WASHINGTON (CN) — The Supreme Court seemed sympathetic Monday to the argument from a well-connected New York developer that Congress never intended to criminalize the type of wire fraud of which he was convicted.
Prosecutors went after Louis Ciminelli, former chairman and CEO of a development firm that bears his name, in 2016 as part of net around the most trusted aides and allies to New York's then-Governor Andrew Cuomo.
Years after his corporate entity LPCiminelli won a lucrative contract to become a preferred developer under Cuomo's signature Buffalo Billion, an initiative to invigorate an erstwhile bustling economic hub that borders Lake Erie, Ciminelli and his immediate family gad contributed at least $100,000 to Cuomo's election campaigns and also hosted a fundraising dinner that added roughly $250,000 to the governor's reelection war chest.
At high court oral arguments on Monday, Ciminelli's attorney Michael Dreeben of O’Melveny & Myers insisted that the right-to-control theory undergirding the criminal case against his client eviscerates the core requirement of wire fraud: that the object of the scheme is to deprive the victim of money or property.
Prosecutors say the theory supports a property fraud conviction where the perpetrator has not informed their victim completely before they make an economic decision, but Dreeben said Congress never criminalized purely informational deprivation.
“This case is about the right to control and whether the right to control is a cognizable property,” Dreeben said.
Justice Samuel Alito posed to the developer’s attorney a hypothetical scenario in which someone contracts with an agency to hire a nanny, and the agency never performs the background check on the employee that it said would occur.
“But it turns out the caregiver does a decent job. Is there fraud there?” Alito asked.
“If all there is is deceit, and the contact was actually a fair exchange, and the employee was fully competent, capable and qualified, then it wouldn't be common-law fraud,” Dreeben answered.
Arguing for the federal government meanwhile, Deputy U.S. Solicitor General Eric Feigin argued that such a situation has always been property fraud, and that Ciminelli's conviction should be affirmed.
“Receiving specific property different from what the victim expected, like a horse with a different name, even if it has equal value, can be fraud,” Feigin said.
“I think, if the court wants to do anything other than affirm, it should remand and let the Second Circuit sort out where we might be now,” Feigin said, suggesting that Ciminelli could then be convicted under a different fraud theory.
Justice Ketanji Brown Jackson pressed back on this.
“That's not how it works,” she said. “The fact that it might map on to another theory of fraud isn't sufficient.”
“The jury was instructed on this right-to-control theory, and they convicted on that theory,” Jackson continued.
Justice Neil Gorsuch was likewise skeptical of the government's sought-after approach.
“Why should the government have yet another chance to start all over again?” Gorsuch asked.
Dreeben predictably pooh-poohed the workaround that would leave Ciminelli open to another prosecution.
“What Mr. Feigin just said is that we raised a sufficiency case, but it should be turned into a jury-instruction-error case,” he balked. “I don't see how the government can maintain simultaneously that the right-to-control theory is invalid and that somehow this case gets to be retried under its new legal theory.”
Several associates of Ciminelli involved in the Buffalo Billion project were rounded up in the same prosecution, with Cuomo’s former right-hand man, Joseph Percoco, being the biggest of those bold-faced names. Percoco, who was convicted of bribery, also appealed his conviction before the high court and found a receptive audience of his own on Monday.
During his more than 20-year career in Albany, Percoco served the gubernatorial administrations of father-and-son Governors Mario and Andrew Cuomo. He was convicted of raking in more than $300,000 in bribes from companies that had business with the state, but Percoco says the government is impermissibly criminalizing the act of lobbying, and that there is no corruption when the defendant is not a public official but a private citizen with influence.
The Second Circuit upheld the convictions of all those involved in the scheme. Percoco received a six-year sentence but was released to a halfway house last year. Ciminelli served only a few months of what was supposed to be a more-than-two-year sentence. A federal judge ordered him released this past summer.
Ciminelli and Percoco's co-defendant, former State University of New York Polytechnic Institute president Alain Kaloyeros, also has an appeal pending before the high court.
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