (decided February 26, 2014): commandant’s order barring protester from Vandenberg Air Force Base applied to whole property, including publicly accessible area reserved for protesters; conviction under 18 U.S.C. §1382 upheld

United States v. Wells, 519 U.S. 482 (decided February 26, 1997): conviction under 18 U.S.C. §1014 (making false statement to federally insured bank) does not require that false statement be material (here, lessor of office equipment which assigned proceeds to bank hid the fact that lessor and not lessees was responsible for repairs)

United States v. Maine et al., 516 U.S. 365 (decided February 26, 1996): original jurisdiction case where Court rejects Massachusetts’s argument that it extends over all of Vineyard Sound and almost all of Nantucket Sound; decree describes straight lines of demarcation (case originally involved 13 Atlantic states and ended up with practically every state limited to three miles offshore)

Ake v. Oklahoma, 470 U.S. 68 (decided February 26, 1985): established rule that defendant is entitled to state-appointed psychiatrist to evaluate insanity defense (hence the phrase “Ake hearing”)

[SRG2]

In Ake, Rehnquist dissented, presumably because he regarded the defendant as a mad dog who should be put down.

[Dilan Esper]

Wells is a reminder that a widely disseminated current talking point (that there's no liability for bank fraud unless someone loses money) is not true.

[David Nieporent]

That was my thought too when I read the post this morning.

[SRG2]

Though IMO people who argue "no loss, so no fraud" only do so in defence of Trump. In no other situation would they argue thus.

[F.D. Wolf]

Alternatively, people who say "no loss, no fraud" actually understand how torts work, and that they do require an injury. Elements of common law fraud:

(1) a representation of fact; (2) its falsity; (3) its materiality; (4) the representer’s knowledge of its falsity or ignorance of its truth; (5) the representer’s intent that it should be acted upon by the person in the manner reasonably contemplated; (6) the injured party’s ignorance of its falsity; (7) the injured party’s reliance on its truth; (8) the injured party’s right to rely thereon; and (9) the injured party’s consequent and proximate injury.

[Sarcastr0]

Why did you bring up common law fraud?

[SRG2]

Do you understand the difference between crime and tort?

[F.D. Wolf]

Do you understand that Trump wasn't charged with a crime in this case?

[SRG2]

And nor was he sued for a tort. It was an equity case.

[F.D. Wolf]

Little in your statement is accurate. For one, these are two different statutes, one federal and one state, that are limited by their respective texts. Also, even captcrisis' brief summary makes it clear that banks would directly lose money. This case had nothing to do with any loans. The defendants sold their interest in a business that leased copying equipment to banks, telling the banks that customers were responsible for repairs, showing them contracts to that effect. However, they had made secret side agreements, of which the banks were not aware, that the company would be responsible for the repairs. Obviously, whether the lessor or lessee is responsible for repairs will present a considerable difference in the cash flow of a leasing operation. And, needless to say, unlike the value of asset, the question of who pays for repairs is not subjective.

[Dan Schiavetta]

The omission was concededly not "material" so I think you're wrong about it causing the bank to lose money.

[F.D. Wolf]

I don't think the Court said it wasn't "material", but rather that the statute didn't require materiality at all. The government had put "materially" in the indictment, but, on remand, the appeals court, in accordance with the Supreme Court, ruled this was just surplusage.

As I read the case, at trial, the government had argued that "materiality" was for the judge to decide, and the defense argued that it was a question for the jury. The trial judge sided with the government and instructed the jury that it need not concern itself with the question of materiality. Ultimately, the Supreme Court ruled none of that mattered because the statute did not require materiality. Though, as an aside, I repeat what I said before, that whether the lessor or lessee is responsible for repairs clearly effects how much income one would realize from the arrangement and is, thus, obviously material in my opinion. Justice Stevens, in his dissent, discusses the history of materiality being necessary to fraud.

[David Nieporent]

Though, as an aside, I repeat what I said before, that whether the lessor or lessee is responsible for repairs clearly effects how much income one would realize from the arrangement and is, thus, obviously material in my opinion.

No, it affects how much profit one would realize, not how much income.

But, yes, it was material. Just like whether a person has $4 billion or only $2 billion clearly affects the risk of non-repayment, and is, thus, obviously material. (Note that Stevens points out the difference between materiality and reliance.)

[F.D. Wolf]

You’re especially pedantic today. Isn't profit a subset of income? I realize you have an unhealthy, pathological obsession with Trump, but not everything is about him.

[David Nieporent]

Obviously, whether the lessor or lessee is responsible for repairs will present a considerable difference in the cash flow of a leasing operation.

No. They didn't sell the leasing operation; they sold the revenue stream from the contracts, which was separate. The Court described the government's theory as the lie being made "in order to avoid tying up needed cash in reserve accounts, which the banks might have required Copytech to maintain if they had known of the company's servicing obligations." In Wells no harm was demonstrated to the banks. It didn't matter.

Kind of like how Trump got a lower rate by giving his personal guarantee, with several covenants related to net worth and cash on hand in order to mitigate risk. His lies made it look like he satisfied those covenants when he didn't.

To be sure, in Wells it was criminal and in Trump it was civil. But it's not clear why that should matter for the purpose of requiring harm. It seems weird to suggest that the government can put someone who caused no tangible harm in jail, but can't fine that person.

[F.D. Wolf]

The relevant charge discussed in Wells was making false statements to a federally insured bank. No harm was demonstrated because there was no need to, as harm is not relevant to a charge of "making false statements". Nevertheless, the harm should be patently obvious. How do you imagine the case even came to the attention of federal prosecutors? It wasn't some Stalinist prosecutor targeting the defendants, looking for anything to hang on them. Rather, a bank complained. The case has no bearing on the case against Trump.

[defaultdotxbe]

Kind of like how Trump got a lower rate

Did Trump get a lower rate? I was under the impression that the bank testified that his valuations didn't impact the terms of the loans.

[Noscitur a sociis]

I take and agree with your underlying point, but this isn’t the best way to convey it: federal bank fraud does have a materiality requirement. Neder v. United States, 527 U.S. 1 (1999).

[Krayt]

Damn. That's some In Cold Blood horror. Well, it worked as his retrial got life in jail and not execution (unlike his wheelman).