Kelly v. United States (18-1059)

argument 18-1059

Kelly v. United States

Supreme Court of the United States 1h 0m 5 speakers 8 chapters transcribed 7 days ago official recording ↗

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What is the government’s theory of property fraud in the Kelly v. United States case?

John G. Roberts 0:00

We'll hear argument first this morning in case eighteen ten fifty

Unknown 0:03

nine, Kelly versus United States.

0:05

Mr.

Unknown 0:05

Roth. Mr Chief Justice, and may it please the court. Once again, the government is trying to use the open ended federal fraud statutes to enforce honest government at the state and local levels. Its theory this time is that the defendants committed property fraud by reallocating two traffic lanes from one public road to another without disclosing their real political reason for doing so. This theory turns the integrity of every official action at every level of government into a potential federal fraud investigation. It ends runs McNally and Skilling by subsuming honest services fraud within property fraud and by criminalising ulterior motives even without bribes or kickbacks. it would effect a sweeping expansion of federal criminal jurisdiction into a particularly fraught area.

Unknown 0:57

This is not the law. This court in Cleveland held that regulatory authority is not property. So an official who induces a sovereign decision through deceit has not obtained property by fraud. Only when the official lies to divert state resources to private use has he stepped outside the regulatory realm and committed property fraud. This rule distinguishes property fraud from honest services fraud and from routine political conduct. Here, because the defendants simply reallocated the traffic lanes from one public use to another. The Port Authority at most was deprived of regulatory control, not property. And that's true regardless of whether, as the government now alleges, the defendants lacked the authority in some sense to order the realignment.

Unknown 1:48

Mr Levy will explain why the government is wrong to say that, but it's ultimately legally irrelevant, because the fraud statutes do not prohibit lying to take unauthorized state action. They prohibit lying to obtain property. And that simply is not what occurred. in this case. You said that if the resources were diverted to private use then the prosecution would be okay. But why isn't it of private use? to benefit defendants politically. Your Honor, I'm trying to distinguish the use of the property from the motive for the decision. So here, the decision was to realign the lanes from one set of public drivers to another set of public drivers. Both are public uses of the lanes. Now it's true the motive, the alleged motive for that regulatory decision.

Unknown 2:44

was improper, it was political, right? That's the allegation in the case. But uh that doesn't mean that that it's that the use of the lanes was private. It's not Um Your Honor, the typical case in which the government has prosecuted property fraud against a public official is where the official lies to take property from the government for his own use. So situation where you lie on your expense report, you say you incurred this expense for uh business reasons and you did not. In that situation, you're lying and you're taking the property. out away from the government for yourself. That is obtaining property. Hear what the defendants influenced through their deceit. was the decision about the alignment of the lanes.

Unknown 3:35

And if there is anything that is regulatory in nature, so Mr. Roth, on on that theory Would it or would it not make a difference if the defendants here rather than doing everything that they did for a political reason uh if they had done it s to make their commutes easier or their families' commutes easier. So it wasn't anything about politics, it was their own personal interests. But they did exactly the same things. Is that covered or is not is that not covered on your theory? That on on my theory that is certainly not property fraud. The officials, even in that case, have not obtained property by the distinction between uh private uses and public uses. You know, uh private purposes and p and public purposes maybe.

Unknown 4:21

I'm certainly not making a distinction between the type of purpose. What I am trying to distinguish is the use of the property. And is it a regulatory decision to realign the lanes for whatever purpose?