McNally v. United States

PETITIONER: McNally
RESPONDENT: United States
LOCATION: Deseret Gymnasium

DOCKET NO.: 86-234
DECIDED BY: Rehnquist Court (1986-1987)
LOWER COURT: United States Court of Appeals for the Sixth Circuit

CITATION: 483 US 350 (1987)
ARGUED: Apr 22, 1987
DECIDED: Jun 24, 1987

ADVOCATES:
Carter G. Phillips - on behalf of Petitioner
Donald B. Ayer - on behalf of Respondent

Facts of the case

Question

Media for McNally v. United States

Audio Transcription for Oral Argument - April 22, 1987 in McNally v. United States

William H. Rehnquist:

Mr. Phillips, you may proceed whenever you're ready.

Carter G. Phillips:

Mr. Chief Justice, and may it please the Court:

--This case involves the proper interpretation of 18 U.S.C. Section 1341, the Federal Mail Fraud Statute.

The primary issue presented is whether it is fraud within the meaning of that statute for a political party leader to fail to disclose to state officials a potential conflict of interest in his handling of the state's patronage system.

The Court of Appeals held that a conviction under this so-called intangible rights theory is proper and we urge this court to reverse.

The basic facts were as follows: The petitioners and the third individual, Howard Hunt, were politically active in the Democratic Party, in the state of Kentucky, during the 1970s.

In part because of their hard work on behalf of Governor Carroll, who was elected in 1974, petitioner Gray was appointed to a cabinet position in 1976 and Mr. Hunt was named head of the Democratic Party.

Hunt as the head of the Democratic Party was invested with substantial patronage powers by the governor, which is not an uncommon practice, I think, in any state.

What may be somewhat less common is the decades long tradition in Kentucky that certain state insurance commissions are treated as part of the patronage system.

Thus, the agent for the state in procuring insurance was asked to share commissions with other individuals holding insurance licenses.

Antonin Scalia:

Why is that worse than ordinary party patronage?

I don't understand.

Carter G. Phillips:

I don't know that it is worse than ordinary party patronage.

I think it's just somewhat less common than any other party patronage.

Antonin Scalia:

All of it is fraud as far as you're concerned?

Carter G. Phillips:

As far as the government's concerned.

Antonin Scalia:

Right.

Carter G. Phillips:

Yes, I think that's correct.

Harry A. Blackmun:

Does it include box seats to the Derby?

[Laughter]

Carter G. Phillips:

I suspect the government would say so.

Yes, Your Honor.

Those receiving shared commissions were not required to perform any services or to be engaged in the insurance business at the time that they received those commissions.

All that was required was that a licensed agent be available.

And it was not uncommon frankly for relatives of public officials to receive some of those commissions.

For instance, the State Insurance Commission--

Sandra Day O'Connor:

Was there no violation of state law for these people to get commissions for having done no work?

Carter G. Phillips:

--No, absolutely not a violation of state law to receive commissions for doing no work.

There is no obligation that you do any work.

Sandra Day O'Connor:

How about if you're not a licensed agent?