WASHINGTON (CN) — Reversing the convictions of a well-connected New York developer, the Supreme Court ruled Thursday that Congress never intended to criminalize the type of wire fraud of which he was convicted.
“The wire fraud statute reaches only traditional property interests,” Justice Clarence Thomas wrote for the unanimous court. "The right to valuable economic information needed to make discretionary economic decisions is not a traditional property interest. Accordingly, the right to-control theory cannot form the basis for a conviction under the federal fraud statutes."
Prosecutors went after Louis Ciminelli in 2016 as part of net around the most trusted aides and allies to New York's then-Governor Andrew Cuomo.
Ciminelli and his immediate family had 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. Previously his company 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.
At high court oral arguments in November, Ciminelli's attorney insisted that the legal theory undergirding the criminal case against his client eviscerated the core requirement of wire fraud: that the object of the scheme is to deprive the victim of money or property.
The lawyer applauded the ruling Thursday.
“We are gratified by the Supreme Court’s unanimous holding today that the government’s theory of prosecution of Louis Ciminelli was invalid, root and branch,” Michael Dreeben of O’Melveny & Myers said in a statement.
Prosecutors said the right-to-control theory supports a property fraud conviction where the perpetrator has not informed their victim completely before they make an economic decision, an argument that seemed to appall Justice Thomas.
“With profuse citations to the records below, the Government asks us to cherry-pick facts presented to a jury charged on the right-to-control theory and apply them to the elements of a different wire fraud theory in the first instance. In other words, the Government asks us to assume not only the function of a court of first view, but also of a jury,” Thomas wrote Thursday. “That is not our role.”
Arguing for the federal government meanwhile, Deputy U.S. Solicitor General Eric Feigin had said that such a situation has always been property fraud, and that Ciminelli's conviction should be affirmed.
Justice Samuel Alito concurred that Ciminelli’s conviction should be reversed but he said the majority should also have addressed whether the government can attempt "to retry petitioner on the theory that he conspired to obtain, and did in fact obtain, by fraud, a traditional form of property.”
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. The high court likewise overturned his bribery conviction Thursday.
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 had 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.
Representatives for the U.S. Department of Justice did not immediately respond to a request for comment on the ruling.
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