544 U.S. 349 (2005)
Between 1996 and 2000, Carl J. Pasquantino, David B. Pasquantino, and Arthur Hilts carried out a scheme to purchase liquor in Maryland and transport it into Canada.1 While in New York, the Pasquantinos ordered liquor over the telephone from discount package stores in Maryland.2
They employed Hilts and others to drive the liquor over the Canadian border without paying the required excise taxes.3 The drivers avoided paying taxes by hiding the liquor in their vehicles and failing to declare the goods to Canadian customs officials.4 During this period Canada heavily taxed the importation of alcoholic beverages.5 Uncontested evidence at trial showed that Canadian taxes then due on alcohol purchased in the United States and transported to Canada were approximately double the liquor's purchase price.6
The three men were indicted for federal wire fraud.7 Before trial they moved to dismiss the indictment on the ground that it stated no wire fraud offense.8 The District Court denied the motion, and the jury convicted them of wire fraud.9
Petitioners appealed to the United States Court of Appeals for the Fourth Circuit.10 A panel reversed the convictions, but the Court of Appeals granted rehearing en banc, vacated the panel decision, and affirmed the convictions.11
The Supreme Court granted certiorari to resolve a conflict in the Courts of Appeals over whether a scheme to defraud a foreign government of tax revenue violates the wire fraud statute.12
Whether a plot to defraud a foreign government of tax revenue violates the federal wire fraud statute, 18 U.S.C. § 1343?13
The wire fraud statute, 18 U.S.C. § 1343, prohibits the use of interstate wires to effect any scheme or artifice to defraud or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises.14 A foreign government's right to uncollected taxes constitutes property in its hands, and a scheme to evade those taxes through false representations to customs officials qualifies as a scheme to defraud within the meaning of the statute.15
Yes. The petitioners' smuggling operation satisfies both elements of the wire fraud offense.16 The scheme began when Carl J. Pasquantino, David B. Pasquantino, and Arthur Hilts decided to exploit the difference in liquor prices and taxes between the United States and Canada.17 While in New York, the Pasquantinos ordered liquor over the telephone from discount package stores in Maryland. They then employed Hilts and others to drive the liquor over the Canadian border without paying the required excise taxes.18 The drivers avoided paying taxes by hiding the liquor in their vehicles and failing to declare the goods to Canadian customs officials.
During the time of petitioners' smuggling operation, between 1996 and 2000, Canada heavily taxed the importation of alcoholic beverages.19 Uncontested evidence at trial showed that Canadian taxes then due on alcohol purchased in the United States and transported to Canada were approximately double the liquor's purchase price. The three men were indicted for federal wire fraud based on their use of interstate wires in furtherance of the scheme.20 Before trial, they moved to dismiss the indictment on the ground that it stated no wire fraud offense because the government lacked a sufficient interest in enforcing the revenue laws of Canada.21
The District Court denied the motion, and the jury convicted them of wire fraud. Petitioners appealed their convictions to the United States Court of Appeals for the Fourth Circuit.22 A panel reversed the convictions on revenue rule grounds, but the Court of Appeals granted rehearing en banc, vacated the panel's decision, and affirmed the convictions.23 The Supreme Court granted certiorari to resolve a conflict in the Courts of Appeals over whether a scheme to defraud a foreign government of tax revenue violates the wire fraud statute.
The petitioners' conduct falls within the literal terms of the wire fraud statute because they engaged in a scheme to defraud Canada of its property interest in tax revenue by using interstate wires.24 The object of the fraud was money or property in the victim's hands, as Canada's right to uncollected excise taxes is an entitlement to collect money that is something of value to the government.25 The scheme involved routine concealment of imported liquor from Canadian officials and failure to declare those goods on customs forms, which constituted representations designed to defraud Canada of taxes due.26
A plot to defraud a foreign government of tax revenue violates the federal wire fraud statute.27
Related opinions on this issue
Joined by Justice Breyer, And Justice Scalia And Justice Souter As To Parts Ii And Iii
Justice Ginsburg dissented on the ground that the wire fraud statute should not extend to schemes to evade foreign taxes.28 She emphasized the presumption against extraterritoriality, noting that Congress, in most of its legislative endeavors, is primarily concerned with domestic conditions. The dissent highlighted that when Congress addressed international smuggling in 18 U.S.C. § 546, it required reciprocal legislation from the foreign nation, which Canada lacks.29
It also pointed to the tax treaty between the United States and Canada that limits collection assistance and excludes claims against U.S. citizens.30 Justice Ginsburg concluded that the prosecution directly implicates the revenue rule by seeking to penalize violations of Canadian tax laws without congressional authorization.31 She invoked the rule of lenity to resolve any ambiguity against expansive application of the statute.32
Whether the common-law revenue rule bars a prosecution under the wire fraud statute for a scheme to evade foreign taxes?33
The common-law revenue rule, which at its core prohibits collection of foreign tax obligations in domestic courts, does not bar a domestic criminal prosecution under the wire fraud statute for a scheme to evade foreign taxes.34 The rule was not so well established by 1952 as to require the conclusion that Congress intended to exempt such conduct from the broad reach of the wire fraud statute.35 The prosecution enforces a domestic criminal law rather than collecting foreign taxes.36
No. The present prosecution is unlike the classic examples of actions traditionally barred by the revenue rule.3738 It is a criminal prosecution brought by the United States in its sovereign capacity to punish domestic criminal conduct rather than a suit to recover a foreign tax liability.39 The wire fraud statute advances the Federal Government's independent interest in punishing fraudulent domestic criminal conduct, a significant feature absent from revenue rule cases.40 The link between this prosecution and foreign tax collection is incidental and attenuated at best.41
The traditional rationales for the revenue rule, including avoiding judicial evaluation of foreign policy-laden enactments, do not apply because the Executive brought the prosecution after assessing its impact on international relations.42 Federal Rule of Criminal Procedure 26.1 provides adequate procedures for resolving any incidental foreign law issues.43
The common-law revenue rule does not bar a prosecution under the wire fraud statute for a scheme to evade foreign taxes.44
Related opinions on this issue
Joined by Justice Breyer, And Justice Scalia And Justice Souter As To Parts Ii And Iii
Justice Ginsburg dissented on the ground that the prosecution directly implicates the revenue rule.45 She observed that the defendants' convictions resulted from and could not have been obtained without proof of their intent to violate Canadian revenue laws, and that sentencing enhancements were based on the amount of Canadian taxes evaded.4647 The dissent argued that the Mandatory Victims Restitution Act's requirement of restitution to the foreign victim further demonstrates that the case is primarily about enforcing Canadian law.48
Justice Ginsburg concluded that Congress did not endeavor by enacting the wire fraud statute to displace the revenue rule, and that the government's expansive reading warrants disapproval.49