LOCATION:Texas State Capitol
DOCKET NO.: 03-725
DECIDED BY: Rehnquist Court (1986-2005)
LOWER COURT: United States Court of Appeals for the Fourth Circuit
CITATION: 544 US 349 (2005)
GRANTED: Apr 05, 2004
ARGUED: Nov 09, 2004
DECIDED: Apr 26, 2005
Deputy Solicitor General Dreeben – argued the cause for the United States
Joshua L. Dratel – for the National Association of Criminal Defense Lawyers et al. as amici curiae urging reversal
Jeremy Maltby – for the National Association of Criminal Defense Lawyers et al. as amici curiae urging reversal
Laura W. Brill – argued the cause for Petitioners
Michael R. Dreeben – argued the cause for Respondent
Quentin Riegel – for the National Association of Criminal Defense Lawyers et al. as amici curiae urging reversal
Facts of the case
Carl J. Pasquantino, David B. Pasquantino and Arthur Hilts smuggled large quantities of liquor from the United States into Canada to evade that country’s heavy alcohol import taxes. A federal district court convicted them for violating the federal wire fraud statute, which prohibited the use of interstate wires for “any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses.” The Fourth Circuit affirmed their convictions, rejecting the petitioners’ argument that they could not be prosecuted because of the common-law revenue, which rule barred courts from enforcing foreign tax laws.
Did a plot to defraud a foreign government of tax revenue violate the federal wire fraud statute?
Media for Pasquantino v. United States
Audio Transcription for Opinion Announcement – April 26, 2005 in Pasquantino v. United States
William H. Rehnquist:
The opinion of the Court in Pasquantino versus United States will be announced by Justice Thomas.
This case comes to us on writ of certiorari to the United States Court of Appeals for the Fourth Circuit.
The issue in this case is whether a plot to defraud a foreign government of tax revenue violates the federal wire fraud statute.
The case arises out of a scheme the petitioners concocted to smuggle liquor from the United States into Canada.
Petitioners Carl and David Pasquantino used U.S. interstate wires to arrange for the shipment of discount liquor from stores in Maryland and to Canada.
Under the scheme the Pasquantino’s employees including petitioner’s Hilts drove the goods across the Canadian border without paying Canadian excise taxes due on the liquor.
The Federal Government brought a wire fraud prosecution against the petitioners for their participation in this plot.
Petitioners moved to dismiss the case against them on the ground that their conduct did not violate the wire fraud statute.
The District Court and the Fourth Circuit Court of Appeals however, both concluded that petitioner’s conduct violated the wire fraud statute.
We agree, and in an opinion filed with the Clerk today we affirm the Court of Appeals’ judgment.
We conclude that petitioners committed wire fraud.
The wire fraud statute criminalizes using 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.”
This accurately describes petitioners’ conduct because petitioners used U.S. wires to execute a plan to deprive the Canadian Government of taxes legally due on to smuggled liquor.
Petitioners advanced two arguments for why they did not commit wire fraud both of which we reject.
First, they contend that Canada’s entitlement to tax revenue is not property within the meaning of the wire fraud statute.
Canada’s right to tax revenue is a valuable entitlement to money such valuable entitlements are property as that term is ordinarily employed and have traditionally been considered property.
Second, petitioners argue that we should read an implicit exception into the wire fraud statute for schemes that aim at depriving foreign governments of tax revenues.
They based this argument on the common-law revenue rule which traditionally precluded courts from enforcing the tax laws of foreign sovereigns.
We also reject this contention.
Petitioners are correct that this prosecution enforces Canadian Revenue Law in an attenuated and indirect sense.
However, we may read implicit exceptions into the statute based only on firmly established common law principles, and no firmly established revenue rule principle bars this prosecution.
Our review of revenue rule jurisprudence set forth a more detail in our opinion, shows that the revenue rule did not plainly preclude a domestic sovereign from enforcing a domestic criminal statute to punish domestic conduct, even if the prosecution has the incidental effect of enforcing a foreign sovereign’s revenue laws.
Justice Ginsburg has filed a dissenting opinion in which Justice Breyer joins in full and in which Justice Scalia and Justice Souter joins as to Parts 2 and 3.