Santa Clara Law Review Santa Clara Law Review
Volume 60 Number 1 Article 2
5-2-2020
PUBLISHING FAKE NEWS FOR PROFIT SHOULD BE PROSECUTED PUBLISHING FAKE NEWS FOR PROFIT SHOULD BE PROSECUTED
AS WIRE FRAUD AS WIRE FRAUD
Size, Robert
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PUBLISHING FAKE NEWS FOR PROFIT SHOULD BE PROSECUTED AS WIRE FRAUD
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29
PUBLISHING FAKE NEWS FOR PROFIT SHOULD BE
PROSECUTED AS WIRE FRAUD
Robert Size*
This Article argues that publishing fake news online for profit
should be prosecuted as wire fraud under 18 U.S.C. § 1343. Fake news
publishers compete in the two-sided market for online news. They de-
ceive their readers to profit from advertisers. Neither the readers nor the
advertisers are defrauded. The readers are not defrauded because they
do not pay to read the stories. The advertisers are not defrauded because
they are not subjected to the deception. But the fake news publisher still
profits by means of the deception. To use the language of the law: the
publisher obtains money by false pretenses. Publishing fake news is the
pre-eminent example of a growing class of frauds that do not defraud.
These are frauds where the dishonest acquisition of money or property
is not accompanied by the dishonest deprivation of any particular per-
son. The conjunctive interpretation of the mail fraud statute adopted by
the Supreme Court in Cleveland v. United States precludes the prosecu-
tion of these kinds of frauds. This Article argues that Cleveland must be
overruled to extend the reach of the wire fraud statute to frauds that do
not defraud. It uses fake news as a vehicle to present a detailed account
of why frauds that do not defraud are worthy of criminal prohibition. It
explains why publishing fake news should constitute fraud and sets out
how the prosecution of fake news as fraud would work. Its aim is to re-
frame the understanding of both fraud and fake news, and to expose pub-
lishing fake news as the scam, the swindle, the scheme, the cheat and the
racket that it really is.
* PhD Candidate and Casual Academic, University of Technology, Sydney. This Ar-
ticle is the product of a broader project examining the extent to which publishing fake news
for profit may constitute fraud in several jurisdictions. I am grateful to Penny Crofts, Derek
Wilding and Hallie Warnock for their valuable feedback on the earlier drafts. I am also grate-
ful to the talented and hardworking editors of the Santa Clara Law Review. The review pro-
cess made this Article much better than it otherwise would have been. And I am overcome
with gratitude to Kasia Czarnota, not only for reading the earlier drafts, but also for her ever-
incisive critique of my ideas and expression. This research was supported by an Australian
Government Research Training Program Scholarship and by the University of Technology
Sydney’s Media Transition Doctoral Scholarship.
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30 SANTA CLARA LAW REVIEW [Vol:60
TABLE OF CONTENTS
I. Introduction ................................................................................... 30
II. Fake News as Fraud ...................................................................... 36
A. Hard Copy Fake News ....................................................... 36
B. The Two-Sided Market for Online Fake News .................... 40
C. Wire Fraud as a Solution to the Problem ............................. 45
III. The Conjunctive Interpretation of the Wire Fraud Statute ............ 48
A. The Intangible Rights Doctrine and the Word “Or” ............ 48
B. McNally v. United States .................................................... 50
C. Cleveland v. United States .................................................. 52
IV. Illegitimacy of the Conjunctive Interpretation .............................. 54
A. The Purpose of the 1909 Amendment ................................. 54
B. Use of Legislative Intent..................................................... 57
C. Inconsistency with the Bank Fraud Statute .......................... 58
V. Reasons to Favor the Disjunctive Interpretation ............................ 62
A. Frauds that do not Defraud ................................................. 62
B. One Purpose of Wire Fraud is to Prohibit the Making of
Dishonest Gains ............................................................... 64
C. It is Legitimate to Prohibit Deceptive Economic Exploitation
........................................................................................ 70
D. The Disjunctive Interpretation is Necessary and Conventional
........................................................................................ 76
E. Counterarguments .............................................................. 80
VI. The Scope of “Fake News Wire Fraud” ....................................... 85
A. The Elements of “Fake News Wire Fraud” ......................... 85
B. Satirical Fake News ............................................................ 88
C. Obviously Fake Fake News ................................................ 94
VII. Conclusion ................................................................................. 99
I. INTRODUCTION
The free world is in the midst of a dishonesty crisis. Tyrannies,
oligarchies and kleptocracies have no need for honesty. But democra-
cies do. Democracies are built on the informed participation of their
citizens. Modern democracies guarantee freedom of speech and freedom
of the press to allow for transparency and the robust exchange of ideas.
But there are some who abuse these freedoms. Some take these great
gifts guaranteed by the social contract and use them to spread lies to
further their own ends. Where these ends are political, not much can be
done. The law trusts the truth to prevail. It trusts the people to favor
honesty over mendacity. But where the ends are financial, it is a differ-
ent story. The law extends no quarter to those who make money by tell-
ing lies. There is no freedom of false pretenses. There is no freedom to
cheat or swindle. To make money by telling lies is fraud—a crime and
a vitiator of statutes and contracts alike.
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Perhaps the most significant manifestation of the modern dishon-
esty crisis is the proliferation and viral spread of fake news on the inter-
net. The phrase “fake news” has been misappropriated almost out of
meaning. Its modern use originally referred to false stories published on
websites that look like legitimate news websites.
1
That is the sense in
which it is used in this Article. The viral spread of false news stories on
the internet is a recognized problem.
2
But the notion that the law may
be the solution has been given short shrift. It has been eclipsed by an
assumption that false speech must be tolerated to protect the right to ex-
press ideas and opinions.
3
That assumption has blotted out the whole
sky.
4
It has obscured the true nature of the problem.
The problem is not just that people are publishing false information
online. It is that people are making money by publishing false statements
of fact online. Fake news stories typically contain false statements of
1
. See, e.g., Jeremy W. Peters, Wielding Claims of ‘Fake News,’ Conservatives Take
Aim at Mainstream Media, N.Y. TIMES, Dec. 26, 2016, at A11 (“purposely fabricated stories
for clicks and revenue”); Sabrina Tavernise, As Fake News Spreads Lies, More Readers Shrug
at the Truth, N.Y. TIMES, Dec. 7, 2016, at A1 (“a made-up story with an intention to deceive,
often geared toward getting clicks”); Jen Weedon, William Nuland & Alex Stamos, Infor-
mation Operations and Facebook, FACEBOOK NEWSROOM 5 (Apr. 27, 2017), https://fbnews-
roomus.files.wordpress.com/2017/04/facebook-and-information-operations-v1.pdf (“[n]ews
articles that purport to be factual, but which contain intentional misstatements of fact with the
intention to arouse passions, attract viewership, or deceive”); Hunt Allcott and Matthew
Gentzkow, Social Media and Fake News in the 2016 Election, 31 J. ECON. PERSP. 211, 213
(2017) (“news articles that are intentionally and verifiably false, and could mislead readers”);
David M. Lazer et al., The Science of Fake News, 359 SCIENCE 1094, 1094 (2018) (“fabricated
information that mimics news media content in form but not in organizational process or in-
tent”).
2
. See generally United Nations Special Rapporteur on Freedom of Op. & Expression
et al., Joint Declaration on Freedom of Expression and “Fake News”, Disinformation and
Propaganda, ORG. FOR SECURITY AND CO-OPERATION IN EUR. (Mar. 3, 2017),
https://www.osce.org/fom/302796?download=true.
3
. The assumption is in part grounded upon the notion that truth will prevail in the mar-
ketplace of ideas. See Abrams v. United States, 250 U.S. 616, 630 (1919) (Holmes, J., dis-
senting) (“the ultimate good desired is better reached by free trade in ideas—that the best test
of truth is the power of the thought to get itself accepted in the competition of the market”).
The application of that notion to false information spread online has been persuasively at-
tacked. See Ari Ezra Waldman, The Marketplace of Fake News, 20 J. CON. L. 845, 848 (2018)
(arguing that fake news does not trade in the marketplace of ideas).
4
. See, e.g., Flemming Rose & Jacob Mchangama, Shutting Down Fake News Could
Move Us Closer to a Modern-Day ‘1984’, WASH. POST, Feb. 10, 2017; Joel Timmer, Fighting
Falsity: Fake News, Facebook, and the First Amendment, 35 CARDOZO ARTS & ENT. L. J.
669, 679-80 (2017); Annie C. Hundley, Fake News and the First Amendment: How False
Political Speech Kills the Marketplace of Ideas, 92 TULANE L. REV. 497, 504 (2017); Ashley
Messenger, The Epistemic and Moral Dimensions of Fake News and the First Amendment, 16
FIRST. AMEND. L. REV. 328, 329-30 (2018); Jessica Stone-Erdman, Just the (Alternative)
Facts, Ma’am: The Status of Fake News Under the First Amendment, 16 FIRST. AMEND. L.
REV. 410, 415 (2018). Contra Clay Calvert et al., Fake News and the First Amendment: Rec-
onciling a Disconnect Between Theory and Doctrine, 86 U. CIN. L. REV. 99 (2018) (arguing
that restricting fake news is compatible with free speech).
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32 SANTA CLARA LAW REVIEW [Vol:60
fact, not ideas or opinions worthy of protection as free speech.
5
Most of
them are published on websites supported by advertising revenue.
6
Sev-
eral prominent fake news publishers have admitted to publishing fake
news primarily to earn money.
7
Others have disclaimed the profit mo-
tive yet disclosed earnings of tens of thousands of dollars.
8
There is even
evidence of publishers employing writers to create content.
9
To obtain money by means of a false statement of fact ordinarily
constitutes fraud. Yet almost no one has suggested that publishing fake
news for profit may constitute fraud. Most legal analyses do not even
mention fraud as a possibility.
10
This omission is baffling given that
“fake news” is often referred to as “fraudulent news.”
11
The whole
5
. Waldman, supra note 3, at 848.
6
. An examination of the BuzzFeed compilation of the fifty most-shared fake news sto-
ries of 2016 reveals that most of the stories were published on websites supported by adver-
tising revenue. See Craig Silverman, Here Are 50 of the Biggest Fake News Hits on Facebook
from 2016, BUZZFEED NEWS (Dec. 30, 2016), https://www.buzzfeednews.com/article/craig-
silverman/top-fake-news-of-2016. See also Brittany Vojak, Fake News: The Commoditization
of Internet Speech, 48 CAL. WEST. INT. L. J. 123, 140-43 (2017).
7
. See, e.g., Andrew Higgins, Mike McIntire & Gabriel Dance, Inside a Fake News
Sausage Factory: ‘This Is All About Income’, N.Y. TIMES, Nov. 26, 2016, at A1 (quoting fake
news publisher as saying “For me, this is all about income, nothing more”); Scott Shane, From
Headline to Photograph, a Fake News Masterpiece, N.Y. TIMES, Jan. 19, 2017, at A1 (report-
ing fake news publisher insisting that the money, not the politics, is the point); Craig Silver-
man, Jane Lytvynenko & Scott Pham, These Are 50 Of The Biggest Fake News Hits On Fa-
cebook In 2017, BUZZFEED NEWS (Dec. 28, 2017),
https://www.buzzfeednews.com/article/craigsilverman/these-are-50-of-the-biggest-fake-
news-hits-on-facebook-in (reporting fake news publisher describing taking advantage of
online hoaxes as “a way to make money”). See also Vojak, supra note 6, at 140-43.
8
. See, e.g., Caitlin Dewey, This Is Not an Interview with Banksy, WASH. POST, Oct.
23, 2014 (reporting fake news publisher disclosing earnings of up to $10,000 per day from a
false story describing the arrest of the anonymous artist known as Banksy); Laura Sydell, We
Tracked Down A Fake-News Creator In The Suburbs. Here’s What We Learned, NPR: ALL
THINGS CONSIDERED (Nov. 23, 2016) (downloaded using NPR) (reporting fake news pub-
lisher making between $10,000 and $30,000 per month yet insisting that it is not about
money); Eli Saslow, ‘Nothing on This Page Is Real’: How Lies Become Truth in Online Amer-
ica, WASH. POST, Nov. 18, 2018 (describing fake news publisher earning as much as $15,000
in a “good month”).
9
. See, e.g., Terrence McCoy, Inside a Long Beach Web Operation That Makes up Sto-
ries about Trump and Clinton: What They Do for Clicks and Cash, L.A. TIMES, Nov. 22,
2016; Silverman, supra note 6; Simon Oxenham, ‘I was a Macedonian Fake News Writer’,
BBC FUTURE (May 28, 2019), https://www.bbc.com/future/article/20190528-i-was-a-mace-
donian-fake-news-writer.
10
. Cf. David O. Klein & Joshua R. Wueller, Fake News: A Legal Perspective, 20 J.
INTERNET L. 5, 9 (2017) (identifying fraud and unfair and deceptive trade practices as poten-
tial tools to fight fake news); John Allen Riggins, Law Student Unleashes Bombshell Allega-
tion You Won’t Believe: “Fake News” as Commercial Speech, 52 WAKE FOREST L. REV.
1313, 1327-29 (2017) (dismissing fraud as viable solution); Ari Melber, Capitol Report: Reg-
ulating Fraud News, N.J.L.J. (Jan. 30, 2017) (suggesting FTC could treat non-political fake
news stories as fraudulent).
11
. See, e.g., PEN AMERICA, FAKING NEWS: FRAUDULENT NEWS AND THE FIGHT FOR
TRUTH (2017) (defining fraudulent news “as demonstrably false information that is being
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2020] PROSECUTING FAKE NEWS FOR PROFIT AS WIRE FRAUD 33
enterprise—the lying, the manipulation, and the profit motive—is remi-
niscent of a traditional scheme to defraud.
This Article argues that those who publish fake news online for
profit should be prosecuted for wire fraud. Wire fraud is the go-to of-
fense for the prosecution of online fraud in the United States. It is con-
tained in 18 U.S.C. § 1343:
Whoever, having devised or intending to devise any scheme or arti-
fice to defraud, or for obtaining money or property by means of false
or fraudulent pretenses, representations, or promises, transmits or
causes to be transmitted by means of wire, radio, or television com-
munication in interstate or foreign commerce, any writings, signs,
signals, pictures, or sounds for the purpose of executing such scheme
or artifice, shall be fined under this title or imprisoned not more than
20 years, or both.
12
To publish information on the internet is to transmit or cause to be
transmitted writings, signs, signals, or pictures by means of wire com-
munications.
13
The communications are “interstate or foreign” because
they are directed at the world at large.
14
They are “in . . . commerce”
because they are published with the intention of making money via
presented as a factual news report with the intention to deceive the public, and the related
erosion of public faith in traditional journalism”); Riggins, supra note 10, at 1313 (referring
to “the phenomenon of intentionally fraudulent, faux journalistic content” (emphasis added)).
12
. 18 U.S.C. § 1343 (2008). The wire fraud statute is the younger sibling of the mail
fraud statute contained in 18 U.S.C. § 1341. The two are identical insofar as they relate to
fraud. The courts have interpreted them as being in pari materia such that principles devel-
oped in relation to one apply to the other. See United States v. Pollack, 534 F.2d 964, 971
(D.C. Cir. 1976); United States v. Donahue, 539 F.2d 1131, 1135 (8th Cir. 1976); United
States v. Tarnopol, 561 F.2d 466, 475 (3rd Cir. 1977), abrogated on other grounds by Griffin
v. United States, 502 U.S. 46, 57 n.2 (1991); United States v. Comput. Scis. Corp., 689 F.2d
1181, 1188 n.14 (4th Cir. 1982), overruled on other grounds by Busby v. Crown Supply, Inc.,
896 F.2d 833, 841-42 (4th Cir. 1990); United States v. Feldman, 711 F.2d 758, 763 (7th Cir.
1983).
13
. See, e.g., United States v. Pirello, 255 F.3d 728, 729-30 (9th Cir. 2001) (publishing
false advertisements online treated as wire communications); United States v. Lee, 296 F.3d
792, 793-94 (9th Cir. 2002) (publishing imitation website treated as wire communication);
United States v. Roemmele, No. 04–60206–CR, 2011 WL 4625348, 6-7 (S.D. Fla. Oct. 3,
2011); United States v. Foster, No. 13-20063-CR-GRAHAM, 2014 WL 12687616 (S.D. Fla.
Mar. 31, 2014), aff’d, 878 F.3d 1297, 1302 (11th Cir. 2018) (publishing false news articles
online treated as wire communications); United States v. Arif, 897 F.3d 1, 4 (1st Cir. 2018)
(publishing false research and fictitious testimonials online treated as wire communications).
14
. Several circuits have held that an internet transmission in and of itself constitutes an
interstate communication. See United States v. Carroll, 105 F.3d 740, 742 (1st Cir. 1997);
United States v. Runyan, 290 F.3d 223, 239 (5th Cir. 2002); United States v. MacEwan, 445
F.3d 237, 244 (3rd Cir. 2006). The Tenth Circuit has recognized that it is possible for an
internet transmission to be intrastate—for example, where the servers of both parties to the
transmission are located within the same state. See United States v. Kieffer, 681 F.3d 1143,
1155 (10th Cir. 2012). No such possibility can arise in relation to communications directed at
the world at large published on websites.
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34 SANTA CLARA LAW REVIEW [Vol:60
advertising.
15
Publishing fake news online therefore meets the jurisdic-
tional elements of wire fraud. This means that it constitutes the offense
if it is a “scheme or artifice to defraud, or for obtaining money or prop-
erty by means of false or fraudulent pretenses, representations, or prom-
ises.”
16
The Supreme Court has held that the words “to defraud” refer to
“wronging one in his property rights by dishonest methods or schemes”
and “usually signify the deprivation of something of value by trick, de-
ceit, chicane or overreaching.”
17
This definition is traditional, not radi-
cal. To defraud is to deprive by dishonest means.
18
The publication of
fake news for profit does not constitute a scheme or artifice “to defraud”
because the fake news publisher does not defraud anyone. The readers
are not defrauded because they do not pay to read the stories. The ad-
vertisers are not defrauded because they are not subjected to the decep-
tion. They pay the publisher for exposure to the readers and the pub-
lisher delivers that exposure. There is a relationship between the number
of readers and the payment due to the publisher.
19
But neither the readers
nor the advertisers are deprived by dishonest means.
The fraud of a fake news publisher is not a traditional scheme to
defraud. It is something else—a fraud that does not defraud. Although
the publisher defrauds neither the readers nor the advertisers, the profit
the publisher makes via the advertising is contingent upon the deception
of the readers. Fortunately, the wire fraud statute prohibits devising or
intending to devise any scheme or artifice “to defraud, or for obtaining
money or property by means of false or fraudulent pretenses, represen-
tations, or promises.”
20
If the statute were read literally, a fake news
publisher could be prosecuted on the basis that publishing fake news for
15
. The requirement that the communications must be made “in interstate or foreign
commerce” exists because the validity of the wire fraud statute depends upon the commerce
clause in Section 8 of Article 1 of the Constitution. See United States v. Bryant, 766 F.2d 370,
375 (8th Cir. 1985); United States v. Hook, 195 F.3d 299, 310 (7th Cir. 1999); United States
v. Schaefer, 501 F.3d 1197, 1202 (10th Cir. 2007); United States v. Louper-Morris, 672 F.3d
539, 563 (8th Cir. 2012). The Supreme Court has treated “commerce” as being analogous with
“economic enterprise” or “economic activity.” See United States v. Lopez, 514 U.S. 549, 561
(1995). There should be no doubt that running a website to generate a profit via advertising is
an economic enterprise and therefore is “in . . . commerce.”
16
. 18 U.S.C. § 1343.
17
. Hammerschmidt v. United States, 265 U.S. 182, 188 (1924) quoted in McNally v.
United States, 483 U.S. 350, 358 (1987), superseded by statute as stated in Skilling v. United
States, 561 U.S. 358 (2010).
18
. See Re London and Globe Finance Corporation, Ltd [1903] 1 Ch.D. 728, 732 (“To
defraud is to deprive by deceit”).
19
. See infra Section (II)(B).
20
. 18 U.S.C. § 1343.
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profit is a scheme or artifice “for obtaining money . . . by means of false
or fraudulent pretenses [or] representations.”
21
Unfortunately, there is a problem with this argument—a crippling
problem. The argument proceeds on the assumption that the wire fraud
statute should be read disjunctively, and that read disjunctively, the stat-
ute does not require that the scheme or artifice be a scheme or artifice
“to defraud.” The problem is that the wire fraud statute has not been
interpreted disjunctively. In Cleveland v. United States, the Supreme
Court interpreted the first two phrases of the mail fraud statute conjunc-
tively—as if a scheme or artifice “for obtaining money or property” must
also be a scheme or artifice “to defraud.”
22
This conjunctive interpreta-
tion stands in the way of the prosecution of fake news as wire fraud.
This Article argues that Cleveland should be overruled so that pub-
lishing fake news for profit may be prosecuted as wire fraud. It makes
this argument in five parts. Part I introduces the notion that publishing
fake news for profit is a fraudulent scheme and asserts that the wire fraud
statute provides an appropriate solution to the problem. Part II explains
the development of the conjunctive interpretation of the wire fraud stat-
ute. It traverses key events relevant to the interpretation of the mail fraud
statute that led to the decision in Cleveland. Part III attacks the decision
in Cleveland. It argues that the Supreme Court misinterpreted unclear
evidence of legislative intent instead of adhering to the plain meaning of
the statute. It also argues that inconsistency in the interpretation of the
mail and wire fraud statutes and the bank fraud statute violates the con-
sistent-usage canon of statutory construction.
Part IV sets out three reasons to favor a disjunctive interpretation
of the wire fraud statute. This interpretation would extend the statute to
schemes or artifices “for obtaining money or property by means of false
or fraudulent pretenses, representations, or promises” that are not also
schemes or artifices “to defraud”—frauds that do not defraud. The first
reason is that one underlying purpose of the statute is to prohibit the
making of dishonest gains. The second is that it is legitimate to use the
criminal law to prevent and punish deceptive economic exploitation.
The third is that the disjunctive interpretation would better capture mod-
ern frauds and do so in a manner more conventional than recourse to the
intangible rights doctrine. Part IV concludes by addressing some antic-
ipated objections to the disjunctive interpretation.
Part V describes the scope of “fake news wire fraud.” It sets out
the elements of the offense and applies the facts of fake news publication
21
. 18 U.S.C. § 1343.
22
. Cleveland v. United States, 531 U.S. 12, 25-26 (2000).
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36 SANTA CLARA LAW REVIEW [Vol:60
to those elements. It stresses that the publication of an opinion or not-
for-profit content cannot constitute fraud. It examines the tricky issue of
how to differentiate genuine satire from fake news. And it explains why
the obvious falsity of a fake news story cannot provide a defense to its
publisher.
The overall goal of this Article is to advance an argument in favor
of prosecuting fake news publishers for wire fraud. One subsidiary goal
is to critique the present inability of the wire fraud statute to capture
frauds that do not defraud. Another is to change the way that people
look at fake news—to expose it as the scam, the swindle, the scheme,
the cheat and the racket that it really is.
II. FAKE NEWS AS FRAUD
The publication of fake news has a history of being viewed as a
criminal act. As far back as 1275 the First Statute of Westminster pro-
vided “[t]hat from henceforth none be so hardy to tell or publish any
false news or tales, whereby discord, or occasion of discord or slander,
may grow between the king and his people or the great men of the
realm.”
23
Many laws enacted in the name of curtailing false speech
would today be considered inconsistent with ideals of free speech and
freedom of the press. But the publication of false news for profit belongs
to a different category. That category is fraud.
A. Hard Copy Fake News
Imagine a person who created a fake newspaper—a hard copy, buy
it, fold it in half and carry it under your arm, newspaper. Now imagine
that person standing in the street ringing a bell shouting: “Extra! Extra!
Pope Francis Shocks World and Endorses Donald Trump for Presi-
dent!”
24
The sale of such a newspaper is fraud throughout the United
States today. It has been fraud for as long as fraud has been a crime.
The original fraud offense at common law was known as “cheat-
ing.” To cheat was to defraud a person in a way that affected the pub-
lic.
25
The courts recognized two kinds of frauds as “cheats.” The first
23
. Statute of Westminster 1275, 3 Edw. 1 c. 34 (Eng.).
24
. This false story was one of the most popular fake news stories of 2016. See Dan
Evon, Pope Francis Shocks World, Endorses Donald Trump for President, SNOPES (July 10,
2016), https://www.snopes.com/fact-check/pope-francis-donald-trump-endorsement/; Craig
Silverman & Jeremy Singer-Vine, The True Story Behind The Biggest Fake News Hit Of The
Election, BUZZFEED NEWS (Dec. 16, 2016), https://www.buzzfeednews.com/article/craigsil-
verman/the-strangest-fake-news-empire; Silverman, supra note 6.
25
. See 2 SIR EDWARD HYDE EAST, A TREATISE OF THE PLEAS OF THE CROWN 817
(Philadelphia, P. Byrne 1806); 3 SIR JAMES FITZJAMES STEPHEN, A HISTORY OF THE
CRIMINAL LAW OF ENGLAND 161 (London, Macmillan & Co, 1883).
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were those that directly affected the public by causing prejudice to the
administration of public services such as the courts or the revenue.
26
The
second were those that a man of ordinary capacity could not detect.
27
The rationale behind this second category was that a cheat beyond the
detection of a man of ordinary capacity was likely to be capable of af-
fecting the public because it could be practiced upon many subjects with-
out detection. The courts considered the use of false tokens, false
weights and false measures, as well as conspiracies to defraud, to be ex-
amples of cheats that men of ordinary capacity could not detect.
28
The word “token” was used in one sense to refer to copper or brass
tokens issued by tradesmen as change in lieu of coins.
29
But the phrase
“false tokens” was also used in a broader sense. It encompassed coun-
terfeit trade tokens as well as false dice,
30
counterfeit letters,
31
counterfeit
seals,
32
counterfeit passports,
33
counterfeit orders,
34
counterfeit promis-
sory notes,
35
fake business cards,
36
and even other less obviously decep-
tive objects, like keys or rings.
37
A false token was a physical object or
device used to support an act of deception—something that “betoken[ed]
a general design to defraud.”
38
A publication masquerading as a news-
paper would have been considered to be a false token because it meets
this description. Selling it would thus have constituted cheating at com-
mon law; and the publisher would have been whipped, pilloried or fined
as punishment.
The publication of a fake newspaper may also have constituted
cheating at common law pursuant to authority that spreading false news
in and of itself constituted cheating. In R v. Harris, Chief Justice
Scroggs said that “all the judges of England” had unanimously declared
that writers of false news, “though not scandalous, seditious, nor
26
. See 2 EAST, supra note 25, at 816-18; 2 JW CECIL TURNER, RUSSELL ON CRIME
1322-27 (11th ed. 1958).
27
. See, e.g., R v. Jones (1703) 1 Salk. 379; 91 Eng. Rep. 330; 2 Ld. Raym. 1013; 92
Eng. Rep. 174; 6 Mod. 105; 87 Eng. Rep. 863. See also 1 WILLIAM HAWKINS, A TREATISE
OF THE PLEAS OF THE CROWN 187-88 (London, Eliz. Nutt 1716).
28
. R v. Wheatly (1761) 2 Burr. 1124, 1127-28; 97 Eng. Rep. 746, 748 sub nom R v.
Wheatley (1761) 1 Black. W. 273, 275; 96 Eng. Rep. 151, 162; 3 JOSEPH CHITTY, A
PRACTICAL TREATISE ON THE CRIMINAL LAW 203 (Philadelphia, Edward Earle 1819).
29
. Henry Mares, Fraud and Dishonesty in King’s Bench and Star Chamber, 59 AM. J.
LEGAL HIST. 210, 225 (2019).
30
. Martin Leeser’s Case (1619) Cro. Jac. 497; 79 Eng. Rep. 424.
31
. R v. Tripp (1670) 2 Keble 527; 84 Eng. Rep. 330.
32
. R v. Worrall (1683) Skin. 108; 90 Eng. Rep. 51.
33
. R v. F.D.L., t16860707-28 (O.B. 1686).
34
. R v. Smith, t16891211-24 (O.B. 1689).
35
. 2 EAST, supra note 25, at 825.
36
. Jones v. State, 50 Ind. 473, 476 (Ind. 1875).
37
. 2 EAST, supra note 25, at 826-27; 3 CHITTY, supra note 28, at 424.
38
. 2 EAST, supra note 25, at 820.
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38 SANTA CLARA LAW REVIEW [Vol:60
reflective upon the government of the state” were “indictable and pun-
ishable upon that account.”
39
Several treatises on the criminal law
picked up on this statement as justification for describing the publication
of false news as a form of cheating.
40
Russell, for example, said in his
chapter on cheats: “[P]robably at this day the fabrication of news, likely
to produce any public detriment, would be considered as criminal.”
41
The requirement that a cheat had to affect the public allowed many
dishonest schemes to go unpunished.
42
Coupled with changing public
attitudes towards dishonesty brought about by events like the bursting of
the South Sea Bubble,
43
its unpopularity prompted Parliament to enact
the False Pretences Act of 1757.
44
This statute prohibited “knowingly
and designedly, by false Pretence or Pretences [obtaining] from any Per-
son or Persons, Money, Goods, Wares or Merchandizes, with Intent to
cheat or defraud any Person or Persons of the same.”
45
It did not require
39
. R v. Harris (1680) 7 St. Tr. 925, 929-30.
40
. 1 SIR WILLIAM OLDNALL RUSSELL, A TREATISE ON CRIMES & MISDEMEANORS
1367 (1st American ed., Boston, Wells & Lilly 1824); HUMPHRY W. WOOLRYCH, A
PRACTICAL TREATISE ON MISDEMEANORS 23 (London, Shaw & Sons 1842); FRANCIS
WHARTON, A TREATISE ON THE CRIMINAL LAW OF THE UNITED STATES 445 (Philadelphia,
Kay & Brother 1846). Some texts even referred to the spreading of false news as a standalone
offense. See, e.g., 1 JOSEPH GABBETT, A TREATISE ON THE CRIMINAL LAW 319 (Dublin, John
Cumming 1835). Bishop criticized Russell’s placement of spreading false news and other in-
dictable misdemeanors under the title of cheats. “But while there is nothing gained by under-
taking to be too nicely philosophical in our division of subjects in the criminal law, still it is a
little loose to contemplate all these varying wrongs as cheats.” See JOEL PRENTISS BISHOP,
COMMENTARIES ON THE CRIMINAL LAW § 162 (Boston, Little, Brown & Co, 6th ed. 1877).
In truth the dictum of Scroggs CJ in Harris may be better regarded as representative of libel
and not fraud because the mere spreading of false news involves no financial benefit or detri-
ment. Russell at least was alive to this reality. He referred to Harris as an authority for libel
as well as cheating. See 1 RUSSELL, supra at 319. See also THOMAS STARKIE, LAW OF
SLANDER, LIBEL, SCANDALUM MAGNATUM AND FALSE RUMOURS 354 (New York, Collins
& Hannay 1832). But Russell may still have been correct to include it as an authority for
cheating seeing as he confined his statement to false news likely to produce any public detri-
ment. This was reflective of the requirement that cheats had to affect the public. There would
have needed to be some element of financial gain or loss involved. But there is no reason why
a false pretense in the form of news could not have constituted cheating if it affected the
public. An example of a decision along those lines (although it was prosecuted as a conspir-
acy) was R v. De Berenger (1814) 3 M. & S. 67; 105 Eng. Rep. 536. The defendants in that
case spread rumours than Napoleon had been killed and that England was about to make peace
with France in order to take advantage of the resultant surge in the price of government bonds.
41
. 1 RUSSELL, supra note 40, at 1367.
42
. The reports are full of failed indictments for cheating. See, e.g., R v. Glanvill (1710)
Holt K.B. 355; 90 Eng. Rep. 1096; R v. Wilders (1720) 11 Mod. 309; 88 Eng. Rep. 1057; R
v. Bryan (1730) 2 Str. 866; 93 Eng. Rep. 902; 1 Barn. K.B. 299; 94 E.R. 203; R v. Nunos
(1740) Sess. Cas. 233; 93 Eng. Rep. 234; R v. Combrune (1751) 1 Wils. K.B. 301; 95 Eng.
Rep. 630.
43
. See JEROME HALL, THEFT, LAW AND SOCIETY 29-30 (2nd ed. 1952).
44
. 30 Geo. II c. 24.
45
. 30 Geo. II c. 24.
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the fraud to be beyond the detection of a man of ordinary capacity.
46
A
bare-naked lie was enough, as long as it was a misrepresentation of a
past or present fact, not an expression of opinion or a promise to do
something in the future.
47
Moreover, although most false pretenses were
written or verbal, the courts also recognized that conduct could amount
to a false pretense.
48
In one decision, the utterance of a counterfeit note
was held to be a false pretense that the note was genuine.
49
In another,
the wearing of a commoner’s cap and gown was held to be a false pre-
tense that the wearer was a commoner of Magdalen College, Oxford.
50
A person who stands in the street and holds out a fake newspaper
for sale represents to the world that the newspaper is legitimate and that
the stories it contains are legitimate news stories. This is a false pretense
by conduct. The stories themselves may contain written false pretenses.
Any money paid by passers-by in exchange for copies of the newspaper
would be obtained by means of the false pretense. The publisher, by
requesting money in exchange for the newspapers known to be false,
demonstrates intent to cheat and defraud. The publication and sale of a
fake newspaper would therefore have constituted obtaining money by
false pretenses.
Provisions prohibiting obtaining money by false pretenses remain
in force throughout the United States.
51
The publication and sale of a
fake newspaper is criminal fraud throughout the country today because
it contravenes those provisions. The notion that it is not fraudulent to
publish fake news online thus seems anomalous. The online fake news
publisher does more or less the same thing as the hard copy publisher.
How can one be fraud but not the other?
46
. R v. Young (1788) 1 Leach 505; 168 Eng. Rep. 354, 355.
47
. R v. Goodhall (1821) Russ. & Ry. 461; 168 Eng. Rep. 898, 899.
48
. See e.g., R v. Freeth (1807) Russ. & Ry. 127; 168 Eng. Rep. 718 (uttering counterfeit
note held to be pretense that note was genuine); R v. Barnard (1837) 7 Car. & P. 784; 173
Eng. Rep. 342 (wearing university uniform held to be pretense that wearer was student of
university); R v. Parker (1837) 7 Car. & P. 825; 173 Eng. Rep. 360; 2 Mood. 1; 169 ER 1
(paying with cheque held to be pretense that cheque was good and genuine order for payment);
R v. Story (1805) Russ. & Ry. 81; 168 Eng. Rep. 695 (accepting money intended to be paid
to another person held to be pretense that defendant was that other person). See also R v. Bull
(1877) 13 Cox. C.C. 608; R v. Parker & Bulteel (1916) 25 Cox. C.C. 145.
49
. R v. Freeth (1807) Russ. & Ry. 127; 168 Eng. Rep. 718.
50
. R v. Barnard (1837) 7 Car. & P. 784, 173 Eng. Rep. 342.
51
. See, e.g., CAL. PEN. CODE §§ 484(a), 148.6(a)(1); N.Y. PEN. CODE § 155.05(2)(d),
190.60, 190.65; TEX. PEN. CODE § 31.02, 31.03; WASH. REV. CODE 9A.56.020(1)(b). See
also MODEL PENAL CODE § 233.3 (AM. LAW INST., Proposed Official Draft 1962).
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40 SANTA CLARA LAW REVIEW [Vol:60
B. The Two-Sided Market for Online Fake News
The answer to this question relates to the online fake news business
model. The hard copy fake news publisher relies on a traditional buyer
and seller business model. The newspapers are sold to the readers. In
contrast, the online fake news publisher makes use of a two-sided market
model. The fake news is provided to the readers free of charge, but rev-
enue is generated via advertising.
A two-sided market is one that contains two interrelated groups of
consumers.
52
Google’s search engine is a prominent example.
53
On one
side are users who do not pay to use the search engine. On the other are
advertisers who pay to advertise to the users.
54
If there were no users,
there would be no one to whom the advertisers could advertise. If there
were no advertisers, there would be no revenue to fund the search engine.
Google must attract both users and advertisers to profit in the two-sided
market for online search.
55
The notion that a business may cater to more than one market at the
same time is not new. It is an inherent feature of any business supported
by advertising or involving an intermediary.
56
The difference today is
the scale at which two-sided markets operate and the opportunities that
exist to profit from one side without charging the other. Both of these
changes were brought about by the internet. The internet has made it
possible to reach millions of people with low investments in time and
52
. Lapo Filistrucchi, Damien Geradin & Eric van Damme, Identifying Two-Sided Mar-
kets, 36 WORLD COMPETITION 33, 33-34 (2013) (“a market in which a firm sells two distinct
products or services to two different groups of consumers . . . and knows that selling more to
one group affects the demand from the other group and possibly vice versa”); see also David
S. Evans, The Antitrust Economics of Multi-Sided Platform Markets, 20 YALE J. ON REG. 325,
328 (2003) (explaining that “platform businesses” serve “multiple disparate communities”
and “compete in ‘multi-sided markets’”).
53
. See generally Robert H. Bork & J. Gregory Sidak, What Does the Chicago School
Teach About Internet Search and the Antitrust Treatment of Google?, 8 J. COMP. L. & ECON.
663 (2012); Giacomo Luchetta, Is the Google Platform a Two-Sided Market?, 10 J. COMP. L.
& ECON. 185 (2013); James D. Ratliff & Daniel L. Rubinfeld, Is There a Market for Organic
Search Engine Results and Can Their Manipulation Give Rise to Antitrust Liability?, 10 J.
COMP. L. & ECON. 517 (2014).
54
. See Bork & Sidak, supra note 53, at 667 (“Search users value the information freely
available on the Internet; advertisers value access to search users. . . . Internet search can be
considered an intermediary platform that brings together two parties—the search user and the
advertiser—to an exchange that occurs over the Internet.”).
55
. See id. at 668 (“When Google increases demand for its search engine, advertising on
Google search becomes more valuable. Google can therefore increase the demand for adver-
tising on its search platform by improving the end-user experience.”).
56
. See Filistrucchi et al., supra note 52, at 34 (explaining that prominent examples of
two-sided markets include media markets, payment card markets, and auction houses).
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capital.
57
Online businesses can provide free-to-access products and ser-
vices but profit from the sale of data and attention.
58
The news media has not been immune from this transformation.
Publications such as Buzzfeed, The Guardian and Huffington Post are
free to read.
59
Like Google, these publications operate in a two-sided
market—the two-sided market for online news. On one side are the read-
ers who read the articles. On the other are the advertisers who advertise
to the readers. The publications must attract both readers and advertis-
ers; they cannot survive with one but not the other.
60
Publications like BuzzFeed, The Guardian and Huffington Post
compete in the market for online news against other legitimate news pub-
lishers. But they also compete against fake news publishers. Fake news
publishers compete in the market for online news in the same way as
legitimate news publishers. The difference is that the way in which fake
news publishers compete is far from legitimate. Fake news publishers
compete by inventing stories, not reporting them, and by taking deliber-
ate steps to trigger the spread of their stories across social media and
message boards.
61
A typical fake news scheme works in the following
way:
1. The publisher purchases a domain that sounds like the domain
of a legitimate news organization.
2. The publisher builds a website that looks like a legitimate news
website.
3. The publisher publishes false news stories on the website.
4. The publisher engages an online advertising service to host ad-
vertisements alongside the stories.
5. The publisher posts links to the stories on platforms like Face-
book and Twitter and forums like Reddit and 4chan.
6. Users read, re-post or share the stories in the false belief that
they are real news stories.
57
. Reno v. Am. Civil Liberties Union, 521 U.S. 844, 849-53 (1997); United States v.
Pirello, 255 F.3d 728, 729-30 (9th Cir. 2001).
58
. John M. Newman, Antitrust in Attention Markets: Objections and Responses, 59
SANTA CLARA L. REV. 743, 746-50 (2020).
59
. John Reynolds, Huffington Post may Charge for Some Content, Says Chief Execu-
tive, HUFFINGTON POST, Mar. 20, 2014; Fergal Gallagher, How Does BuzzFeed Make Money,
TECH TIMES (Mar. 6, 2015), https://www.techtimes.com/articles/38013/20150306/buzzfeed-
make-money.htm; Jim Waterson, Guardian Breaks Even Helped by Success of Supporter
Strategy, THE GUARDIAN, May 1, 2019.
60
. See Filistrucchi et al., supra note 52, at 34 (“In media markets, advertisers demand
for ads on media outlet increases with the number of consumers of content (viewers, readers,
listeners, etc.), while viewers, readers and listeners might also be, positively or negatively,
affected by the quantity of advertising.”).
61
. See Vojak, supra note 6, at 140-43 (distinguishing intentional fake news for profit
from other types of fake news).
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42 SANTA CLARA LAW REVIEW [Vol:60
7. The publisher is paid by the advertising service for exposing
advertisements to readers.
62
The successful execution of a scheme to profit by publishing fake
news requires an understanding of website design and knowledge of the
online information ecosystem. But the real art (if dishonesty is an art) is
devising the right kind of story—one that people not only will want to
read, but one they will want to share. Publishing stories that people want
to share is the key to making money via fake news.
63
The more people
who visit the website (the more impressions) and/or the more people who
visit websites linked by advertisements (the more clicks), the more
money the publisher will make.
64
The two most popular false stories in the lead up to the 2016 Presi-
dential Election were a report that Pope Francis had endorsed Donald
Trump for President and a report that Hilary Clinton had sold weapons
to I.S.I.S.
65
The publishers of those stories banked on devoted pro-
Trump readers sharing them.
66
They anticipated the glee with which
those readers would receive news that the Pope had endorsed Trump or
that Clinton had been caught selling weapons to I.S.I.S. And they
62
. See Vojak, supra note 6, at 123-27 (describing how three individuals set up fake news
sites to make money); Abby Ohlheiser, This Is How Facebook’s Fake-News Writers Make
Money, WASH. POST, Nov. 18, 2016; Justin Ray, The Man Who Helps the Internet Make Fake
News, COLUMBIA JOURNALISM REV. (Jan. 24, 2019), https://www.cjr.org/innova-
tions/breakyourownnews-com-jonathan-cresswell.php; Where Does Fake News Come
From?, CTR. FOR INFO. TECH. & SOC’Y, https://www.cits.ucsb.edu/fake-news/where (last vis-
ited Feb. 20, 2020).
63
. Fake news websites attract a much higher proportion of their traffic from social me-
dia (41.8%) compared to top news websites (10.1%). See Allcott & Gentzkow, supra note 1,
at 222. See also Jacob L. Nelson & Harsh Taneja, The Small, Disloyal Fake News Audience:
The Role of Audience Availability in Fake News Consumption, 20 NEW MEDIA & SOC’Y 3720,
3721 (2018) (finding that “visits to fake news sites originated from social network sites . . . at
a much higher rate than visits to real news sites, confirming the primary role social media
played [in 2016] in spreading fake news”).
64
. See Vojak, supra note 6, at 124; see also James Parsons, The Difference Between
Website Impressions and Clicks, GROWTRAFFIC BLOG (Jan. 25, 2015), https://growtraf-
fic.com/blog/2015/01/difference-website-impressions-clicks.
65
. Craig Silverman, This Analysis Shows How Viral Fake Election News Outperformed
Real News on Facebook, BUZZFEED NEWS (Nov. 16, 2016),
https://www.buzzfeednews.com/article/craigsilverman/viral-fake-election-news-outper-
formed-real-news-on-facebook [hereinafter Silverman, BUZZFEED].
66
. See Allcott & Gentzkow, supra note 1, at 223 (finding that “there are about three
times more fake pro-Trump articles than pro-Clinton articles, and the average pro-Trump ar-
ticle was shared more on Facebook than the average pro-Clinton article”); Emily Shugerman,
Trump Supporters Share More Fake News Than Anyone Else, Study Shows, INDEPENDENT
(Feb. 7, 2018), https://www.independent.co.uk/news/world/americas/us-politics/trump-sup-
porters-share-more-fake-news-junk-news-oxford-study-a8199056.html; Nir Grinberg et al.,
Fake News on Twitter During the 2016 U.S. Presidential Election, 363 SCIENCE 374 (2019)
(finding that most fake news was consumed by persons who were conservative leaning, older
and highly engaged with political news).
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anticipated the outrage with which they would respond to other stories.
“Police Find 19 White Female Bodies in Freezers with ‘Black Lives
Matter’ Carved into Skin” and “Donald Trump Protester Speaks Out: ‘I
was paid $3,500 to Protest Trump’s Rally’” were also top performers.
67
Fake news is infamous today because of suggestions that it in some
way influenced the outcome of the 2016 Presidential Election.
68
But the
publication of fake news is not an inherently political enterprise.
69
Whilst politics is an easy target because some people care about it so
much, anything about which people really care will do. Health and
safety, life and liberty, are also targets. Beyond the narrow but important
realm of politics, fake news publishers have produced false accounts of
events during natural disasters,
70
promoted bogus health care advice,
71
67
. Kim Lacapria, Did Police Find 19 Female Bodies in Freezers with ‘Black Lives Mat-
ter’ Carved Into Their Skin?, SNOPES (Feb. 18, 2016); Louis Jacobson, No, Someone Wasn’t
Paid $3,500 to Protest Donald Trump; It’s Fake News, POLITIFACT (Nov. 17, 2016),
https://www.politifact.com/factchecks/2016/nov/17/blog-posting/no-someone-wasnt-paid-
3500-protest-donald-trump-it/; Silverman, supra note 6.
68
. See, e.g., Silverman, BUZZFEED, supra note 65; Richard Gunther, Paul A. Beck &
Erik C. Nisbet, Fake News May Have Contributed to Trump’s 2016 Victory (Ohio State Univ.,
2018) (finding a correlation between belief in fake news stories and voting for Donald Trump
among individuals who voted for Barack Obama).
69
. But cf. Abby K. Wood & Ann M. Ravel, Fool Me Once: Regulating “Fake News”
and Other Online Advertising, 91 S. CAL. L. REV. 1223, 1226 (2018) (characterizing fake
news as political advertising).
70
. See, e.g., Sy Mukherjee, These Hurricane Irma Myths Have Gone Viral. Don’t Fall
for Them, FORTUNE, Sep. 6, 2017; Jane Lytvynenko, Here’s a Running List of Hoaxes and
Scams About Hurricane Florence, BUZZFEED NEWS (Sep. 13, 2018),
https://www.buzzfeednews.com/article/janelytvynenko/hurricane-florence-hoaxes-fake-
news. See also DEPARTMENT OF HOMELAND SECURITY, COUNTERING FALSE INFORMATION
ON SOCIAL MEDIA IN DISASTERS AND EMERGENCIES 8 (2018) (discussing opportunistic dis-
information).
71
. See, e.g., Amanda Z. Naprawa, Don’t Give Your Kid That Shot!: The Public Health
Threat Posed by Anti-Vaccine Speech and Why Such Speech is Not Guaranteed Full Protec-
tion Under the First Amendment, 11 CARDOZO PUB. L. POLICY & ETHICS J. 473, 506-08
(2013) (addressing anti-vaccination information spread to influence sales of other products);
Przemyslaw M. Waszak, Wioleta Kasprzycka-Waszakc & Alicja Kubanek, The Spread of
Medical Fake News in Social Media – The Pilot Quantitative Study, 7 HEALTH POL. & TECH.
115, 116 (2018) (finding 40% of frequently shared health-related links in Polish language
social media contain false information). In the past few months this form of misinformation
has adopted a new form, as individuals have used YouTube videos to promote bogus advice
related to the COVID-19 pandemic. See Kari Paul, YouTube Profits From Videos Promoting
Unproven Covid-19 Treatments, THE GUARDIAN, Apr. 3, 2020. Although there is no research
available on the topic, it appears to be safe to assume that at least some of those who post
bogus advice on YouTube are financially motivated, as YouTube channels generate advertis-
ing revenue for their owners. See How to Earn Money on YouTube, YOUTUBE HELP,
https://support.google.com/youtube/answer/72857 (last visited Apr. 6, 2020).
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44 SANTA CLARA LAW REVIEW [Vol:60
published false rumors about celebrities,
72
and simply sought to scare or
shock their readers.
73
The damage done by this kind of deception cannot be underrated.
The sheer prevalence of false information online makes it hard for even
astute readers to determine whether or not a particular story is real; and
readers who believe false stories may be influenced to act in ways in
which they would not have acted but for their belief in the false stories.
74
To use obvious examples, those who believe political fake news may
vote in ways in which they would not otherwise have voted,
75
and those
who believe false health care advice or crisis information may subject
themselves to serious physical danger.
76
Prevalence of these kinds of
beliefs may influence or taint the legitimacy of an election or waste pre-
cious public resources. In this way, the false beliefs of some have the
potential to set back the interests of others and society as a whole.
77
The
72
. See, e.g., Dan Evon, John Cena Death Hoax, SNOPES (Jul. 10, 2016),
https://www.snopes.com/fact-check/john-cena-death-hoax/; Dan Evon, Did Mark Zuckerberg
Announce His Resignation from Facebook?, SNOPES (Mar. 14, 2017),
https://www.snopes.com/fact-check/mark-zuckerberg-resignation/.
73
. See, e.g., Dan Evon, Did Police Discover a Meth Lab in a Back Room of an Alabama
Walmart?, SNOPES (Dec. 27, 2017), https://www.snopes.com/fact-check/meth-lab-alabama-
walmart/; Dan Evon, Are Michigan Police Worried About a ‘Vigilante’ Serial Killer of Pedo-
philes?, SNOPES (Oct. 15, 2018), https://www.snopes.com/fact-check/police-vigilante-pedo-
phile-serial-killer/.
74
. Even those who know better than to believe false stories may unwittingly alter their
behavior in response due to what psychologists call the “illusory truth effect” – the phenom-
enon that people come to believe a statement the more times they are exposed to it, even if
they originally knew it to be false. See Lisa Fazio, Unbelievable News? Read It Again and
You Might Think It’s True, THE CONVERSATION, Dec. 5, 2016.
75
. Richard Gunther, et al., Fake News May Have Contributed to Trump’s 2016 Victory
1 (Ohio State Univ., Mar. 8, 2018) (“Our analysis leads us to the conclusion that fake news
most likely did have a substantial impact on the voting decisions of a strategically important
set of voters”). See generally Allcott & Gentzkow, supra note 1, at 232-33. See also Krysten
Crawford, Stanford Study Examines Fake News and the 2016 Presidential Election,
STANFORD NEWS (Jan. 18, 2017), https://news.stanford.edu/2017/01/18/stanford-study-ex-
amines-fake-news-2016-presidential-election/ (“A reader of our study could very reasonably
say, based on our set of facts that it is unlikely that fake news swayed the election…[b]ut that
conclusion ultimately depends on what readers think is a reasonable benchmark for the per-
suasiveness of an individual fake news story.”).
76
. Research suggests that fake news has contributed to the anti-vaccination movement
that is behind the resurgence of diseases like measles and diphtheria. See, e.g., Vincenzo Car-
rieri, Leonardo Madio & Francesco Principe, Vaccine Hesitancy and (Fake) News: Quasi-
Experimental Evidence from Italy, 28 HEALTH ECONOMICS 1377, 1381 (2019) (linking fake
news to drop in childhood immunization).
77
. Several commentators have argued that the prevalence of false political information
has the potential to undermine faith in democracy. See, e.g., PEN AMERICA, supra note 11, at
16 (“Pinned beneath the weight of so much uncertainty, people lose interest in government,
civic life, and democratic participation because they are convinced that the whole enterprise
is a veil for self-dealing, that any professed ideals are empty words.”); Meital Balmas, When
Fake News Becomes Real: Combined Exposure to Multiple News Sources and Political Atti-
tudes of Inefficacy, Alienation, and Cynicism, 41 COMMUNICATION RESEARCH 430, 446
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dishonesty of and disruption caused by the publication of fake news is a
serious problem.
C. Wire Fraud as a Solution to the Problem
Nations, organizations and individuals around the world are in
search of a solution to the fake news problem. The prevailing attitude
favors fact checking, promoting news literacy, and censorship by plat-
forms in lieu of laws prohibiting the publication of fake news. But there
are significant problems with each of these purported solutions.
“Fact checking” with respect to fake news refers to the practice of
responding to false stories by publishing articles that counteract false
information or by labelling links to stories as false on social media.
78
Although the practice is noble, as a solution it is too slow and ineffective.
By the time a fact checker has investigated and debunked a false story,
thousands of people may have seen the story;
79
most of them will never
see the response by the fact checker,
80
and those that do may not believe
it.
81
“Improving news literacy” refers to efforts to teach citizens how to
spot false information.
82
This too is a worthy goal. But it is also too
(2014) (identifying “a political-communication process whereby fake-news viewing impacts
on political attitudes, enhancing feelings of inefficiency, alienation, and cynicism towards
politicians”).
78
. See What Is Fact-Checking?, BALLOTPEDIA, https://ballotpedia.org/What_is_fact-
checking (last visited Feb. 20, 2020); Lili Levi, Real “Fake News” and Fake “Fake News”,
16 FIRST AMEND. L. REV. 232, 239 (Symposium 2017).
79
. Levi, supra note 78, at 292 (“because of the speed with which ‘fake news’ can prop-
agate on social media, it is very likely that fact checkers will find it difficult to provide real-
time rebuttals”).
80
. See Soroush Vosoughi, Deb Roy & Sinan Aral, The Spread of True and False News
Online, 359 SCIENCE 1146, 1147 (2018) (“[F]alsehood diffuse[s] significantly farther, faster,
deeper, and more broadly than the truth in all categories of information.”); Philip M. Napoli,
What If More Speech Is No Longer the Solution? First Amendment Theory Meets Fake News
and the Filter Bubble, 70 FED. COMM. L. J. 55, 77-78 (2018) (explaining how filter bubbles
inhibit dissemination of counterspeech).
81
. Alice E. Marwick, Why Do People Share Fake News? A Sociotechnical Model of
Media Effects, 2 GEO. L. TECH. REV. 474, 508 (2018) (suggesting that fact checking may make
believers double down on false beliefs).
82
. See, e.g., What Is News Literacy?, CTR. FOR NEWS LITERACY, https://www.center-
fornewsliteracy.org/what-is-news-literacy/ (last visited Feb. 20, 2020) (defining news literacy
as development of “critical thinking skills in order to judge the reliability and credibility of
information” and “a literacy that empowers news consumers to determine whether infor-
mation is reliable and then act on it”); Pesach Benson, News Literacy: The 7 Habits You Need
to Develop, HONESTREPORTING (Jan. 21, 2019), https://honestreporting.com/news-literacy-
7-habits/ (describing strategies to improve news literacy); Lindsay Beyerstein, Can News Lit-
eracy Grow Up? [Updated]: After a Decade, the Movement Tries to Prove Its Worth,
COLUMBIA JOURNALISM REV. (2014), https://archives.cjr.org/feature/can_news_liter-
acy_grow_up.php (explaining that the mission of news literacy is “to help give people the
critical-thinking skills necessary to discern what is trustworthy”).
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46 SANTA CLARA LAW REVIEW [Vol:60
slow; and it is too optimistic.
83
It assumes that a person who is news
literate will reject false stories.
84
This fails to account for those weighed
down by heavy confirmation bias. It also fails to account for stories the
falsity of which is difficult to detect. Modern “deepfake” technology
increasingly allows for the creation of convincing false video and audio
content.
85
The fake news of tomorrow will be difficult to detect for lit-
erate and illiterate alike.
86
“Platform censorship,” in relation to fake news, refers to platforms,
such as Facebook, Google, and Twitter, removing, deprioritizing or
identifying false information.
87
Research demonstrates that platform
censorship works.
88
But it also places the platforms in a tricky position.
89
Failing to censor content risks criticism that the platform is being used
to spread false information. Censoring too much content risks criticism
that the platform is violating rights to freedom of speech and freedom of
the press, or that it is biased.
90
More importantly, the notion that
83
. See Beyerstein, supra note 82 (“In theory, critical thinking skills are teachable, but
in practice they are difficult to define and measure.”).
84
. See Nicole A. Cooke, Posttruth, Truthiness, and Alternative Facts: Information Be-
havior and Critical Information Consumption for a New Age, 87 LIBR. Q. 211, 217 (2017)
(“the bulk of disinformation on the Internet could be combated with basic evaluation skills. If
consumers of information would take time to make a few simple assessments, disinformation
would not be so prevalent or insidious.”).
85
. See Holly Kathleen Hall, Deepfake Videos: When Seeing Isn’t Believing, 27 CATH.
U. J. L. & TECH. 51, 57 (2018) (“Deepfakes are created by inserting photographs into a ma-
chine-learning algorithm that puts one face on another.”); Oscar Schwartz, You Thought Fake
News Was Bad? Deep Fakes are Where Truth Goes to Die, THE GUARDIAN, Nov. 12, 2018
(explaining that a deepfake is “a computer-generated replication of a person . . . saying or
doing things they have never said or done”); John Villasenor, Artificial Intelligence, Deep-
fakes, and the Uncertain Future of Truth, BROOKINGS (Feb. 14, 2019), https://www.brook-
ings.edu/blog/techtank/2019/02/14/artificial-intelligence-deepfakes-and-the-uncertain-fu-
ture-of-truth/ (“Deepfakes are videos that have been constructed to make a person appear to
say or do something that they never said or did.”).
86
. See Hall, supra note 85, at 56-61 (describing the potential misuses of deepfakes); see
generally Schwartz, supra note 85; Garfield Benjamin, Deepfake Videos Could Destroy Trust
in Society – Here’s How to Restore It, THE CONVERSATION, Feb. 7, 2019; Villasenor, supra
note 85.
87
. See generally Cindy Cohn, Bad Facts Make Bad Law: How Platform Censorship
Has Failed So Far and How to Ensure That the Response to Neo-Nazis Doesn’t Make It
Worse, 2 GEO. L. TECH. REV. 432 (Spring 2018);
88
. See, e.g., Lesley Chiou & Catherine Tucker, Fake News and Advertising on Social
Media: A Study of the Anti-Vaccination Movement 23 (Nat’l Bureau of Econ. Research, Work-
ing Paper No. 25223, 2018) (finding that a “ban on advertising [containing links to fake news
sites] led to a dramatic decline of 75% in the number of shares on Facebook relative to Twit-
ter”).
89
. See generally Kate Klonick, The New Governors: The People, Rules and Processes
Governing Online Speech, 131 HARV. L. REV. 1598 (2018) (examining moderation of online
speech by platforms).
90
. See, e.g., John Herrman & Mike Isaac, Conservatives Accuse Facebook of Political
Bias, N.Y. TIMES, Mar. 10, 2016, at B1.
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platforms should take responsibility for censoring fake news is hard to
justify. On what ground can society demand that platforms take steps to
prevent the spread of information, the publication of which is said to be
legal?
Beyond these specific problems, the prevailing solutions share a
more serious general problem. That problem concerns responsibility and
the attribution of blame. The publishers are the ones who buy the do-
main name, build the website, dream up the false and inflammatory con-
tent, and post and share the content in the hopes of turning a profit.
91
Their enterprise is pre-meditated. It takes time, effort and ingenuity. Yet
the prevailing solutions place responsibility for the problem on ordinary
citizens and organizations engaged in legitimate business. They accept
fake news as inevitable and place no blame upon those who are actually
responsible for its publication.
From one perspective, this reaction is unusual. One would expect
society to blame those responsible for conduct that is recognized as be-
ing disruptive and damaging to public interests. But from another per-
spective, the reaction is understandable. Fake news publishers have
usurped many of the protections that modern democracies hold dear:
they have usurped the protections extended to the press by mimicking
the press; they have usurped the protections extended to speech by pub-
lishing political content; and they have usurped the protections extended
to opinions and ideas by posing as satirists or commentators. In other
words, fake news looks so much like protected speech that society has
assumed that it is protected speech: the very nature of the deception has
impaired its characterization of the problem.
The problem is not just that false stories are being spread online; it
is that those who spread false stories online are profiting by publishing
false statements of fact. To profit by intentionally publishing false state-
ments of fact is to obtain money by means of false or fraudulent pre-
tenses or representations. That is why prosecution for wire fraud is an
appropriate solution. Publishing fake news is a new way to make money
by telling lies—a new form of fraud made possible only by misuse of the
online two-sided market business model. And, so far as frauds go, it is
one of the most ingenious kinds. By utilizing the two-sided market to
split up the dishonesty from the deprivation, the fake news publisher ob-
tains money by deception without defrauding anyone, and lulls society
into thinking that his behavior is beyond the reach of the criminal law.
To prosecute the publication of fake news for profit as wire fraud is
an appropriate way to address the source of the problem and attribute
91
. See supra Section (II)(B).
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48 SANTA CLARA LAW REVIEW [Vol:60
blame to those most responsible. It would not violate the rights to free-
dom of speech or freedom of the press because fraudulent speech is an
exception to the First Amendment.
92
And it would avoid an inherent
flaw in enacting new laws to prohibit the publication of fake news—the
risk of criticism that the very existence of the law is politically moti-
vated. The wire fraud statute contains an established offense with settled
principles of application. Its focus upon the falsity of the statement and
the profit made by the publisher would ensure that the political orienta-
tion of the fake news is not put on trial. The publisher would be tried for
making money by telling lies, not for the content of the lies told.
III. THE CONJUNCTIVE INTERPRETATION OF THE WIRE FRAUD
STATUTE
Today the publication of fake news for profit does not constitute
wire fraud due to the limitations imposed by the conjunctive interpreta-
tion in Cleveland v. United States.
93
The conjunctive interpretation re-
quires a scheme “for obtaining money or property by means of false or
fraudulent pretenses, representations, or promises” to also be a scheme
“to defraud.”
94
This part of the Article explains the development of that
interpretation. Its origin was entangled with the emergence of the intan-
gible rights doctrine.
A. The Intangible Rights Doctrine and the Word “Or”
Under the “intangible rights doctrine,” a scheme to defraud a person
of a recognized intangible right, but not money or property, constituted
mail or wire fraud.
95
The doctrine developed over a series of decisions
in the 1970s and 1980s.
96
Prosecutors relied upon it to prosecute those
who breached fiduciary duties or engaged in corrupt conduct. In one
seminal case, an employee who arranged for his employer to purchase
cabinets from a particular manufacturer in exchange for a kickback from
the manufacturer was convicted of devising a scheme to defraud his
92
. See, e.g., Curtis Publ’g Co. v. Butts, 388 U.S. 130, 150 (1967) (naming mail fraud
statute as an exception to right to communicate information of public interest); Illinois ex rel.
Madigan v. Telemarketing Assocs., 538 U.S. 600, 621 (2003) (“the First Amendment and our
case law emphatically do not require … a blanket exemption from fraud liability for a fund-
raiser who intentionally misleads in calls for donations”); United States v. Alvarez, 567 U.S.
709, 723 (2012) (“Where false claims are made to effect a fraud or secure moneys or other
valuable considerations, say offers of employment, it is well established that the Government
may restrict speech without affronting the First Amendment.”).
93
. 531 U.S. 12 (2000).
94
. See id. at 19, 25-26.
95
. Skilling v. United States, 561 U.S. 358, 401 n.35 (2010).
96
. See infra notes 144-45.
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employer of its right to “his honest and faithful services.”
97
In another,
a governor who accepted bribes in return for fixing particular racing
dates for a horse racing enterprise was convicted of devising a scheme
to defraud the people of their right to his “honest and faithful services as
governor.”
98
The intangible rights doctrine is relevant to the conjunctive inter-
pretation of the wire fraud statute because several defendants charged
with defrauding a person of an intangible right attempted to exonerate
themselves by relying on a conjunctive interpretation of the mail fraud
statute. Their basic argument was that a scheme “to defraud” also had
to be a scheme “for obtaining money or property by means of false or
fraudulent pretenses, representations, or promises” for it to constitute
mail fraud. This argument was rejected each and every time it was made.
In United States v. States the defendants argued that their voter
fraud scheme was not a scheme to defraud because it was not a scheme
“for obtaining money or property.”
99
The Eighth Circuit said that their
interpretation placed a “very strained and limited meaning” upon the
statute.
100
It held that the two phrases were “part of an uninterrupted
listing of a series of obviously diverse schemes” and concluded that the
“more natural construction” was “to view the two phrases inde-
pendently.”
101
In United States v. Halbert the defendant claimed that his
scheme could not constitute a scheme to defraud because it did not in-
volve a false or fraudulent pretense, representation or promise.
102
The
Ninth Circuit rejected his argument.
103
It held that the statute “specifies
several alternative ways in which the mail fraud offense may be com-
mitted.”
104
And in United States v. Scott the defendant was charged with
devising a scheme for obtaining money or property but not with devising
a scheme to defraud.
105
The trial judge instructed the jury that they were
to consider whether he had intent to “obtain[] money or property by
means of false or fraudulent pretenses, representations, or promises.”
106
The defendant argued on appeal that the trial judge should have in-
structed the jury that they had to find “intent to defraud.”
107
The
97
. United States v. George, 477 F.2d 508, 513 (7th Cir. 1973).
98
. United States v. Isaacs, 493 F.2d 1124, 1150 (7th Cir. 1974).
99
. 488 F.2d 761, 763 (8th Cir. 1973).
100
. Id. at 764.
101
. Id.
102
. 640 F.2d 1000, 1007 (9th Cir. 1981).
103
. Id.
104
. Id. See also United States v. Frankel, 721 F.2d 917, 920 (3rd Cir. 1983); United States
v. Clapps 732 F.2d 1148, 1152 (3rd Cir. 1984).
105
. 701 F.2d 1340, 1343 (11th Cir. 1983).
106
. Id.
107
. Id. at 1344.
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50 SANTA CLARA LAW REVIEW [Vol:60
Eleventh Circuit rejected his argument.
108
“The phrasing of this statute
in the disjunctive prohibits two separate acts, each constituting an inde-
pendent ground for prosecution and conviction of mail fraud.”
109
By the mid-1980s the doctrine was on an exponential path of devel-
opment. Courts were recognizing more and more classes of intangible
rights and prosecutors were on a warpath against dishonesty.
110
But the
Supreme Court stopped the development dead in its tracks when it abol-
ished the doctrine in McNally v. United States.
111
The defendants in
McNally, like many before them, attempted to rely on a conjunctive in-
terpretation of the statute as a defense.
112
B. McNally v. United States
The defendants in McNally were convicted of mail fraud for devis-
ing a scheme to defraud the citizens and government of Kentucky of their
right to have the State’s affairs conducted honestly.
113
Two of the de-
fendants petitioned the Supreme Court.
114
They disputed the validity of
the intangible rights doctrine by arguing that the mail fraud statute did
not extend to schemes or artifices that did not have an object of depriving
someone of money or property.
115
A majority of the Supreme Court ac-
cepted their argument.
116
In doing so, the majority addressed the possi-
bility that the words “to defraud” were somehow limited by the words
“or for obtaining money or property by means of false or fraudulent pre-
tenses, representations, or promises”:
Because the two phrases identifying the proscribed schemes appear
in the disjunctive, it is arguable that they are to be construed inde-
pendently and that the money-or-property requirement of the latter
phrase does not limit schemes to defraud to those aimed at causing
deprivation of money or property. This is the approach that has been
taken by each of the Courts of Appeals that has addressed the issue:
schemes to defraud include those designed to deprive individuals,
the people, or the government of intangible rights, such as the right
108
. Id.
109
. Id. at 1343. See also Christopher Q. Cutler, McNally Revisited: The “Misrepresen-
tation Branch” of the Mail Fraud Statute a Decade Later, 13 B.Y.U. J. PUB. L. 77, 83-85
(1998).
110
. See United States v. Louderman, 576 F.2d 1383, 1387 (9th Cir. 1978) (recognizing a
scheme to defraud telephone company of confidential information and customers of right to
privacy).
111
. 483 U.S. 350 (1987).
112
. See id. at 354-55.
113
. See McNally, 483 U.S. at 352.
114
. See id.
115
. See id. at 358-59.
116
. See id. at 360.
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to have public officials perform their duties honestly. As the Court
long ago stated, however, the words “to defraud” commonly refer
“to wronging one in his property rights by dishonest methods or
schemes,” and “usually signify the deprivation of something of value
by trick, deceit, chicane or overreaching.” The codification of the
holding in [Durland v. United States] in 1909 does not indicate that
Congress was departing from this common understanding. As we
see it, adding the second phrase simply made it unmistakable that the
statute reached false promises and misrepresentations as to the future
as well as other frauds involving money or property.
117
The majority’s reference to Durland v. United States and the 1909
amendment requires some explanation.
118
The original mail fraud stat-
ute prohibited only schemes or artifices “to defraud.”
119
In Durland, the
petitioner devised a phony investment scheme in which he sold bonds
promising returns that he knew would never eventuate.
120
The common
law and statutory offense of obtaining property by false pretenses re-
quired the making of a “[mis]representation as to [a] past or present”
fact.
121
The petitioner argued that this was also a requirement under the
mail fraud statute such that his scheme, which he claimed did not involve
a misrepresentation of a past or present fact, could not constitute a
scheme to defraud.
122
The Supreme Court rejected his argument:
We cannot agree with counsel. The statute is broader than is
claimed. Its letter shows this: “Any scheme or artifice to defraud.”
Some schemes may be promoted through mere representations and
promises to the future, yet are none the less schemes and artifices to
defraud.
123
The Supreme Court held that the statute was broader than claimed
by the petitioner on two grounds.
124
One was that a promise as to the
future could constitute a false pretense where the promisor never in-
tended to make good on the promise.
125
The other was that the purpose
of the statute was to protect the public against “all such intentional ef-
forts to despoil, and to prevent the post office from being used to carry
them into effect.”
126
Thirteen years later—in 1909—Congress added the
117
. Id. at 359 (internal citations omitted).
118
. Durland v. United States, 16 U.S. 306 (1896).
119
. See McNally, 483 U.S. at 357-58.
120
. See Durland, 16 U.S. at 312.
121
. See id. at 313.
122
. See id. at 312-13.
123
. Id. at 313.
124
. See id. at 314.
125
. See id.
126
. Durland, 16 U.S. at 314.
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52 SANTA CLARA LAW REVIEW [Vol:60
words “or for obtaining money or property by means of false or fraudu-
lent pretenses, representations, or promises” to the statute.
127
The majority in McNally did not hold that the words inserted in
1909 limited the meaning of the words “to defraud.” The crux of their
reasoning was that “to defraud” means “to defraud of money or prop-
erty” because that is the common meaning of those words. However, by
asserting that the words “or for obtaining money or property by means
of false or fraudulent pretenses, representations, or promises” were in-
serted to codify Durland, the majority suggested that those words were
limited by the words “to defraud.”
Soon after McNally, Congress enacted 18 U.S.C. § 1346: “For the
purposes of this chapter, the term ‘scheme or artifice to defraud’ includes
a scheme or artifice to deprive another of the intangible right of honest
services.” This was a partial revival of the intangible rights doctrine. It
created a statutory intangible right to honest services. But it made no
mention of other intangible rights, such as the right to fair elections or
privacy. The law, therefore, became that a scheme or artifice to defraud
had to deprive another person of money, property, or the intangible right
of honest services for it to constitute mail or wire fraud.
C. Cleveland v. United States
The defendants in Cleveland v. United States applied for licenses to
operate poker machines in the State of Louisiana.
128
They concealed
their dire financial circumstances by using the names of their children in
their applications.
129
They were charged with mail fraud.
130
They ar-
gued that the alleged scheme did not constitute mail fraud because they
had not defrauded the State of property.
131
This argument was premised
upon the proposition that an unissued license was not “property” in the
hands of the State.
132
The District Court rejected their argument and held
that the licenses did constitute property in the hands of the State.
133
The
Fifth Circuit affirmed its decision on appeal.
134
The defendants petitioned the Supreme Court for certiorari.
135
The
Supreme Court unanimously held that the poker machine licenses were
not “property” in the hands of the government such that the defendants
127
. See Act of Mar. 4, 1909, ch. 321, § 215, 35 Stat. 1130.
128
. Cleveland, 531 U.S. at 15-16.
129
. Id. at 16.
130
. Id. at 16-17.
131
. Id. at 17.
132
. See id. at 18.
133
. United States v. Cleveland, 951 F. Supp. 1249, 1261 (E.D. La. 1997).
134
. United States v. Bankston, 182 F.3d 296, 319 (5th Cir. 1999).
135
. See Cleveland, 531 U.S. at 18.
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had not defrauded the government of any money or property.
136
But it
also addressed an alternative argument put by the prosecution. This ar-
gument was that the defendants had devised a scheme “for obtaining”
the licenses by “false pretenses” and, therefore, had breached the second
phrase of the mail fraud statute:
Finally, in an argument not raised below but urged as an alternate
ground for affirmance, the Government contends that § 1341, as
amended in 1909, defines two independent offenses: (1) “any
scheme or artifice to defraud” and (2) “any scheme or artifice . . . for
obtaining money or property by means of false or fraudulent pre-
tenses, representations, or promises.” Because a video poker license
is property in the hands of the licensee, the Government says, [the
defendant] “obtain[ed] . . . property” and thereby committed the sec-
ond offense even if the license is not property in the hands of the
State . . . Although we do not here question that video poker licen-
sees may have property interests in their licenses, we nevertheless
disagree with the Government’s reading of § 1341. In McNally, we
recognized that “[b]ecause the two phrases identifying the pro-
scribed schemes appear in the disjunctive, it is arguable that they are
to be construed independently.” But we rejected that construction of
the statute, instead concluding that the second phrase simply modi-
fies the first by “ma[king] it unmistakable that the statute reached
false promises and misrepresentations as to the future as well as other
frauds involving money or property.” . . . We reaffirm our reading
of § 1341 in McNally.
137
In other words, the Supreme Court held that a scheme “for obtain-
ing money or property by means of false or fraudulent pretenses, repre-
sentations, or promises” must also be a scheme “to defraud” for it to
constitute mail fraud.
138
It affirmed the rejection of the disjunctive read-
ing of the first two phrases by the majority in McNally.
139
It interpreted
the statute as if it were written so as to prohibit the following: devising
or intending to devise a scheme or artifice to defraud, or including a
scheme or artifice for obtaining money or property by means of false or
fraudulent pretenses, representations or promises.
140
Because of this in-
terpretation, the Cleveland decision prevents the publication of fake
news being prosecuted as wire fraud.
136
. Cleveland v. United States, 531 U.S. 12, 20 (2000).
137
. Id. at 25-26 (internal citations omitted).
138
. Id. at 25.
139
. Id. at 25-26.
140
. Id.
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54 SANTA CLARA LAW REVIEW [Vol:60
IV. ILLEGITIMACY OF THE CONJUNCTIVE INTERPRETATION
Cleveland was a unanimous decision of the Supreme Court.
141
The
relevant element of the decision—that the second phrase of the mail
fraud statute is limited by the first—was a response to an argument made
by the prosecution.
142
It was ratio, not dicta. It is therefore binding
throughout the United States. This part of the Article identifies a number
of problems with the decision. Although these problems do not permit
a court other than the Supreme Court to depart from Cleveland, they
should motivate prosecutors eager to overcome the limits it imposes to
run the gauntlet to the Supreme Court.
A. The Purpose of the 1909 Amendment
The majority in McNally said that the purpose of the 1909 amend-
ment was to codify the decision in Durland—to clarify that a scheme to
defraud included a scheme involving false promises.
143
The unanimous
court in Cleveland affirmed this aspect of the majority’s reasoning.
144
But there are good reasons to view it with suspicion. If the purpose of
the amendment was to codify Durland, why did the amendment speak
of “obtaining money or property” and “false or fraudulent pretenses
[and] representations”? Why did Congress not simply add something
like “including by means of false promises” after the words “to de-
fraud”? The words of the amendment were much broader than the pur-
pose ascribed to them by the majority in McNally.
The majority in McNally explained that the 1909 amendment was a
codification of Durland in the following way:
Congress codified the holding of Durland in 1909, and in doing so
gave further indication that the statute’s purpose is protecting prop-
erty rights. The amendment added the words “or for obtaining
money or property by means of false or fraudulent pretenses, repre-
sentations, or promises” after the original phrase “any scheme or ar-
tifice to defraud.” . . . The new language is based on the statement in
Durland that the statute reaches “everything designed to defraud by
representations as to the past or present, or suggestions and promises
as to the future.” . . . However, instead of the phrase “everything de-
signed to defraud” Congress used the words “[any scheme or artifice]
for obtaining money or property.”
145
141
. Id. at 14.
142
. Cleveland, 531 U.S. at 26.
143
. McNally, 483 U.S. at 357-58.
144
. Cleveland, 531 U.S. at 26.
145
. McNally, 483 U.S. at 357-58 (internal citations omitted).
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The majority supported the first sentence of the above extract with
the following footnote:
The new language was suggested in the Report of the Commission
to Revise and Codify the Criminal and Penal Laws of the United
States, which cited Durland in the margin of its Report . . . . The
sponsor of the 1909 legislation did not address the significance of
the new language, stating that it was self-explanatory.
146
As is apparent from the combination of the footnote and the text,
the majority based its assertion that the 1909 amendment was a codifi-
cation of Durland purely upon the reference to Durland in the margin of
the Report of the Commission to Revise and Codify the Criminal and
Penal Laws of the United States. The fact that the sponsor of the legis-
lation said that the language was “self-explanatory” is neither here nor
there.
147
If anything, it suggests a literal interpretation, not an interpre-
tation that construes the new language as having a purpose at odds with
its literal meaning.
The report to which the majority referred was split into two parts.
148
The first part contained the report itself.
149
The second contained a pro-
posed revised penal code.
150
The commissioners did not refer to the ad-
dition of the words “or for obtaining money or property by means of
false or fraudulent pretenses, representations, or promises” in the actual
report.
151
The report, insofar as it addressed the proposed changes to the
mail fraud statute, explained why two tracts of the statute had been re-
moved, and why other words had been inserted.
152
The margin of the
report contained no references.
153
The reference to Durland was in the
margin of the proposed penal code.
154
It appears that the commissioners used the margin of the proposed
penal code to set out the decisions to which they had turned their minds
during the drafting process. Durland was one of thirty-three decisions
referred to in the margin alongside the proposed mail fraud provision.
155
Nothing about its placement or position suggests that the commissioners
considered it to be more significant than any of the others; and none of
146
. Id. at 357 n.7 (internal citations omitted).
147
. Id.
148
. See generally id.
149
. See S. REP. NO. 57-68, pt. 2, at III-XXXIV.
150
. Id. at 1.
151
. See generally id. at III-XXXIV.
152
. See S. REP. NO. 57-68, pt. 2, at XVI (1901).
153
. See generally id.
154
. Id. at 63.
155
. Id. at 63.
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56 SANTA CLARA LAW REVIEW [Vol:60
the references were accompanied by explanatory text.
156
Therefore, on
the majority’s reasoning, it seems that the 1909 amendment was a codi-
fication of thirty-three decisions, not just a codification of Durland.
157
This proposition flows not just from the presence of those decisions
in the margin but also from the following statement by the commission-
ers in the introduction to their report:
In compliance with the provision of the act of Congress that requires
us to “indicate any proposed change in the substance of existing
law,” we submit the following, premising that we do not here note
changes of phraseology only which are designed to secure uni-
formity or greater precision of expression.
158
The commissioners recognized that they were obliged to indicate
any changes to the substance of the existing law and clarified that they
would not indicate changes of phraseology only. This suggests that the
commissioners regarded the addition of the words “or for obtaining
money or property by means of false or fraudulent pretenses, represen-
tations, or promises” in substance to represent the existing law and that
they introduced the words to “secure uniformity or greater precision of
expression.”
159
There is no evidence to suggest that they inserted the
words to modify the meaning of the words “to defraud.” Nor is there
any evidence that they intended the word “or” to be interpreted conjunc-
tively. The words “or for obtaining money or property by means of false
or fraudulent pretenses, representations, or promises” were inserted to
overcome the lack of precision of the words “to defraud.” The two
phrases represent what the commissioners considered to be two ways of
saying the same thing.
The problem for the Supreme Court in Cleveland is that the com-
missioners were mistaken. The two phrases, taken literally, are not two
ways of saying the same thing. There are slight differences between
them. The arguments advanced by the prosecution in Cleveland and by
this Article prove that there are schemes “for obtaining money or prop-
erty by means of false or fraudulent pretenses, representations, or prom-
ises” that are not schemes “to defraud.” Therefore, the issue is not
whether, as held in Cleveland, the second phrase was intended to modify
the first. It is clear that it was not. Rather, the issue is whether the scope
of the second phrase, read disjunctively, should be limited on the basis
that it was not expected to broaden the scope of the statute, or whether
156
. See id.
157
. Analysis of the thirty-three decisions does not appear to provide any additional as-
sistance as to the meaning of the 1909 amendment.
158
. S. REP. NO. 57-68, pt. 2, at VII.
159
. Id. at 63.
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the second phrase should be interpreted according to its plain meaning,
so that the statute is able to capture new forms of fraud.
B. Use of Legislative Intent
There is a canon of statutory construction that clear evidence of leg-
islative intent may illuminate ambiguous text.
160
This canon exists to
supplement the “plain meaning rule”—that if the language of a statute is
unambiguous, it must be applied according to its terms.
161
The majority
in McNally relied upon legislative intent in order to interpret the 1909
amendment as a codification of Durland.
162
The previous section con-
tended that the majority misinterpreted the purpose of the 1909 amend-
ment. There are also good reasons to question their very use of legisla-
tive intent as an aid to construction.
The canon requires clear evidence of legislative intent. But there
was not clear evidence of the purpose of the 1909 amendment. The ma-
jority described the mail fraud statute as having a “sparse legislative his-
tory.”
163
The only evidence relevant to the 1909 amendment was the
report of the law reform commission and the records of Congress. The
report ascribed no particular purpose to the amendment beyond the gen-
eral purpose of better expressing the law as it existed at the time. The
representative who sponsored the bill said that the amendment was “self-
explanatory.”
164
Furthermore, the canon provides that the clear evidence may illu-
minate ambiguous text. But the majority never said that the phrase “or
for obtaining money or property by means of false or fraudulent pre-
tenses, representations, or promises” was ambiguous. They never ques-
tioned the meaning of the words “or,” “obtaining,” “false,” “fraudulent,”
“pretense,” “representation,” or “promise.” They never asked what it
meant for one thing to be “by means of” another. They relied upon their
interpretation of the purpose of the amendment without considering the
meaning of the words themselves. This was, respectfully, an inappro-
priate use of legislative intent.
160
. See, e.g., Milner v. Dep’t of the Navy, 562 U.S. 562, 572 (2011) (“Those of us who
make use of legislative history believe that clear evidence of congressional intent may illumi-
nate ambiguous text. We will not take the opposite tack of allowing ambiguous legislative
history to muddy clear statutory language.”).
161
. See, e.g., Consumer Prod. Safety Comm’n v. G.T.E. Sylvania, Inc., 447 U.S. 102,
108 (1980); Griffin v. Oceanic Contractors, 458 U.S. 564, 570 (1982); United States v. Ron
Pair Enters., Inc., 489 U.S. 233, 242 (1989); Hartford Underwriters Ins. Co. v. Union Planters
Bank, 530 U.S. 1, 6 (2000); Sebelius v. Cloer, 569 U.S. 369, 381 (2013).
162
. McNally, 483 U.S. at 357.
163
. Id. at 356. See generally Jed S. Rakoff, The Federal Mail Fraud Statute, 18 DUQ. L.
REV. 771, 779-86 (1980) (discussing the origin of the mail fraud statute).
164
. See McNally, 483 U.S. at 357 n.7.
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58 SANTA CLARA LAW REVIEW [Vol:60
C. Inconsistency with the Bank Fraud Statute
Another canon of statutory construction is the “presumption of con-
sistent usage.” According to this presumption, identical words in differ-
ent parts of the same statute should generally be presumed to have the
same meaning.
165
It is perhaps trivial to note that the word “or” is used
forty times in the mail fraud statute but was interpreted conjunctively
only once. But it is not trivial to compare the use of the word “or” in the
mail fraud statute with its use in other provisions of the United States
Penal Code. In particular, it is not trivial to compare it to the use of the
word “or” in the bank fraud statute.
166
The bank fraud statute shares the language but not the style of the
mail fraud and wire fraud statutes:
Whoever knowingly executes, or attempts to execute, a scheme or
artifice—
(1) to defraud a financial institution; or
(2) to obtain any of the money, funds, credits, assets, securities,
or other property owned by, or under the custody or control
of, a financial institution, by means of false or fraudulent
pretenses, representations, or promises;
shall be fined not more than $1,000,000 or imprisoned not more than
30 years, or both.
167
The meaning of the word “or” in the bank fraud statute arose for
consideration in Loughrin v. United States.
168
The defendant purchased
goods from Target using stolen checks and returned the goods in ex-
change for cash.
169
He was convicted of breaching subsection (2) of the
statute.
170
Before the Supreme Court, he argued that he should not have
been convicted because he had defrauded Target, not a financial institu-
tion.
171
One aspect of his argument was that subsection (2) of the bank
fraud statute was limited by subsection (1) in the same way that the
165
. The Supreme Court has recognized the existence of this presumption but emphasized
that it readily yields to context. See Atlantic Cleaners & Dyers v. United States, 286 U.S. 427,
433 (1932); Envtl. Def. v. Duke Energy Corp., 549 U.S. 561, 574 (2007); Utility Air Regula-
tory Grp. v. E.P.A., 573 U.S. 302, 320 (2014); see also ANTONIN SCALIA & BRYAN A.
GARNER, READING LAW 170-73 (2012) (explaining the presumption of consistent usage as a
canon of statutory construction).
166
. 18 U.S.C. § 1344.
167
. Id.
168
. 573 U.S. 351 (2014).
169
. Id. at 353.
170
. Id. at 355.
171
. Id. at 356.
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second phrase of the mail fraud statute was limited by the first in
McNally and Cleveland.
172
The Supreme Court rejected his argument:
The single question presented is whether the Government must prove
yet another element: that the defendant intended to defraud a bank.
As Loughrin describes it, that element would compel the Govern-
ment to show not just that a defendant intended to obtain bank prop-
erty (as the jury here found), but also that he specifically intended to
deceive a bank. And that difference, Loughrin claims, would have
mattered in this case, because his intent to deceive ran only to Target,
and not to any of the banks on which his altered checks were drawn
. . . . That is because the first clause of § 1344, as all agree, includes
the requirement that a defendant intend to “defraud a financial insti-
tution”; indeed, that is § 1344(1)’s whole sum and substance. To
read the next clause, following the word “or,” as somehow repeating
that requirement, even while using different words, is to disregard
what “or” customarily means. As we have recognized, that term’s
“ordinary use is almost always disjunctive, that is, the words it con-
nects are to be given separate meanings.” Yet Loughrin would have
us construe the two entirely distinct statutory phrases that the word
“or” joins as containing an identical element. And in doing so, his
interpretation would make § 1344’s second clause a mere subset of
its first: If, that is, § 1344(2) implicitly required intent to defraud a
bank, it would apply only to conduct already falling within §
1344(1). Loughrin’s construction thus effectively reads “or” to
mean “including”—a definition foreign to any dictionary we know
of.
173
The Supreme Court’s assertion that to read “or” as “including” is
foreign to any known dictionary undermines both McNally and Cleve-
land and defies the presumption of consistent usage. But the judges were
alive to the disharmony they were creating. The defendant had relied
upon McNally in support of his argument:
Loughrin rightly explains that, despite the word “or,” McNally un-
derstood [the mail fraud statute] as setting forth just one offense—
using the mails to advance a scheme to defraud. The provision’s
back half, we said, merely codified a prior judicial decision applying
the front half: In other words, the back clarified that the front in-
cluded certain conduct, rather than doing independent work.
174
The Supreme Court in Loughrin distinguished McNally on three
grounds. The first ground related to the structural differences between
the bank fraud and the mail fraud statutes:
172
. Id. at 359-62.
173
. Id. at 356-57 (internal citations omitted).
174
. Loughrin, 573 U.S. at 359.
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60 SANTA CLARA LAW REVIEW [Vol:60
[T]he two statutes, as an initial matter, have notable textual differ-
ences. The mail fraud law contains two phrases strung together in a
single, unbroken sentence. By contrast, § 1344’s two clauses have
separate numbers, line breaks before, between, and after them, and
equivalent indentation—thus placing the clauses visually on an equal
footing and indicating that they have separate meanings. The legis-
lative structure thus reinforces the usual (even if not McNally’s) un-
derstanding of the word “or” as meaning . . . well, “or”—rather than,
as Loughrin would have it, “including.”
175
There is no doubt that by separating the two phrases into subsec-
tions and dividing them by line breaks, Congress indicated its intention
that the two phrases in the bank fraud statute were to be read disjunc-
tively. But it does not follow from the absence of subsections and line
breaks in the mail fraud statute that Congress intended the mail fraud
statute to be read conjunctively. The failure of Congress to draft the mail
fraud statute in a more readable way is evidence of nothing more than its
adherence to a now (thankfully) defunct style of drafting.
The second ground upon which the Supreme Court in Loughrin dis-
tinguished McNally concerned the existence of what it called a “serious
chronological problem”:
Congress passed the bank fraud statute in 1984, three years before
we decided that case. And at that time, every Court of Appeals to
have addressed the issue had concluded that the two relevant phrases
of the mail fraud law must be read “in the disjunctive” and “con-
strued independently.” McNally disagreed, eschewing the most nat-
ural reading of the text in favor of evidence it found in the drafting
history of the statute’s money-or-property clause. But the Congress
that passed the bank fraud statute could hardly have predicted that
McNally would overturn the lower courts’ uniform reading. We thus
see no reason to doubt that in enacting § 1344, Congress said what it
meant and meant what it said . . . i.e., that it both said “or” and meant
“or” in the usual sense.
176
This ground proposes that Congress, when it enacted the bank fraud
statute in 1984, mistakenly believed, due to its reliance upon decisions
that were overruled in 1987, that the Congress that amended the mail
fraud statute in 1909 intended the mail fraud statute to be interpreted
disjunctively. The Supreme Court relied on this argument to support its
disjunctive interpretation of the bank fraud statute. But this argument
may also support a disjunctive interpretation of the mail and wire fraud
statutes. The ground accepts that Congress was aware of and satisfied
175
. Id. at 359.
176
. Id. at 359-60 (internal citations omitted).
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with the disjunctive interpretation of the mail and wire fraud statutes in
1984. Re-enactment of a statute is evidence of legislative ratification of
the “settled construction” of the parts of the statute that are not altered.
177
And failure of Congress to amend a statute after it has been interpreted
“is persuasive of legislative recognition that the judicial construction is
the correct one.”
178
The enactment of the bank fraud statute was not a
re-enactment of the mail or wire fraud statutes. But its replication of the
language used in those statutes signal legislative approval of the disjunc-
tive interpretation known to Congress in 1984.
The third ground upon which the Supreme Court in Loughrin dis-
tinguished McNally was based upon the 1909 amendment:
And a peek at history, of the kind McNally found decisive, only cuts
against Loughrin’s reading of the bank fraud statute. According to
McNally, Congress added the mail fraud statute’s second, money-or-
property clause merely to affirm a decision of ours interpreting the
ban on schemes “to defraud”: The second clause, McNally reasoned,
thus worked no substantive change in the law. By contrast, Congress
passed the bank fraud statute to disapprove prior judicial rulings and
thereby expand federal criminal law’s scope—and indeed, partly to
cover cases like Loughrin’s . . . . We will not deprive that enactment
of its full effect because McNally relied on different history to adopt
a counter-textual reading of a similar provision.
179
This is the real crux of the distinction drawn by the Supreme Court
between the mail fraud statute and the bank fraud statute. Congress in-
tended the mail fraud statute to be read in the conjunctive because its
purpose was to affirm Durland. However, as explained earlier, Congress
did not amend the statute merely to codify Durland. This means that the
Supreme Court justified its interpretation of the word “or” as meaning
“including”—an interpretation that it said was “foreign to any diction-
ary”—upon a false premise. In these circumstances, the disharmony be-
tween the mail and wire fraud statutes and the bank fraud statute cannot
stand. The universal interpretation should be one where “or” means, in
the Supreme Court’s own words: “well, ‘or.’”
177
. See, e.g., Lorillard v. Pons, 434 U.S. 575, 580 (1978); Monessen S.W. Ry. v. Morgan,
486 U.S. 330, 338-39 (1988); Pierce v. Underwood, 487 U.S. 552, 567 (1988); Ankenbrandt
v. Richards, 504 U.S. 689, 700 (1992); Jama v. Immigration and Customs Enf’t, 543 U.S. 335,
349-52 (2005).
178
. Apex Hosiery Co. v. Leader, 310 U.S. 469, 488 (1940); see also Bob Jones Univ. v.
United States, 461 U.S. 574, 601 (1983); see, e.g., Zuni Pub. Sch. Dist. No. 89 v. Dep’t of
Educ., 550 U.S. 81, 90-91 (2007) (considering Congress’s failure to criticize, revise, or recon-
sider an adopted definition of a statute while determining its construction).
179
. Loughrin, 573 U.S. at 360-61 (internal citations omitted).
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62 SANTA CLARA LAW REVIEW [Vol:60
V. REASONS TO FAVOR THE DISJUNCTIVE INTERPRETATION
The Supreme Court in Loughrin was right to describe the interpre-
tation of “or” in McNally and Cleveland as “foreign to any dictionary.”
180
Reading “or” as “including” was not interpretation. It was substitution
of one word for another—something the judiciary is not supposed to do.
To read “or” as “including” requires every litigant, lawyer and judge to
ask whether “or” means “or” or whether it means something else every
time it appears. This throws not only the interpretation of statutes, but
also rules, regulations and contractual terms, into doubt, which increases
the likelihood of discordance, and, therefore, litigation. The conjunctive
interpretation could be overruled on the sole ground that it strays too far
from the plain meaning of the statute. But there are other reasons to
favor the adoption of a disjunctive interpretation. This part sets out those
reasons. It is split into five sections. The first section describes the prac-
tical effect of adopting a disjunctive interpretation. The second, third
and fourth sections set out three reasons to favor its adoption. The final
section rebuts counterarguments that opponents of a disjunctive inter-
pretation may seek to proffer.
A. Frauds that do not Defraud
The disjunctive interpretation would extend the reach of the wire
fraud statute to schemes “for obtaining money or property by means of
false or fraudulent pretenses, representations, or promises” that are not
also schemes “to defraud.”
181
The introduction to this Article explained
that to “defraud” is to deprive by dishonest means.
182
Most schemes “for
obtaining money or property by means of false or fraudulent pretenses,
representations, or promises” are schemes to deprive by dishonest
means. This means that in most cases the adoption of a disjunctive in-
terpretation will not make a difference. However, not all fraudulent
schemes are schemes to defraud. There are some “frauds that do not
defraud.” These kinds of frauds are not captured by the conjunctive in-
terpretation but would be captured by a disjunctive interpretation. They
may be broken into three categories.
The first category is where there is no person to deprive of the
money or property: if there is no person to deprive, there is no person to
defraud. This category includes situations in which the defendant ob-
tains money or property that is not possessed or owned by anyone—
property that has never had an owner or has been abandoned. It is hard
180
. Id. at 357.
181
. See supra Section (I).
182
. Id.
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to imagine a situation where a person could obtain un-owned or aban-
doned property by means of a false or fraudulent pretense, representation
or promise. But if such a situation were ever to exist, it would be a fraud
that does not defraud.
The second category is where the person from whom the property
is obtained is not deprived of the property: if there is no deprivation,
there cannot be a dishonest deprivation. This may occur where the ac-
quired property only becomes property upon or after its acquisition. Li-
censes issued by a government authority are an example.
183
It may also
occur where the property is capable of being used by more than one per-
son at the same time. The bulk of this kind of property is intangible.
Examples include information such as stock tips,
184
news stories,
185
or
recipes,
186
and digital products such as computer programs and online
subscription services.
187
The third category is where the acquisition but not the deprivation
is dishonest: if the deprivation is not dishonest, there cannot be a dishon-
est deprivation. This occurs where one person deceives a second person
in order to obtain something from a third person pursuant to a bona fide
transaction. This kind of fraud that does not defraud is possible within
a two-sided market in which one side of the market is not charged. Pub-
lishing fake news is perhaps the first, but is unlikely to be the last, ex-
ample of this kind. The acquisition is dishonest because the publisher
deceives the readers in order to profit by selling exposure to advertisers.
But the deprivation is not dishonest because: (1) the readers are not sub-
jected to any deprivation—they do not pay to read the stories; and (2)
the deprivation of the advertisers is honest—the publisher is entitled to
be paid for providing exposure to the readers.
188
Not all cases in which one person deceives another in order to ob-
tain money or property from a third person fall into this category. The
category only encompasses circumstances where: (1) the first person and
the third person enter a legitimate agreement; (2) the first person fulfills
her or his end of the bargain by being dishonest to the second person;
and (3) the second person is not deprived of anything recognised by the
183
. See, e.g., Cleveland v. United States, 531 U.S. 12 (2000). See also Donna M. Maus,
License Procurement and the Federal Mail Fraud Statute, 58 U. CHI. L. REV. 1125, 1142-49
(1991) (arguing that licenses are not property); Geraldine Szott Moohr, Federal Criminal
Fraud and the Development of Intangible Property Rights in Information, 2000 U. ILL. L.
REV. 683, 708-13 (2000) (discussing theories pursuant to which courts have attempted to de-
termine whether unissued licenses are property).
184
. See, e.g., Carpenter v. United States, 484 U.S. 19 (1987).
185
. See, e.g., Int’l News Serv. v. Associated Press, 248 U.S. 215, 263-67 (1918).
186
. See, e.g., Moohr, supra note 183, 692-93 (giving example of carrot cake recipe).
187
. Id. at 728 (discussing online databases).
188
. See supra Sections (II)(B) and (II)(C).
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64 SANTA CLARA LAW REVIEW [Vol:60
law—i.e. money, property or an intangible right. If not for the legitimate
agreement between the first person and the third person, the scheme
would be a scheme “to defraud,”
189
as there is no requirement that the
person deceived be the person who is deprived of the money or prop-
erty.
190
And if the second person was deprived of something recognised
by the law, the scheme would be a conventional scheme “to defraud,” as
the second person would have been subjected to dishonest deprivation.
B. One Purpose of Wire Fraud is to Prohibit the Making of Dishonest
Gains
The first reason to favor the disjunctive interpretation is that it
would help the statute fulfill one of its underlying purposes: to prohibit
the making of dishonest gains. This aspect of its purpose is not always
obvious. Superficially, the purpose of the statute appears to be to
189
. See, e.g., United States v. Granberry, 908 F.2d 278, 280 (8th Cir. 1990).
190
. See United States v. Pepper, 51 F.3d 469, 473 (5th Cir. 1995) (“There is no statutory
requirement that direct misrepresentations must be made to the victims of the scheme.”);
United States v. Blumeyer, 114 F.3d 758, 767 (8th Cir. 1997); United States v. Christopher
142 F.3d 46, 54 (1st Cir. 1998) (“Nothing in the mail and wire fraud statutes requires that the
party deprived of money or property be the same party who is actually deceived.”); United
States v. Ratcliff, 488 F.3d 639, 645 (5th Cir. 2007) (“the misrepresentations in a mail fraud
scheme need not be made directly to the scheme’s victim”); United States v. Sorich, 523 F.3d
702, 713 (7th Cir. 2008); United States v. McMillan 600 F.3d 434, 449-50 (5th Cir. 2010)
(holding that the prosecution “was not required to prove that misrepresentations were made
directly to any of the victims”); United States v. Seidling, 737 F.3d 1155, 1161 (7th Cir. 2013)
(“this Court does not interpret the mail fraud statute as requiring convergence between the
misrepresentations and the defrauded victims”); United States v. Greenberg, 835 F.3d 295,
306 (2nd Cir. 2016). There are no persuasive authorities to the contrary. In United States v.
Evans, 844 F.2d 36, 38-40 (2nd Cir. 1988) the Second Circuit said: “it may be the correct view
of the statute . . . that the deceived party must lose some money or property.” But in Greenberg
it rejected the proposition: “wire fraud does not require convergence between the parties in-
tended to be deceived and those whose property is sought in a fraudulent scheme.” See Green-
berg, 835 F.3d at 306. In United States v. Lew, 875 F.2d 219, 221 (9th Cir. 1989) the Ninth
Circuit said that McNally “made it clear that the intent must be to obtain money or property
from the one who is deceived.” Other circuits rightly doubted that proposition. See Evans, 844
F.2d at 39 (“as we read McNally, the Supreme Court did not focus on whether the person
deceived also had to lose money or property”) and Christopher, 142 F.3d at 54 (“McNally
itself says nothing about convergence”). In United States v. Walters, 997 F.2d 1219, 1227 (7th
Cir. 1993) the Seventh Circuit held that “only a scheme to obtain money or other property
from the victim by fraud violates § 1341.” In Sorich the Seventh Circuit confined the meaning
of this statement. See Sorich, 523 F.3d at 713. It explained that the statement “was not a re-
quirement that the defendant receive the money or property [from the victim], but rather a
way of illustrating a deeper problem with the case.” Id. The defendant in Walters was an agent
who signed college athletes as clients and thereby caused them to violate the terms of their
scholarships. Walters, 997 F.2d at 1227. The “deeper problem” was that the scheme was not
a scheme to defraud the colleges of the scholarships. Id. at 1224. The payment of scholarship
money to the athletes was incidental to the scheme. Id. at 1225-26. See also United States v.
Seidling, 737 F.3d 1155, 1160-61 (7th Cir. 2013); United States v. Wolf, No. 03 CR 532-2,
slip op. at 4 (D.C. N.D. Ill. Aug. 31, 2005) (“the Seventh Circuit’s holding focused upon
Walters’ intent”).
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prohibit the dishonest infliction of losses by means of telecommunica-
tions. But wire fraud is more than a criminal version of the tort of deceit.
It also captures schemes to defraud that do not cause the victim(s) to
suffer any loss.
To say that the statute does not require loss is not the same thing as
saying that the statute does not require deprivation. There is a difference
between loss and deprivation. If one person tricks another into purchas-
ing property, the purchaser is deprived of the purchase price. But the
purchaser only suffers a loss if the purchase price was greater than the
value of the property. If the purchase price was less than or equal to the
value of the property, the purchaser may on-sell the property to recover
the purchase price and thereby mitigate the loss.
The authorities support the proposition that the wire fraud statute
does not require loss for at least eight reasons. The first is that the statute
prohibits “devising” or “intending to devise” a “scheme or artifice.”
There is no need to prove loss because there is no need to prove that the
scheme or artifice was successfully executed—an attempt, or even an
intent, is enough. This reason flows from the clear words of the statute
itself and is universally accepted.
191
The second reason is that a person who dishonestly deprives an-
other of only the use of property has defrauded that person of the prop-
erty.
192
The implications of this reason depend on the kind of property
involved. If the property may be used by only one person at a time, the
defendant causes a loss to the victim whilst he or she is using it, and may
risk losing it whilst using it. The scheme is not truly “lossless” because
it risks loss and because elimination of the loss depends upon the de-
fendant restoring the victim to her or his original position. However, if
the property is capable of being used by more than one person at a time,
the victim will only suffer a loss if the use by the defendant diminishes
191
. See, e.g., Neder v. United States, 527 U.S. 1, 25 (1999) (“By prohibiting the ‘scheme
to defraud,’ rather than the completed fraud, the elements of reliance and damage would
clearly be inconsistent with the statutes Congress enacted.”); Pasquantino v. United States,
544 U.S. 349, 371 (2005) (“[T]he wire fraud statute punishes the scheme, not its success.”
(quoting United States v. Pierce, 224 F.3d 158, 166 (2d Cir. 2000) (internal quotation marks
omitted)).
192
. See, e.g., Carpenter, 484 U.S. at 26-27; Shaw v. United States, 137 S. Ct. 462, 467
(2016). In Carpenter the defendants profited by obtaining access to the contents of an influ-
ential investment column published by the Wall Street Journal. Carpenter, 484 U.S. at 26-27.
The Supreme Court held: “Petitioners cannot successfully contend . . . that a scheme to de-
fraud requires a monetary loss, such as giving the information to a competitor; it is sufficient
that the Journal has been deprived of its right to exclusive use of the information, for exclu-
sivity is an important aspect of confidential business information and most private property
for that matter.” Id.
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66 SANTA CLARA LAW REVIEW [Vol:60
its value.
193
If the use does not diminish its value, the victim does not
suffer a loss, and the scheme is lossless.
The third reason is that there is no need to prove loss of money or
tangible property if the victim has suffered a loss of an intangible right.
194
This suggests that the purpose of the statute is to prevent loss but that it
encompasses losses of intangible rights as well as losses of money or
tangible property. It cannot be taken as evidence of the purpose of the
whole statute because the intangible rights doctrine was abolished in
McNally.
195
But it is evidence of its purpose with respect to a scheme to
deprive others of the intangible right to honest services under 18 U.S.C.
§ 1346.
The fourth reason is that a fiduciary who makes a secret profit does
not have to cause the principal to suffer a loss because the fraud is inher-
ent in the breach of duty.
196
However, as the original decisions based
upon this reasoning were enmeshed with the intangible rights doctrine
(a breach of fiduciary duty being a deprivation of the right to honest ser-
vices)
197
their authority did not survive the decision in McNally. The
reasoning now rests upon 18 U.S.C. § 1346, which, pursuant to the
193
. See Moohr, supra note 183, at 734 (“when intangible property is taken, the owner
still possesses and may even use the property. Because owners lose only exclusive use, their
harm is lost financial value”).
194
. See, e.g., United States v. George, 477 F.2d 508, 512 (7th Cir. 1973); United States
v. States, 488 F.2d 761, 766 (8th Cir. 1973); United States v. Isaacs, 493 F.2d 1124, 1149-50
(7th Cir. 1974); United States v. Keane, 522 F.2d 534, 546 (7th Cir. 1975); United States v.
Bryza, 522 F.2d 414, 421-22 (7th Cir. 1975); United States v. Rauhoff, 525 F.2d 1170, 1175
(7th Cir. 1975); United States v. Bush, 522 F.2d 641, 646 (7th Cir. 1975); United States v.
Brown, 540 F.2d 364, 374 (8th Cir. 1976); United States v. Mandel, 591 F.2d 1347, 1361-62
(4th Cir. 1979); United States v. Bohonus, 628 F.2d 1167, 1172 (9th Cir. 1980); United States
v. Von Barta, 635 F.2d 999, 1005-07 (2nd Cir. 1980); United States v. Margiotta, 688 F.2d
108, 121 (2nd Cir. 1982); United States v. Barber, 668 F.2d 778, 784 n.4 (4th Cir. 1982);
United States v. Boffa, 688 F.2d 919, 926 (3rd Cir. 1982); United States v. Clapps, 732 F.2d
1148, 1153 (3rd Cir. 1984); United States v. Price, 788 F.2d 234, 237 (4th Cir. 1986); United
States v. Lovett, 811 F.2d 979, 984 (7th Cir. 1987); United States v. Silvano, 812 F.2d 754,
759 (1st Cir. 1987).
195
. McNally, 483 U.S. at 356-60.
196
. Most of the decisions that speak of secret profits involved schemes whereby the fi-
duciary caused the principal to suffer a loss. See, e.g., United States v. Buckner, 108 F.2d 921,
926-27 (2nd Cir. 1940); United States v. Groves, 122 F.2d 87, 90 (2nd Cir. 1941); United
States v. Hoffa, 205 F. Supp. 710 (S.D. Fla. 1962); United States v. Boffa, 688 F.2d 919, 930-
31 (3rd Cir. 1982); United States v. Silvano, 812 F.2d 754, 759-60 (1st Cir. 1987). Others
involved secret profits that the court said deprived the principal of a gain to which it was
entitled. See, e.g., United States v. Barrett, 505 F.2d 1091, 1104 (7th Cir. 1974); United States
v. Bush, 522 F.2d 641, 647 (7th Cir. 1975). The only decision in which the gain was not linked
to some form of loss appears to be United States v. Isaacs, 493 F.2d 1124, 1149 (7th Cir.
1974).
197
. See, e.g., United States v. Isaacs, 493 F.2d 1124, 1149-50 (7th Cir. 1974); United
States v. Margiotta, 688 F.2d 108, 121 (2nd Cir. 1982) (“it is now a commonplace that a
breach of fiduciary duty in violation of the mail fraud statute may be based on artifices which
do not deprive any person of money or other forms of tangible property”).
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decision of the Supreme Court in Skilling v. United States, extends only
to fiduciary frauds involving bribes or kickbacks.
198
The fifth reason is that a lack of financial loss is not a defense to
the offense of obtaining property by false pretenses,
199
and the mail and
wire fraud statutes reflect the law relating to false pretenses in this
way.
200
This reason is particularly important. It demonstrates that loss
traditionally is not an element of criminal fraud.
The sixth reason is that the insertion of the words “or for obtaining
money or property by means of false or fraudulent pretenses, represen-
tations, or promises” was “evidently intended to enlarge the scope of the
act.”
201
This reason is questionable in view of the drafting history re-
counted earlier. The insertion of the new words did enlarge the scope of
the statute. But they enlarged it to encompass frauds of a kind that Con-
gress could not have anticipated at the time.
The seventh reason is that any other construction of the statute
would “deprive it of all force” in dealing with fraudulent schemes
198
. 561 U.S. 358, 408-09 (2010).
199
. See, e.g., People v. Bryant, 119 Cal. 595, 597 (Cal. 1898) (“If a person is induced to
part with his property by reason of fraudulent pretenses and misrepresentations, he is thereby
defrauded of the property so parted with, even though he may eventually make himself whole
in some mode not then contemplated”); Ex parte Rudebeck, 95 Wash. 433, 440 (Wash. 1917)
(“[T]he cases frequently declare that the owner must have been actually defrauded. But this
expression does not imply that he must have suffered actual pecuniary loss.”); People v. Bar-
tels, 77 Colo. 498, 500 (Colo. 1925) (“[I]t is not necessary that the prosecutor should sustain
a pecuniary loss.”); State v. Sargent, 2 Wash.2d 190, 193 (Wash. 1940) (“[W]hether or not
the owner suffered a pecuniary loss is immaterial.”); People v. Talbott, 65 Cal.App.2d 654,
659 (Cal. 1944) (“The victim is merely a witness whose ultimate financial gain or loss, in the
circumstances, is immaterial.”); Nelson v. United States, 227 F.2d 21, 25 (D.C. Cir. 1955)
(holding fraud committed where defendant obtained two television sets but provided security
worth five times their value); State v. Mills, 96 Ariz. 377, 381 (Ariz. 1964); State v. Hines, 36
N.C. App. 33, 41-42 (N.C. 1978) (“[A] showing of actual pecuniary loss by the victim/pros-
ecuting witness is not necessary to sustain a conviction for obtaining property through false
pretenses.”); State v. Kennedy, 105 Wis.2d 625, 631-33 nn.1-2 (Wis. 1981); State v. Gruber,
132 N.H. 83, 91-92 (N.H. 1989); Hale v. State, 214 Ga. App. 899, 901 (Ga. 1994); State v.
Bouchard, 881 A.2d 1130, 1134 (Me. 2005); Scott v. States, 277 Ga. App. 876, 878-79 (Ga.
2006); State v. Cagle, 182 N.C. App. 71, 77 (N.C. 2007). See generally JEROME HALL,
GENERAL PRINCIPLES OF CRIMINAL LAW 240-46 (2nd ed. 1960); GEORGE P FLETCHER,
RETHINKING CRIMINAL LAW § 1.3.4 (2000); WAYNE LAFAVE, SUBSTANTIVE CRIMINAL
LAW § 19.7(i)(3) (5th ed. 2010).
200
. See, e.g., Neder v. United States, 527 U.S. 1, 24-25 (1999) (holding that requirements
of reliance and damages “plainly have no place in the federal fraud statutes”). But the Supreme
Court has not interpreted the statutes as if they replicate all the elements of the false pretenses
offense. Compare Durland, 16 U.S. at 313 (rejecting the argument that the mail fraud statute
only reaches cases that would come within the definition of false pretenses) with Neder, 527
U.S. at 25 (holding that the requirement of materiality applies to the mail and wire fraud stat-
utes).
201
. Moore v. United States, 2 F.2d 839, 841 (7th Cir. 1924), overruling Miller v. United
States, 174 F. 35 (7th Cir. 1909).
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68 SANTA CLARA LAW REVIEW [Vol:60
involving the purchase of property of uncertain value.
202
“[I]n how many
cases could the government show that [the victims] failed to get their
money’s worth?”
203
On one view, this reason appears to suggest that the
purpose of the statute is to punish loss, but that it does not require loss
where loss is too difficult to prove. On another, it may be taken to sug-
gest that the law should not allow difficulties in determining loss to pre-
vent the prosecution of those who make dishonest gains.
The final reason is that the “loss of a chance to bargain with the
facts” is enough. This reason originated in United States v. Rowe.
204
There Judge Learned Hand noted that the indictment did not allege that
any of the victims had suffered a loss and said:
Civilly of course the action would fail without proof of damage, but
that has no application to criminal liability. A man is none the less
cheated out of his property, when he is induced to part with it by
fraud, because he gets a quid pro quo of equal value. It may be im-
possible to measure his loss by the gross scales available to a court,
but he has suffered a wrong; he has lost his chance to bargain with
the facts before him. That is the evil against which the statute is
directed.
205
This reason appears to suggest that the scheme does require loss,
but that the loss does not have to be measured in terms of money or
property. In this way, it is similar to the third reason, which suggested
that the loss could be of an intangible right. But to speak of a loss of a
“chance to bargain with the facts” is really to speak of a loss of honesty.
This makes the final reason far broader than the others: the mere pres-
ence of dishonesty in a transaction renders the dishonest party guilty of
fraud.
206
These reasons and their supporting authorities prove that the wire
fraud statute does not require the victim to suffer a loss. The conse-
quences of this proposition are substantial. Imagine a person who is
tricked into purchasing something that turns out to be something other
than what the seller represented it to be. As the statute does not require
202
. Wilson v. United States, 190 F. 427, 434 (2nd Cir. 1911).
203
. Id. See also Cowl v. United States, 35 F.2d 794, 797 (8th Cir. 1929).
204
. United States v. Rowe, 56 F.2d 747 (2nd Cir. 1932).
205
. Id. at 749.
206
. See also United States v. Bernard, 84 F. 634, 635 (S.D.N.Y. 1898) (obtaining of
money by false pretenses constitutes scheme to defraud even where defendants intended to
invest money for benefit of victims); United States v. Granberry, 908 F.2d 278, 280 (8th Cir.
1990) (lying on application for school bus operator permit held to constitute scheme to defraud
school district of salary despite proper performance of duties); United States v. Schwartz, 924
F.2d 410, 421 (2nd Cir. 1991) (lying to military equipment supplier about identity of customer
held to constitute scheme to defraud supplier of night vision goggles despite making full pay-
ment).
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proof of loss, the seller has committed wire fraud even if the value of the
thing turns out to be the same as or greater than the purchase price.
207
In
each case the buyer is deprived of the purchase price. However, because
the buyer suffers no loss, the deprivation causes no tangible harm. This
suggests that the purpose of the law extends beyond preventing the dis-
honest infliction of losses. It suggests that the law is also concerned with
preventing the making of dishonest gains.
In these circumstances, it is hard to justify favoring the conjunctive
interpretation over the disjunctive interpretation. The conjunctive inter-
pretation captures lossless schemes to defraud but not frauds that do not
defraud. This means that it prohibits the making of dishonest gains only
in circumstances where there is some form of dishonest deprivation. But
the utility of the deprivation requirement is questionable given the neg-
ligible character of the deprivation involved in a lossless scheme to de-
fraud. Put simply, if the law operates in circumstances where the depri-
vation causes no loss, why require deprivation at all? In both the fraud
that does not defraud and the lossless scheme to defraud, the defendant
gets what he or she wants by being dishonest and without causing anyone
else to suffer a loss. It does not make sense to prohibit one but not the
other.
There are even reasons to consider frauds that do not defraud to be
more worthy of prohibition than lossless schemes to defraud. Consider
the following three scenarios:
(a) A deceives B into purchasing worthless property for
$100,000.
(b) A deceives B into purchasing property worth $100,000 for
$100,000.
(c) A deceives B in order to obtain $100,000 from C (without
dishonestly depriving C of the $100,000).
Scenario (a) represents the typical scheme to defraud. B’s loss is
A’s gain. There is a $200,000 difference between A and B’s final posi-
tions. A is $100,000 better off and B is $100,000 worse off. Scenario
(b) represents the lossless scheme to defraud. B suffers no loss. There
is no difference between A and B’s final positions. A purchases property
worth $100,000 and pays $100,000 to B. Scenario (c) represents a fraud
that does not defraud. B suffers no loss but A makes a gain. There is a
$100,000 difference between A and B’s final positions. B stays the same
but A gains $100,000. The lossless scheme to defraud results in no net
change to the respective positions of A and B. But the fraud that does
207
. For example, where the seller made a mistake about the nature or value of the item,
or where the market changed soon after the transaction, or where the seller just wanted to
make a sale, and was never interested in obtaining more than the property was actually worth.
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70 SANTA CLARA LAW REVIEW [Vol:60
not defraud places A ahead of B by $100,000. This arguably makes a
fraud that does not defraud (i.e., scenario (c)) worse than a lossless
scheme to defraud (i.e., scenario (b)) because a $100,000 change has
been brought about by deception. Prohibiting lossless frauds, but not
frauds that do not defraud, thus may prohibit the lesser of two evils. The
disjunctive interpretation would capture the greater evil by prohibiting
dishonest acquisition even where it is unaccompanied by dishonest dep-
rivation.
This approach is likely to attract opposition. An opponent might
argue that dishonest deprivation is an essential element of fraud—that is,
without dishonest deprivation, there cannot be fraud.
208
This argument
is unconvincing in light of the triviality of the deprivation in a lossless
scheme to defraud. The more lethal argument available to the opponent
of the disjunctive interpretation is that the appropriate solution is to re-
tract rather than extend the wire fraud statute—to argue that wire fraud
should not extend to lossless schemes to defraud. This argument would
reject the notion that preventing and punishing the making of dishonest
gains is a legitimate function of the criminal law. The whole argument
advanced in this Article hinges upon the acceptance of that notion. It is
therefore necessary to explore it in further detail.
C. It is Legitimate to Prohibit Deceptive Economic Exploitation
John Stuart Mill famously argued that the “only purpose for which
power can be rightfully exercised over any member of a civilized com-
munity, against his will, is to prevent harm to others.”
209
Mill’s harm
principle has had a powerful influence on the criminal law. It has be-
come routine to characterize offenses by reference to the harms they seek
to redress.
210
It has also become routine to question the legitimacy of
offenses that do not address cognizable harms.
211
The disjunctive inter-
pretation of the wire fraud statute is hard to justify by recourse to the
harm principle. That is because fraudulent schemes that are not schemes
208
. Perhaps on the ground that without deprivation the exchange does not undermine
“the regime of property.” See A.P. Simester & G.R. Sullivan, On the Nature and Rationale of
Property Offences, in R.A. DUFF & STUART GREEN, DEFINING CRIMES 168, 172 (2005). Con-
tra Alex Steel, The Harms and Wrongs of Stealing: The Harm Principle and Dishonesty in
Theft, 31 U.N.S.W.L.J. 712, 720-21 (2008) (citing Arthur Ripstein, Beyond the Harm Princi-
ple, 34 PHIL. & PUB. AFF. 215, 226 (2006)).
209
. JOHN STUART MILL, ON LIBERTY 22 (London, Parker & Son 1859) (emphasis
added).
210
. See Bernard E. Harcourt, The Collapse of the Harm Principle, 90 J. CRIM. L. &
CRIMINOLOGY 109, 109-12 (1999).
211
. Id. at 134-38.
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to defraud appear to constitute “harmless wrongdoing.”
212
The decep-
tion makes the scheme wrong; but the lack of loss, or an apparent victim,
may indicate that it causes no harm.
Joel Feinberg critiqued the notion that the law may be used to pro-
hibit harmless wrongdoing in the final volume of his four-volume work
titled The Moral Limits of the Criminal Law.
213
The central thesis of his
work was that the criminal law should prohibit only acts that cause either
harm or offense to others.
214
Feinberg rejected the general proposition
that instances of harmless wrongdoing should be crimes.
215
He argued
that the prohibition of harmless wrongdoing amounted to little more than
the enforcement of morality.
216
But Feinberg was tentative about one particular kind of harmless
wrongdoing—that involving exploitation. For the purposes of his anal-
ysis, Feinberg defined an exploitation principle: “that it is always a good
reason in support of penal legislation that it will prevent wrongful (un-
just) gain even when there is no corresponding wrongful loss (harm).”
217
He revealed his tentativeness about exploitation when he said that the
exploitation principle “makes much stronger claims to our acceptance
. . . than most other forms of legal moralism and must therefore be taken
very seriously.”
218
The exploitation principle provides a rationale upon which to con-
sider the prohibition of frauds that do not defraud. The essential point
about the principle is that it purports to justify the criminalization of con-
duct that does not cause harm. Although there are definitions of “ex-
ploitation” that require the victim to suffer harm,
219
they are not relevant
here. Here exploitation refers to one person (the exploiter) taking ad-
vantage of another (the exploitee) to make some kind of gain. The ex-
ploitation may lead to the exploitee suffering harm.
220
But it is the gain
212
. See generally JOEL FEINBERG, HARMLESS WRONGDOING (1990) [hereinafter
“HARMLESS WRONGDOING”].
213
. Id.
214
. Id. at x-xvi.
215
. Id.
216
. Id.
217
. Joel Feinberg, The Paradox of Blackmail, 1 RATIO JURIS 83, 83 n.2 (1988); see also
HARMLESS WRONGDOING, supra note 212, at 213.
218
. HARMLESS WRONGDOING, supra note 212, at 176.
219
. See ALAN WERTHEIMER, EXPLOITATION 10-13 (1996) (identifying writers who con-
sider harm to be an element of exploitation but himself seeing “no reason to put such con-
straints on what counts as exploitation”).
220
. HARMLESS WRONGDOING, supra note 212, at 211 (“The harm principle alone could
handle most cases of coercive and fraudulent exploitation.”). Many offenses involve exploi-
tation that causes harm. The law against embezzlement, for example, is readily justifiable on
the ground that it causes harm. Yet the defendant also exploits the trust of her or his employer.
The presence of exploitation is treated as insignificant because of the presence of harm.
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72 SANTA CLARA LAW REVIEW [Vol:60
to the exploiter and the taking of advantage of the exploitee, not the harm
or possibility of harm to the exploitee, that the exploitation principle
seeks to prohibit.
221
The central difficulty with exploitation as a justification for crimi-
nal laws is differentiating between wrongful and non-wrongful exploita-
tion. There are many kinds of exploitation that are not wrongful. The
conductor who exploits the talents of an orchestra does not wrong the
members of that orchestra, for example.
222
Feinberg described this kind
of exploitation as “utilization.”
223
He conceived the degree to which
criminal sanction is justified as dependent upon the unfairness of the act
of exploitation.
224
Utilization deserves no sanction because it is not un-
fair; but beyond obvious instances of legitimate exploitation the position
becomes murky. Fairness is a difficult concept. What seems fair to one
person, or from one perspective, may seem unfair to, or from, another.
Feinberg conceptualized the level of unfairness by reference to the
means of exploitation, the traits and circumstances of the exploitee ex-
ploited by the exploiter, and the discrepancy between the effect of the
exploitation as between the exploitee and exploiter.
225
He suggested: (1)
coercion and deception are more unfair than other means of exploitation
such as manipulation or the making of non-deceptive offers;
226
(2) ex-
ploiting traits and circumstances like trust and other virtues is more
Wertheimer calls this “the problem of occlusion”. WERTHEIMER, supra note 219, at 15-16.
The exploitation is occluded by the harm. This is a problem when it comes to understanding
the basis upon which conduct has traditionally been criminalized. The criminalization of ex-
ploitative conduct that causes harm may be justified on the ground that it prevents harm. But
it is possible that such conduct was in fact criminalized on the ground that it prevents harm
and exploitation—not one but not the other, and not one any more than the other.
221
. HARMLESS WRONGDOING, supra note 212, at 203 (“[T]he distinctively offensive el-
ement is not that B has suffered a loss but that A has made a profit.”). See also John Lawrence
Hill, Exploitation, 79 CORNELL L. REV. 631, 680 (1994) (“[I]f the offeror does not intend to
take advantage of a vulnerability, the offer is not exploitative.”); WERTHEIMER, supra note
219, at 17 (“[I]t seems that A cannot take unfair advantage of B unless A gets some advantage
from B.”).
222
. See HARMLESS WRONGDOING, supra note 212, at 177.
223
. Id. at 199.
224
. See WERTHEIMER, supra note 219, at 10 (“A exploits B when A takes unfair ad-
vantage of B.”).
225
. HARMLESS WRONGDOING, supra note 212, at 179. Wertheimer delineated exploita-
tion along similar lines by considering the benefit to the exploiter, the effect on the exploitee
and the process adopted by the exploiter. See WERTHEIMER, supra note 219, at 16-28. See
also A. Bogg & J. Stanton-Ife, Protecting the Vulnerable: Legality, Harm and Theft, 23 L.S.
402, 416 (2003) (adopting Feinberg’s conception of wrongfulness).
226
. HARMLESS WRONGDOING, supra note 212, at 201 (“It would surely seem that the
coercive uses have the greatest tendency to be unfair.”). Id. at 202 (“[T]he clearest of all ex-
amples of unfairness are those in which A takes advantage of B’s trust by cheating or free-
loading, and thus achieves a dishonest gain for himself.”).
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unfair than exploiting misfortunes and weaknesses;
227
and (3) the more
the exploiter gains relative to the exploitee, the more unfair the exploi-
tation.
228
The need to consider something as nebulous as “unfairness” may
seem like a weakness of the exploitation principle.
229
But that weakness
is characteristic of any liberty-limiting principle, including the harm
principle. The harm principle suggests that conduct should be prohibited
where it causes “harm” to others. But it does not define “harm.”
230
What
constitutes “harm” is open to interpretation. Feinberg defined “harm” as
a setback to interests. His version of the harm principle extended only
to harms that were also “wrongs.”
231
“B is A’s victim if and only if A . . .
both sets back [B’s] interests and wrongs [B].”
232
This limitation is not
radical. It excludes setbacks that are legitimate, such as pain endured by
a boxer or losses sustained by an investor. Without it, the harm principle
would be over-inclusive.
The harm principle and the exploitation principle both propose that
certain kinds of wrongful conduct may be prohibited. The harm princi-
ple proposes that the law may be used to prevent one person setting back
the interests of another where the setback is wrongful. The exploitation
principle proposes that the law may be used to prevent a person advanc-
ing her or his own interests where the advance is wrongful. The princi-
ples are really two sides of the same coin. The person who harms gets
ahead by putting others behind; the person who exploits puts her or him-
self ahead and leaves others behind.
Those left behind by exploitation often end up suffering some kind
of setback. Consider the frauds that do not defraud that were set out in
the first section of this part of the Article. The person who obtains aban-
doned property does not defraud any particular person at the time, but
the next person who seeks to obtain the abandoned property suffers a
loss. That person would have obtained the property had it not been ob-
tained already. Similarly, the dishonest license applicant does not de-
fraud the issuing authority. However, if there are only a limited number
of licenses available, and the application of another applicant is rejected,
227
. Id. at 202 (“This puts the moral universe out of joint: untrustworthiness is rewarded
and honesty is penalized (or at least unrewarded).”).
228
. Id. at 203-04.
229
. See Jennifer Collins, Exploitation of Persons and the Limits of the Criminal Law,
[2017] CRIM. L. REV. 167, 180 (2017) (critiquing “imprecision” of Feinberg’s account of ex-
ploitation).
230
. See Harcourt, supra note 210, at 120 (arguing that harm principle “provides no guid-
ance to compare harm arguments”).
231
. See HARMLESS WRONGDOING, supra note 212, at xxvii-xxix.
232
. Id. at xxix.
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74 SANTA CLARA LAW REVIEW [Vol:60
that applicant suffers a loss.
233
Finally, the person who deceives one
person to obtain money pursuant to an agreement with another does not
defraud either person. However, if there are others who would have ob-
tained that money had it not been obtained already, those others suffer a
loss.
The exploitation principle recognizes that for every winner there is
always a loser—even if the loser is too distant and uncertain to invoke
the operation of the harm principle.
234
In this sense the exploitation prin-
ciple may not truly extend to harmless wrongdoing. Both it and the harm
principle seek to prevent unfair adjustment of the position of one person
vis-à-vis other members of society. The exploitation principle could be
accepted as a legitimate liberty limiting principle either on its own merits
or because it complements the harm principle in this way—subject to
one modification.
The modification relates to the object of the exploitation. The “ob-
ject” is the intended outcome of the exploitation—typically economic,
sexual, social or political gain. The exploitation principle asserts that
exploitation may be prohibited where it is wrongful (i.e., unfair). Fein-
berg conceptualized unfairness by reference to the kind of exploitation,
the vulnerability of the exploitee and the discrepancy of the effect of the
exploitation between the exploitee and exploiter.
235
The object of the
exploitation should be added to this conception as a fourth category.
Some objects are more unfair than others; and to return to the present
topic, the case for prohibiting economic exploitation, in particular, is
very strong.
In a capitalist society, where citizens are expected to compete
against each other for limited resources, those who accumulate great
wealth are able to enjoy a higher standard of living than those who do
not.
236
The law sets all kinds of limits on resource allocation. The most
basic limits concern what kinds of conduct may be engaged in to acquire
money or property. But the law does not operate in a prescriptive way.
It does not enumerate ways in which money or property may be acquired.
Rather, it prohibits certain methods of acquiring money or property, and
thereby permits methods that are not prohibited. This distinction is sim-
ple, but critical. By prohibiting certain methods of acquiring money or
property, the law creates punitive incentives not to employ those
233
. See Maus, supra note 183, at 1142 n.101.
234
. Ripstein, supra note 208, at 223 (“[T]he harm principle gets its critical edge from its
demand that each prohibition be justified in terms of the harm that it prevents.”).
235
. See HARMLESS WRONGDOING, supra note 212, at 179.
236
. See generally ADAM SMITH, THE THEORY OF MORAL SENTIMENTS 257-68 (London,
Henry G. Bohn, 1853).
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methods. The corollary of this approach is that the law leaves in place
economic incentives to employ methods that are not prohibited. In other
words, everything that is not prohibited is encouraged, or, if not encour-
aged, at least condoned. For example, the law disincentivizes stealing
and selling whale meat by prohibiting theft and the sale of whale meat;
but it condones building and teaching by not prohibiting people working
in the construction or education industries.
The law underpinning property and financial offenses is special in
this way. Not only does it prevent and punish interferences with money
and property, it also defines which methods of obtaining money or prop-
erty are permissible—it sets the rules of the game. This aspect of its
purpose has been underappreciated. In part that is because the criminal
law tends to focus on the impact upon the victim (i.e., the deprivation).
But it is predominantly because almost all wrongful acquisitions of prop-
erty also involve wrongful deprivation. Theft, for example, involves
wrongful deprivation by definition.
237
The general rule is that wrongful acquisitions and wrongful depri-
vations go hand in hand. Frauds that do not defraud are exceptions to
that general rule. But that does not mean they should be exceptions to
the law. Part of the purpose of fraud—like all property and financial
offenses—is to define which methods of obtaining money or property
are legitimate. To exclude frauds that do not defraud from criminal fraud
is to permit deceptive exploitation with an object of economic gain. This
treats lying as a legitimate method for obtaining money or property. And
if the fake news phenomenon has proven anything, it is that the law
should not treat lying as a legitimate way to obtain money or property.
The law should not treat lies as products or being lied to as a service.
Nor should it treat lying as an occupation. Lying is not like building,
teaching, trading, writing, investing, or entertaining. Whilst the exist-
ence of economic incentives to engage in those and other activities tends
to benefit society, the existence of an economic incentive to lie tends to
do the opposite. As the Supreme Court said in Gertz v. Robert Welch,
Inc., false statements of fact “are no essential part of any exposition of
ideas, and are of such slight social value as a step to the truth that any
benefit that may be derived from them is clearly outweighed by the so-
cial interest in order and morality.”
238
The disruption and confusion
237
. See, e.g., MODEL PENAL CODE § 233.2 (AM. LAW INST., Proposed Official Draft
1962) (“A person is guilty of theft if he unlawfully takes, or exercises unlawful control over,
movable property of another with purpose to deprive him thereof.”).
238
. Gertz v. Robert Welch, Inc., 418 U.S. 323, 340 (1974), quoting Chaplinsky v. New
Hampshire, 315 U.S. 568, 572 (1942). See also Hustler Magazine, Inc. v. Falwell, 485 U.S.
46, 52 (1988) (“False statements of fact are particularly valueless; they interfere with the truth-
seeking function of the marketplace of ideas . . .”). Some suggest that there is value in false
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76 SANTA CLARA LAW REVIEW [Vol:60
brought about by the fake news phenomenon has proven this point. The
most profitable lies have been those that exploit, not only trust, but also
fears, dreams and prejudices, that prey upon social, political and cultural
rifts, and that risk damage to both individuals and institutions. Put
simply, the worst lies have been the bestsellers. By eliminating the ex-
isting incentive to engage in deceptive economic exploitation, the dis-
junctive interpretation of the wire fraud statute would remove them from
the shelf.
D. The Disjunctive Interpretation is Necessary and Conventional
Modern social and economic conditions increasingly present op-
portunities to profit by means of frauds that do not defraud. The growth
of regulation means that licenses are required for more and more kinds
of conduct. The growth of the internet means that attention may be com-
moditized at small cost for great reward. All kinds of digital products
are relied on in day-to-day work and leisure. These developments have
exposed a gap in the law of criminal fraud that in simpler times would
have been microscopic. The law must adapt to fill this gap. The legis-
lature must introduce new laws or the judiciary must give new meaning
to old laws. In the case of the wire fraud statute, this “new” meaning is
the literal meaning—the meaning that really should be the old meaning.
The mail and wire fraud statutes have long been recognized as
weapons with which to fight novel forms of fraud. Chief Justice Burger
expressed this sentiment in United States v. Maze:
Section 1341 of Title 18 U.S.C. has traditionally been used against
fraudulent activity as a first line of defense. When a ‘new’ fraud
develops—as constantly happens—the mail fraud statute becomes a
stopgap device to deal on a temporary basis with the new phenome-
non, until particularized legislation can be developed and passed to
deal directly with the evil.
239
The Chief Justice was speaking in dissent.
240
His suggestion that
the mail and wire fraud statutes should be used as stopgap devices has
attracted at best uneasy acceptance among judges and academics. The
apparent consensus is that it is appropriate to use the statutes to capture
novel forms of fraud—subject to at least two qualifications. One is that
opinions. See MILL, supra note 209, at 36 (arguing that expression of a false opinion produces
a “clearer perception and livelier impression of the truth, produced by its collision with er-
ror”). But this affords no value to false statements of fact.
239
. United States v. Maze, 414 U.S. 395, 405-06 (1974). See also Rakoff, supra note
163, at 772 (likening mail fraud statute to a trusty hand gun – the federal prosecutor’s “one
true love”).
240
. Maze, 414 U.S. at 405.
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the “fraud” must in fact be fraud and not something else. The other is
that the statutes should not be used to interfere with matters that should
be dealt with by the States. The next section explains why the disjunc-
tive interpretation does not collide with either qualification.
The disjunctive interpretation would ensure that the wire fraud stat-
ute is able to operate as a stopgap for new forms of telecommunications
fraud. The necessity for this should be apparent to anyone who has spent
even a little time online. The internet is a wilderness of dishonesty, and
frauds that do not defraud are the next frontier. The free on one side, not
free on the other, market model is ubiquitous online. Search engines,
streaming services, content providers and social media platforms pro-
vide free products and services but generate revenue via advertising.
The prevailing interpretation of the wire fraud statute permits these kinds
of businesses to profit by lying to their users because it precludes the
prosecution of frauds that do not defraud.
The disjunctive interpretation is necessary to prevent online busi-
nesses that make use of two-sided markets from profiting by lying to
their users. But beyond bare necessity, the disjunctive interpretation
would in fact provide a more conventional means by which to capture
novel frauds. There is nothing unprecedented about a fraud offense that
extends to frauds that do not defraud. Such offenses already exist in
other common law jurisdictions. For example, § 2(1) of the Fraud Act
2006 (U.K.) provides:
A person is in breach of this section if he—
(a) dishonestly makes a false representation, and
(b) intends, by making the representation—
(i) to make a gain for himself or another, or
(ii) to cause loss to another or to expose another to a risk of
loss.
241
Similarly, § 192E(1) of the Crimes Act 1900 (N.S.W.) provides:
A person who, by any deception, dishonestly—
(a) obtains property belonging to another, or
(b) obtains any financial advantage or causes any financial dis-
advantage, is guilty of the offence of fraud.”
242
The clear terms of both provisions prohibit acquiring money or
property irrespective of whether or not the acquisition entails
241
. Fraud Act 2006, c. 35, § 2(1) (UK). See also id. § 5(2), which provides that “gain”
and “loss” extend only to “gain or loss in money or other property” and “include any such
gain or loss whether temporary or permanent.”
242
. Crimes Act 1900 (NSW) § 192E (Austl.).
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78 SANTA CLARA LAW REVIEW [Vol:60
deprivation. The limiting factor is whether the accused has acted dis-
honestly. This is a question of fact to be determined by the jury.
243
Ac-
cordingly, if a person perpetuated a fraud that does not defraud, and a
jury thought that the person had intended to make a gain (or had obtained
a financial advantage) “dishonestly,”
244
the person would be convicted.
The law of the United Kingdom has taken this form since the enactment
of the Theft Act 1968 (U.K.).
245
Australian law has taken this form since
its States and Territories created similar offenses in the 1970s and
1980s.
246
New Zealand law has taken this form since at least 2003.
247
The United States lags years behind the rest of the common law
world. One cause of this lag may be comparative ambivalence towards
dishonesty.
248
But the major cause is the judicial anomaly known as the
intangible rights doctrine. The intangible rights doctrine allowed courts
to convict defendants who had not deprived their victims of money or
property by means of the fiction that those victims had been defrauded
of intangible rights.
249
The invention of the doctrine allowed the United
243
. Crimes Act 1900 (NSW) § 4B(2) (Austl.); Criminal Code 2002 (ACT) § 302 (Austl.);
Criminal Law Consolidation Act 1935 (SA) § 131(2) (Austl.); Peters v. The Queen (1998)
192 CLR 493, [29] (Austl.); R v. Dillon; Ex parte Attorney-General (Qld) [2016] 1 Qd R 56;
[2015] QCA 155 (Austl.); Tasmania v. Clark [2018] TASSC 64, [10]-[11] (Austl.); Ivey v.
Genting Casinos (UK) Ltd [2018] AC 391; [2017] UKSC 67, [48].
244
. In the United Kingdom, Queensland and Tasmania, to prove that the defendant acted
“dishonestly,” the prosecution must prove that the defendant was dishonest according to the
standards of ordinary people. See R v. Fitzgerald [1980] Tas R 257, 262, 264 (Austl.); Peters
v. The Queen (1998) 192 CLR 493, [18], [145] (Austl.); Macleod v. The Queen (2003) 214
CLR 230, [46] (Austl.); Jovanovich v. The Queen [2007] TASSC 56, [38]-[40] (Austl.); R v.
Dillon; Ex parte Attorney-General (Qld) [2016] 1 Qd R 56; [2015] QCA 155, [48] (Austl.);
Ivey v. Genting Casinos (UK) Ltd [2018] AC 391; [2017] UKSC 67, [74]; D.P.P. v. Patterson
[2018] 1 Cr. App. R 28; [2017] EWHC 2820 (Admin), [16] (Gr. Brit.); R v. Pabon [2018]
EWCA Crim. 420, [23] (Gr. Brit.); London Organising Committee of the Olympic and Para-
lympic Games (in liquidation) v. Sinfield [2018] EWHC 51 (Q.B.), [62]. In New South Wales,
South Australia and the Australian Capital Territory, the prosecution must prove in addition
that the defendant knew that he or she was dishonest according to those standards. See Crimes
Act 1900 (NSW) § 4B(1) (Austl.); Criminal Law Consolidation Act 1935 (SA) § 131(1)
(Austl.); Criminal Code 2002 (ACT) § 300 (Austl.). In Victoria the prosecution must prove
only that the defendant did not have a belief in a legal right to the financial advantage. See R
v. Salvo [1980] VR 401, 422, 440 (Austl.); R v. Brow [1981] VR 783, 789 (Austl.); R v.
Bonollo [1981] VR 633, 634-35, 644-45 (Austl.); R v. Todo (2004) 10 VR 244; [2004] VSCA
177, [26] (Austl.).
245
. Theft Act 1968, c. 60 §§ 15 (obtaining property by deception), 15A (obtaining a
money transfer by deception), 16(1) (obtaining pecuniary advantage by deception) (UK).
246
. Criminal Code 2002 (ACT) § 332 (Austl.); Summary Offences Act 1970 (NSW) § 38
(Austl.) (repealed); Crimes Act 1900 (NSW) § 178BA (Austl.) (repealed); Criminal Code
1899 (Qld) § 408C (Austl.); Criminal Law Consolidation Act 1935 (SA) § 139 (Austl.); Crim-
inal Code Act 1924 (Tas) sch. 1 §§ 252A, 253A (Austl.); Crimes Act 1958 (Vic) § 82 (Austl.).
247
. Crimes Act 1961, s 240(1) (N.Z.).
248
. See generally TAMAR FRANKEL, TRUST AND HONESTY: AMERICA’S BUSINESS
CULTURE AT A CROSSROAD 3-6 (Oxford University Press, 2006).
249
. See supra Section (III)(A).
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States to duck the question “Can a dishonest acquisition of money or
property alone constitute fraud?” at a time when other common law ju-
risdictions were answering “Yes” to that question.
250
A striking feature of the decisions that promulgated the intangible
rights doctrine is their complete lack of justification for its development.
The early decisions purported to follow cases that did not in fact support
the proposition that a scheme to defraud a person of an intangible right
constituted mail fraud.
251
The later decisions continued that trend and
followed the early decisions without questioning their merits.
252
At no
250
. See Donald V. Morano, The Mail-Fraud Statute: A Procrustean Bed, 14 J.
MARSHALL L. REV. 45, 62-65 (1980) (explaining court focus on disloyalty rather than unjust
enrichment of defendant).
251
. The origin of the intangible rights doctrine appears to have been United States v.
Faser, 303 F. Supp. 380 (E.D. La. 1969). There the court said: “[I]t is a violation of the statute
in question if a person defrauds the States out of the ‘loyal and faithful services of an em-
ployee.’” Id. at 384. In support it relied on Blachly v. United States, 380 F.2d 665 (5th Cir.
1967) and Foshay v. United States, 68 F.2d 205 (8th Cir. 1933). Id. at 384-85. Neither case
involved intangible rights. The scheme in Blachly was a pyramid scheme. 380 F.2d at 668-
71. Foshay involved the sale of stock by false pretenses. 68 F.2d at 206-07. None of the deci-
sions predating Faser referred to in later decisions as authorities for the intangible rights doc-
trine involved an acknowledged deprivation of an intangible right. United States v. Rowe, 56
F.2d 747, 748 (1932) involved the fraudulent settlement of claims made by those who had lost
money investing in stocks. United States v. Classic, 35 F. Supp. 457, 458 (E.D. La. 1940) was
a voter fraud scheme in which the court rejected an argument that there could be no fraud
because the defendants were acting in their capacity as primary election commissioners. There
was no suggestion that the defendants defrauded the people of any intangible right. Id. They
may have been charged with devising a scheme to defraud the government of the salaries of
the candidates for whom they attempted to procure election. Id. See also United States v.
Aczel, 219 F. 917, 938-39 (D.C. D. Ind. 1915). Shushan v. United States, 117 F.2d 110 (5th
Cir. 1941), overruled by United States v. Cruz, 478 F.2d 408 (1973), was credited by the
Supreme Court in Skilling v. United States, 561 U.S. 358, 400 (2010) with “first presenting
the intangible-rights theory.” But it involved a scheme to defraud a public body of money by
means of corrupting its officials and false representations. Id. There was an element of breach
of fiduciary duty that was later relied upon, but the decision said nothing about intangible
rights. See id. at 420. United States v. Procter & Gamble Co., 47 F. Supp. 676, 678 (D.C. Ma.
1942) followed Shushan, and itself has been referred to as supporting the intangible rights
doctrine. The scheme was a fiduciary fraud scheme in which the defendants bribed employees
of the Lever Brothers Company to provide confidential information and experimental soaps.
Procter & Gamble, 47 F. Supp. at 678. Those employees were not honest and loyal, but the
deprivation of their honesty and loyalty was not the scheme for which the defendants were
indicted. Id. at 678-79.
252
. United States v. George, 477 F.2d 508 (7th Cir. 1973) is considered to be an intangi-
ble rights case. See, e.g., United States v. Bryza 522 F.2d 414, 422 (7th Cir. 1975); United
States v. Brown 540 F2d 364, 374 (8th Cir. 1976). But the court in George held that the de-
fendant fiduciary had defrauded his principal of money. See George, 477 F.2d at 512-13. It
relied on Faser, United States v. Hoffa, 205 F. Supp. 710, 716 (S.D. Fla. 1962) and Rowe, 56
F.2d at 513. Faser and Rowe were explained in the previous footnote. Hoffa held that making
secret profits constitutes an active fraud but did not refer to intangible rights. See 205 F. Supp.
at 716-17. United States v. States 488 F.2d 761 (8th Cir. 1973) recognized a scheme to defraud
the people of “certain intangible political and civil rights”—namely, the right to the fair con-
duct of elections. 488 F.2d at 765. In addition to several cases irrelevant to this Article, the
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point did any judge explain why an intangible right to “honest services”
or “free and fair elections” was as worthy of protection as money or
property. The empty, pseudo-technical reasoning is perhaps the chief
cause of the doctrine’s downfall. Critics identified its weaknesses but
there were no champions of its strengths. It was a castle built on sand
with no defenses. The opposing forces simply washed it away and left
its inhabitants wondering why.
Congress responded to McNally by reviving the intangible rights
doctrine insofar as it protected the “intangible right to honest ser-
vices.”
253
But this revival caused problems of its own. The courts had
to grapple with difficult questions. When does the right to honest ser-
vices arise? What does it entail? Under what circumstances is a person
defrauded of it? The Supreme Court later clarified that only schemes or
artifices involving bribes or kickbacks prejudiced the intangible right to
honest services.
254
But the remaining questions continue to present dif-
ficulties.
It would be much simpler to interpret the statutes as if they mean
what they say—that schemes or artifices for obtaining money or prop-
erty by false pretenses constitute mail and wire fraud. This would elim-
inate the need to rely on the fallacy that a person can be defrauded of an
intangible right, at least where a false or fraudulent pretense, representa-
tion, or promise has been made. It would accord with fraud’s traditional
emphasis on money and property. It would allow the law of the United
States to catch up with developments in other common law jurisdictions.
And it would ensure that the law is ready for the new frontier of online
fraud.
E. Counterarguments
The previous three sections set out three reasons to favor extension
of the wire fraud statute to frauds that do not defraud. This extension
would allow for the prosecution of those who publish fake news for
profit. The next part of this Article discusses what that prosecution
would look like. However, before moving to that topic, it is necessary
to address some objections that opponents of extending the statute may
court relied upon Faser and George as “persuasive authority for the proposition that in a pros-
ecution for the use of the mails to further and execute a vote fraud scheme the indictment
states an offense even though it does not contain allegations that anyone was defrauded of any
money or property.” United States v. Isaacs, 493 F.2d 1124 (7th Cir. 1974) followed Faser
and George and several other decisions that did not involve intangible rights. 493 F.2d at
1150. This trend continued right up until the abolition of the doctrine in McNally. See supra
note 194.
253
. 18 U.S.C. § 1346.
254
. Skilling v. United States, 561 U.S. 358, 368 (2010).
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seek to proffer. Many commentators and judges have criticized the
sprawling reach of the mail and wire fraud statutes. Their criticisms in-
dicate potential grounds upon which a disjunctive interpretation of the
wire statute may be opposed. They tend to be based upon one of five
concerns.
The first concern relates to federalism. Critics argue that the stat-
utes are used to prosecute conduct that should be prosecuted by the
States.
255
This was an underlying theme in Cleveland.
256
Resolving the
federal balance is beyond the scope of this Article. But one point may
be made. The point concerns an important difference between the mail
fraud statute and the wire fraud statute. The wire fraud statute, but not
the mail fraud statute, applies only to communications that are “in inter-
state or foreign commerce.” This limitation prevents the wire fraud stat-
ute being used to prosecute fraudulent schemes that make use of only
intrastate wire communications.
257
Expansion of wire fraud, therefore,
cannot readily be characterized as undermining the federal balance.
258
The second concern relates to the interpretation of the jurisdictional
elements of the mail and wire fraud statutes. Critics argue that the courts
have taken an inconsistent and lax approach to defining the circum-
stances in which a mailing or wire communication is “for the purpose
255
. See, e.g., Andrew T. Baxter, Federal Discretion in the Prosecution of Local Political
Corruption, 10 PEPP. L. REV. 321, 336-38 (1983); Ralph E. Loomis, Federal Prosecution of
Elected State Officials for Mail Fraud: Creative Prosecution or an Affront to Federalism?,
28 AM. U. L. REV. 63 (1978); Geraldine Szott Moohr, Mail Fraud and the Intangible Rights
Doctrine: Someone to Watch Over Us, 31 HARV. J. LEG. 153, 170-87 (1994) [hereinafter
“Mail Fraud and the Intangible Rights Doctrine”]; Geraldine Szott Moohr, The Federal In-
terest in the Criminal Law, 47 SYRACUSE L. REV. 1127 (1997).
256
. See Cleveland, 531 U.S. at 25 (“‘[U]nless Congress conveys its purpose clearly, it
will not be deemed to have significantly changed the federal-state balance’ in the prosecution
of crimes.” (quoting Jones v. United States, 529 U.S. 848, 858 (2000)); see also Hadi S. Al-
Shathir, And Into the Maelstrom Steps the Supreme Court: Licenses Are Not Property for
Purposes of the Mail Fraud Statute, 68 MISS. L. REV. 179, 192 (2003).
257
. See, e.g., United States v. Garrido, 713 F.3d 985, 998 (9th Cir. 2013); United States
v. Izydore, 167 F.3d 213, 219 (5th Cir. 1999); Smith v. Ayres, 845 F.2d 1360, 1366 (5th Cir.
1988); United States v. Giovengo, 637 F.2d 941, 943 (3rd Cir. 1980).
258
. This important difference between the two statutes may even support an argument
that the statutes should not be interpreted in pari materia. It may be appropriate to confine the
scope of the mail fraud statute due to concerns of federal overreach (although this Article
contends that it is illegitimate to do so by undermining the plain meaning of its words) but
inappropriate to confine the scope of the wire fraud statute because the protection of interstate
and foreign wire communications is squarely within the domain of the federal legislature. See,
e.g., Committee on Long Range Planning of the Judicial Conference of the United States,
LONG RANGE PLAN FOR THE FEDERAL COURTS 24 (1995) (viewing federal criminal legisla-
tion as justified only where state prosecution is inappropriate or where federal interests are
paramount); see also Mail Fraud and the Intangible Rights Doctrine, supra note 255, at 1143-
44, 1169-70 (discussing the Long Range Plan).
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82 SANTA CLARA LAW REVIEW [Vol:60
of” executing a fraudulent scheme.
259
These criticisms are persuasive.
But they have no relevance to the argument at hand. Extending the stat-
ute as proposed by this Article neither expands nor contracts the juris-
dictional elements of either offense.
The third concern relates to the characterization of certain kinds of
conduct as “fraud.” Critics argue that the statutes have been used to
prosecute as “fraud” conduct that in fact is not “fraud.”
260
These criti-
cisms are not relevant to the argument at hand either. This Article pro-
poses that obtaining money or property by means of false or fraudulent
pretenses, representations, or promises should constitute fraud in cir-
cumstances where no one has been defrauded. Although this may seem
novel, it cannot be better characterized as something other than fraud.
The fourth concern is the “principle of lenity.” This principle pro-
vides that “when there are two rational readings of a criminal statute, one
harsher than the other, [the courts] are to choose the harsher only when
Congress has spoken in clear and definite language.”
261
It has been jus-
tified on the ground that “the citizen is entitled to fair notice of what sort
of conduct may give rise to punishment.”
262
Critics may argue that to
adopt a disjunctive interpretation would violate the principle of lenity.
But there are good reasons to doubt that argument.
The principle of lenity is premised upon the proposition that Con-
gress would not prohibit (or should not be taken to have prohibited) be-
havior without using clear and definite language.
263
This proposition is
most potent where legislation spells out a number of clear and definite
offenses or elements of offenses and the challenged behavior does not
fall within any of them. It is least potent where legislation is broad or
indefinite in its entirety. The deliberate use of broad language signals
open-ended intent. It indicates that Congress intended the courts to de-
velop the scope of the offense.
264
259
. 18 U.S.C. § 1341; see, e.g., Morano, supra note 250, 82-83; see generally, C.J. Wil-
liams, What is the Gist of the Mail Fraud Statute, 66 OKLA. L. REV. 287 (2014).
260
. See, e.g., Richard A. Hibey, Application of the Mail and Wire Fraud Statutes to In-
ternational Bribery: Questionable Prosecutions of Questionable Payments, 9 GA. J. INT’L &
COMP. L. 59 (1979); W. Robert Gray, The Intangible-Rights Doctrine and Political-Corrup-
tion Prosecutions Under the Federal Mail Fraud Statute, 47 U. CHI. L. REV. 562 (1980); John
C. Coffee Jr., From Tort to Crime: Some Reflections on the Criminalization of Fiduciary
Breaches and the Problematic Line Between Law and Ethics, 19 AM. CRIM. L. REV. 117
(1981).
261
. McNally, 483 U.S. at 359-60.
262
. Id. at 375 (Stevens, J., dissenting).
263
. See generally Bell v. United States, 349 U.S. 81, 83-84 (1955); United States v. Bass,
404 U.S. 336, 348-49 (1971).
264
. McNally, 483 U.S. at 373 (Stevens, J., dissenting) (“The wide open spaces in statutes
such as these are most appropriately interpreted as implicit delegations of authority to the
courts to fill in the gaps in the common-law tradition of case-by-case adjudication.”).
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The broad language of the mail and wire fraud statutes indicates
that Congress has delegated the task of determining the scope of the of-
fense to the courts. The fact that Congress has repeatedly amended the
statutes to broaden their reach in response to decisions of the Supreme
Court supports this argument.
265
In United States v. Maze, the Supreme
Court held credit card fraud to be beyond the reach of the mail fraud
statute.
266
Congress reacted by enacting the bank fraud statute.
267
In
McNally, the Supreme Court held that the mail fraud statute did not ex-
tend to “intangible rights.”
268
Congress reacted by enacting 18 U.S.C. §
1346. Congress has therefore twice sanctioned the application of the stat-
utes to novel forms of fraud.
The conjunctive interpretation rebukes the conferral of discretion
upon the courts by Congress. It also collides with the proposition that
Congress would or should use clear and direct language to identify crim-
inal conduct. It does so because, by reading the second phrase as a subset
of the first, it gives no meaning to the clearest and most direct language
used in the statutes. In a perverse sort of way, it employs the principle,
which is reserved for cases of “grievous ambiguity or uncertainty,”
269
to
undermine the least ambiguous words. The principle of lenity should
not be applied to reduce the scope of the statutes as the clearest language
supports the broader interpretation.
The final concern relates to overcriminalization. Critics may argue
that extension of the statute will prohibit conduct that should not be crim-
inal. Against this argument it is important to bear in mind that the words
“or for obtaining money or property by means of false or fraudulent pre-
tenses, representations, or promises” are words of limitation as well as
words of expansion. The words ensure that depriving someone of some-
thing cannot constitute wire fraud unless the deprivation is accompanied
by the obtaining of money or property. They also ensure that concealing
a fact or breaching a duty cannot constitute wire fraud unless the con-
cealment is accompanied by the making of a false or fraudulent pretense,
representation, or promise. Extension of the wire fraud statute will only
capture those who profit from overt dishonesty.
It is also important to bear in mind the weakness of arguments based
on overcriminalization more generally. During the hearing of
265
. Id. at 374.
266
. 414 U.S. 395, 396-97, 405 (1974).
267
. 18 U.S.C. § 1344. See Loughrin v. United States, 573 U.S. 351, 360-61 (2014).
268
. McNally, 483 U.S. at 356.
269
. Muscarello v. United States, 524 U.S. 125, 138-39 (1998); Ocasio v. United States,
136 S.Ct 1423, 1434 n.8 (2016); Barber v. Thomas, 560 U.S. 474, 488 (2010). Cf. Intisar A.
Rabb, The Appellate Rule of Lenity, 131 HARV. L. REV. 179, 190-91 (2018) (describing Mus-
carello as a “stingy approach” to the lenity principle).
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84 SANTA CLARA LAW REVIEW [Vol:60
Cleveland, Justice Breyer suggested that the prosecution was proposing
that the winner of the television show Survivor could be charged with
fraud for deceiving the other contestants in order to win the contest.
270
The transcript records laughter.
271
Counsel for the prosecution never re-
covers. Similarly, in Sorich v. United States, Justice Scalia expressed
dismay at the possibility that the intangible rights doctrine could be used
to charge an employee for skipping work to attend a ball game.
272
His
goal was to make readers think: “But that is simply ridiculous! It would
turn all kinds of otherwise respectable people into criminals!”
These are reductio ad absurdum arguments, and only a little
thought reveals that they are unpersuasive. Breyer’s argument is unper-
suasive because the winner of Survivor was playing a game. His decep-
tion is no more a crime than the bluff of a professional poker player.
Scalia’s argument is unpersuasive because an employee who lies to skip
work to attend a ball game is actually a criminal. The employee told his
employer, “I am too sick to work today.” But in fact he was not sick at
all. This was a false pretense. The employee was only entitled to be
paid for working or in circumstances where his contract of employment
made provision for paid leave. The employee made use of the false pre-
tense to obtain pay without working and outside of those paid leave cir-
cumstances. The employee thus obtained his pay by false pretenses. In
passing it may be noted that this fraud involves no reliance upon the
intangible rights doctrine.
The point here is not that federal prosecutors should open up a new
branch to deal with truant employees. It is that there is nothing unsettling
about the notion that something as innocuous as skipping work may con-
stitute a crime. The same employee could be charged with theft for tak-
ing stationery home from work, defamation for making false statements
about his boss, or assault for poking someone in the midst of a heated
argument. All kinds of day-to-day mischief is criminal. The bulk of the
population remains at liberty because the law has built in mechanisms
that prevent and mitigate the prosecution and punishment of trivial
crimes.
273
De minimis non curat lex.
270
. Oral Argument at 31-32, Cleveland v. United States, 531 U.S. 12 (2000) (No. 99-
804).
271
. Id.
272
. Sorich v. United States, 555 U.S. 1204, 1309 (2009) (Scalia, J., dissenting).
273
. See generally Stephanos Bibas, The Need for Prosecutorial Discretion, 19 TEMP.
POL. & CIV. RTS. L. REV. 369-73 (2010) (extolling the merits of prosecutorial discretion).
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VI. THE SCOPE OF “FAKE NEWS WIRE FRAUD”
This final part of the Article explains the way in which publishing
fake news could be prosecuted as wire fraud. The first section addresses
the elements of wire fraud and applies the facts of publishing fake news
to those elements. The second section deals with the important issue of
how bona fide satirists may be distinguished from fake news publishers.
The final section dispels the notion that the obviousness of the falsity of
a fake news story should have anything to do with whether or not its
publication constitutes fraud.
A. The Elements of “Fake News Wire Fraud”
To prove that a person has committed wire fraud, it is necessary to
prove first that the jurisdictional elements of the offense are satisfied.
They are satisfied in relation to fake news because to publish information
on the internet for profit is to transmit or cause to be transmitted writings,
signs, signals or pictures by means of wire communications in interstate
or foreign commerce.
274
It is then necessary to prove that the fraud-re-
lated elements of the offense are satisfied. According to the disjunctive
interpretation advanced in this Article, the prosecution must prove be-
yond a reasonable doubt: (1) that the defendant “devised or intend[ed] to
devise” a “scheme or artifice;” (2) that the scheme or artifice was “for
obtaining money or property;” (3) that the money or property was to be
obtained “by means of” certain conduct; (4) that the conduct involved
the making of “false or fraudulent pretenses, representations, or prom-
ises;” and (5) that the defendant had the requisite intent.
The publication of content upon a website constitutes a scheme or
artifice. The fake news publisher devises the scheme or artifice by cre-
ating the website and publishing the content.
275
The scheme or artifice
is for obtaining money because it is supported by advertising. The pub-
lication of the website in the form of a news website constitutes a false
or fraudulent pretense or representation that the website is a legitimate
news website; the publication of a false story in the form of a news story
constitutes a false or fraudulent pretense or representation that the story
is a legitimate news story; and false statements made within a story con-
stitute false or fraudulent pretenses or representations that the contents
274
. See supra Section (I).
275
. See, e.g., United States v. Foster, No. 13-20063-CR-GRAHAM, 2014 WL 12687616
(S.D. Fla. Mar. 31, 2014), aff’d, 878 F.3d 1297, 1302 (11th Cir. 2018) (defendant convicted
of wire fraud for publishing false news articles online); United States v. Arif, 897 F.3d 1, 4
(1st Cir. 2018) (defendant convicted of wire fraud for publishing false research and fictitious
testimonials).
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86 SANTA CLARA LAW REVIEW [Vol:60
of the statements are true.
276
Money is obtained by means of the false or
fraudulent pretenses or representations because the website and stories
are used to lure readers to the advertisements—but for the website, sto-
ries, and statements, there would be no readers, and, by extension, no
revenue.
277
The foregoing demonstrates that the creation and operation of a
fake news website satisfies the first four fraud-related elements of wire
fraud. Before turning to the fifth element, it is necessary to make two
important points. One is that the publication of an opinion cannot con-
stitute wire fraud—no matter how vile or erroneous the opinion happens
to be. That is because a false pretense or representation must be an as-
sertion of fact,
278
and an expression of an opinion is not an assertion of
fact.
279
The other point is that the publication of false information on a
website that is not supported by advertising or some other means of rais-
ing revenue cannot constitute wire fraud—no matter how egregious the
falsity of the information. That is because the scheme must be for “ob-
taining money or property.” There is no such thing as a not-for-profit
fraud that does not defraud. That is just a lie.
The fifth fraud-related element of wire fraud is intent—the mens
rea of the offense. The mens rea of wire fraud is typically described as
“intent to defraud.” The meaning of that phrase has been expressed in
various ways. The Second Circuit has referred to it as “intent to deceive
and intent to cause actual harm.”
280
The Seventh Circuit has put it
slightly differently: “acting willfully and with the specific intent to de-
ceive or cheat, usually for the purpose of getting financial gain for one’s
self or causing financial loss to another.”
281
Both formulations include two requirements: (1) intent to deceive;
and (2) intent to do something else—to cause harm or loss, or to gain.
This Article has premised the criminality of publishing fake news upon
prohibiting deceptive economic exploitation. It follows that the
276
. See supra Section (II)(A).
277
. See supra Section (II)(B).
278
. See Durland, 161 U.S. at 312 (describing false pretense as a “misrepresentation as to
some existing fact”). See also WHARTON, supra note 40, at 453.
279
. However, in appropriate circumstances, a person who makes an assertion of opinion
that he or she does not actually hold may be taken to have made an implied false assertion of
fact—namely, that he or she holds the opinion. See WAYNE LAFAVE, SUBSTANTIVE
CRIMINAL LAW § 19.7(b)(5) (5th ed. 2010).
280
. See, e.g., United States v. Stavroulakis, 952 F.2d 686, 694 (2nd Cir. 1992); United
States v. Chandler, 98 F.3d 711, 715 (2nd Cir. 1996).
281
. United States v. Britton, 289 F.3d 976, 981 (7th Cir. 2002); Corley v. Rosewood Care
Ctr., Inc. of Peoria, 388 F.3d 990, 1000 (7th Cir. 2004); United States v. Faruki, 803 F.3d 847,
853 (7th Cir. 2015). See also United States v. Moede, 48 F.3d 238, 241 (7th Cir. 1995); United
States v. Paneras, 222 F.3d 406, 410 (7th Cir. 2000); United States v. Davuluri, 239 F.3d 902,
906 (7th Cir. 2001).
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prosecution should be required to prove beyond a reasonable doubt that
the defendant had intent to deceive and intent to make a gain. The pub-
lication of a fake news website, fake news stories, and false statements
within those stories demonstrates prima facie intent to deceive;
282
and
the engagement of an advertising service to raise revenue demonstrates
prima facie intent to gain.
Against this prima facie case for intent, the fake news publisher
could claim to have lacked intent to deceive on the ground that he did
not intend for readers to believe the stories. But this defense would be
difficult to establish. There is authority that a person who knowingly
makes a false statement may disprove intent to deceive if he “knew that
he could not deceive the recipient of his statements.”
283
A person who
makes a misrepresentation to a confined audience may be able to demon-
strate that he or she knew that the members of the audience could not be
deceived. But the fake news publisher would have to demonstrate that
he knew that there was not a single person with access to the internet
who would think the website and stories were legitimate. This would be
close to impossible.
The fake news publisher could also claim to have lacked intent to
deceive on the ground that he thought the stories were true. Belief in the
truth of a false pretense or representation constitutes a complete defense
to fraud.
284
But the defense is not as simple as saying, “Well, I thought
it was true.” The prosecution will no doubt demonstrate the lack of ev-
idence for the truth. The publisher will then have to explain how he was
able to form a genuine belief despite the lack of evidence. If the pub-
lisher is not able to explain how he had a genuine basis for his belief, the
prosecution may argue that the publisher, whilst he may not have known
282
. Note that the wire fraud statute does not require proof that any particular person be-
lieved or relied on the false or fraudulent pretenses or representations. See Neder v. United
States, 527 U.S. 1, 24-25 (1999) (explaining that requirements of reliance and damages
“plainly have no place in the federal fraud statutes”).
283
. United States v. Maxwell, 579 F.3d 1282, 1301 (11th Cir. 2009) (citing United States
v. Pendergraft, 297 F.3d 1198, 1209 (11th Cir. 2002)). See also Norton v. United States, 92
F.2d 753, 755 (9th Cir. 1937). The Eleventh Circuit appeared to set the bar a little lower in
Pelletier v. Zweifel, 921 F.2d 1465, 1499 (11th Cir. 1991). “A defendant cannot possibly in-
tend to deceive someone if he does not believe that his intended ‘victim’ will act on his de-
ception.” Id. This test appears to focus more upon the subjective belief of the defendant. In
practice the difference is unlikely to be material.
284
. See, e.g., Knickerbocker Merch. Co. v. United States, 13 F.2d 544, 546 (2nd Cir.
1926) (“[A] man might not be charged for his honest beliefs, however imbecile they might
be.”); Stone v. United States, 113 F.2d 70, 74-75 (6th Cir. 1940); United States v. Alkins, 925
F.2d 541, 550 (2nd Cir. 1991) (“An honest belief in the truth of the representations made by
a defendant is a good defense, however inaccurate the statement may turn out to be.”).
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88 SANTA CLARA LAW REVIEW [Vol:60
that the propositions were false, nevertheless had reckless disregard as
to the truth, which amounts to intent to deceive.
285
B. Satirical Fake News
Satirical fake news published in the hopes of entertaining readers
or expressing opinions is as much “fake news” as the kind of behavior
this Article has discussed so far. Stephen Colbert’s portrayal of a right-
wing pundit on The Colbert Report was fake news. So are articles by
publications like The Onion. But there is a world of difference between
a satirist and the kind of person this Article has referred to as a “fake
news publisher.” The fake news publisher is to the satirist what the
forger is to the calligrapher. The two-share skill, not virtue.
Satire is speech protected by the First Amendment.
286
It has been
relied on as a defense to suits for defamation and the intentional inflic-
tion of emotional distress.
287
Its cousin, parody, has been relied on as a
defense to suits for copyright and trademark infringement.
288
The courts
recognize that humor, such as satire, “is . . . to be protected as much,
under appropriate circumstances, as political speech, journalistic expo-
sés, or religious tracts.”
289
Therefore, for prosecuting fake news as wire
fraud to work, there must be a way to differentiate between fake news
and genuine satire.
290
285
. See, e.g., United States v. Amrep Corp., 560 F.2d 539, 543 (2nd Cir. 1977); United
States v. Frick, 588 F.2d 531, 536 (5th Cir. 1979); United States v. Themy, 624 F.2d 963, 965
(10th Cir. 1980); United States v. Boyer, 694 F.2d 58, 59 (3rd Cir. 1982); United States v.
Schaflander, 719 F.2d 1024, 1027 (9th Cir. 1983); United States v. Dick, 744 F.2d 546, 551
(7th Cir. 1984); United States v. Gay, 967 F.2d 322, 326 (9th Cir. 1992).
286
. See generally Roy S. Gutterman, New York Times Co. v. Sullivan: No Joking Matter
– 50 Years of Protecting Humor, Satire, and Jokers, 12 FIRST. AMEND. L. REV. 497 (2014).
287
. See, e.g., Hustler Magazine, Inc. v. Falwell, 485 U.S. 46, 54-57 (1988) (barring
claims for intentional infliction of emotional distress against public figures and officials ab-
sent showing actual malice); see also N.Y. Times Co. v. Sullivan, 376 U.S. 254 (1964).
288
. See, e.g., Fisher v. Dees, 794 F.2d 432, 440 (9th Cir. 1986) (affirming summary judg-
ment against copyright infringement because the parody was “deserving of fair-use protection
as a matter of law”); L.L. Bean, Inc. v. Drake Publishers, Inc., 811 F.2d 26 (1st Cir. 1987)
(“Denying parodists the opportunity to poke fun at symbols and names which have become
woven into the fabric of our daily life, would constitute a serious curtailment of a protected
form of expression.”); Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569 (1994) (holding that
“[i]t was an error for the Court of Appeals to conclude that the commercial nature of [the
parody] rendered it presumptively unfair.”).
289
. Freedlander v. Edens Broad. Inc., 734 F. Supp. 221, 228 (E.D. Va. 1990).
290
. Fraudulent speech and protected speech have collided in the past. See, e.g., In re
Grand Jury Matter, Gronowicz, 764 F.2d 983, 988 (3rd Cir. 1985) (rejecting contemnor’s
claim that “the first amendment forbids application of the mail fraud statute to an author”).
See also Peter T. Barbur, Mail Fraud and Free Speech, 61 N.Y.U. L. REV. 942, 943 (1986)
(arguing that the government interest in regulating protected speech “must be more compel-
ling than the mere interest in preventing fraud”).
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This task presents difficulties. People sometimes mistake satirical
news stories for actual news stories, and many fake news publishers pre-
sent themselves as satirists. Fortunately, the courts have dealt with sim-
ilar dilemmas in relation to defamation, which, like fraud, requires the
making of a false statement of fact. The law is not as settled as might be
expected.
291
But it is settled enough to provide useful guidance.
For a statement to be defamatory, it must be a false statement of
fact that “harm[s] the reputation of another as to lower him in the esti-
mation of the community or to deter third persons from associating or
dealing with him.”
292
Where the subject of the statement is a public of-
ficial or public figure, the statement must be made with “actual mal-
ice.”
293
In this context “actual malice” does not mean something akin to
“malevolence.” It means that the statement must be made “with
knowledge that it was false or with reckless disregard of whether it was
false or not.”
294
Where a statement is alleged to have been satirical, the actual mal-
ice rule presents a problem. The satirist who makes a false statement
knows that the statement is false. The satirist thus appears to have actual
malice as of course—“automatic actual malice.”
295
The courts have
avoided this outcome by holding that a statement must be able to be rea-
sonably interpreted as stating facts about an individual for it to be de-
famatory.
296
The Tenth Circuit expressed the test in the following way:
“The test of what a particular statement could reasonably be understood
to have asserted is what a reasonable reader would understand the
291
. See generally Jeff Todd, Satire in Defamation Law: Toward a Critical Understand-
ing, 35 REV. LITIG. 45 (2016).
292
. RESTATEMENT (SECOND) OF TORTS § 559 (1977) (AM. LAW INST. 1975).
293
. N.Y. Times Co., 376 U.S. at 279; Curtis Publ’g Co., 388 U.S. at 162-65 (Warren, J.,
concurring).
294
. N.Y. Times Co., 376 U.S. at 279-80. One commentator has suggested that relaxation
of the actual malice rule may provide a solution to the fake news problem. See Randall D.
Nice, Reviving the Lost Tort of Defamation: A Proposal to Stem the Flow of Fake News, 61
ARIZ. L. REV. 205, 230 (2019). The problem with this proposal is that fake news publishers
know their content is false. This means that eliminating the actual malice requirement will not
do anything. The reason publishers are not sued for defamation is not that the tort is too nar-
row. It is that fake news is not always defamatory and most people who are defamed are not
interested in litigation. See id. at 223.
295
. New Times, Inc. v. Isaacks, 146 S.W.3d 144, 162 (Tex. 2004).
296
. See, e.g., Greenbelt Coop. Publ’g Assn., Inc. v. Bresler, 398 U.S. 6, 14 (1970)
(“[E]ven the most careless reader must have perceived that the word was no more than rhe-
torical hyperbole.”); Hustler Magazine, Inc. v. Falwell, 485 U.S. 46, 50 (1988) (holding that
ad parody “could not reasonably have been interpreted as stating actual facts about the public
figure involved”); Letter Carriers v. Austin, 418 U.S. 264, 286 (1974); Milkovich v. Lorain
Journal Co., 497 U.S. 1, 16-20 (1990).
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90 SANTA CLARA LAW REVIEW [Vol:60
author to be saying, considering the kind of language used and the con-
text in which it is used.”
297
This test recognizes that false statements of fact may be employed
to convey opinions or ideas. It excludes satire from defamation on the
ground that a statement that cannot reasonably be taken as conveying a
factual message should not be characterized as a false statement of
fact.
298
It is similar to the way in which puffery is not considered to be
a false pretense.
299
Consider a salesman who claims, “This is the greatest
horse in the world.” The statement could be construed as a false state-
ment of fact, but cannot reasonably be taken as conveying a factual mes-
sage because potential buyers would recognize it to be hyperbole.
Satirical false statements should be treated by fraud in the same way
in which they are treated by defamation. Where a defendant claims to
have published satire, the court should ask, “Would a reasonable reader
interpret the article as stating facts?” Naturally, the answer will likely
depend upon consideration of all the circumstances. But some guidance
may be drawn from decisions in which satire or parody has been relied
upon as a defense to defamation or copyright or patent infringement.
Propositions supported by those decisions are considered in the next four
paragraphs.
The medium in which a statement is made may indicate satire.
300
A
statement made during a comedic performance would be readily inter-
preted as satire, for example.
301
But this does not assist the satirical fake
news publisher. Satirical fake news is satire through parody. The parody
is the adoption of the form of a news article. The satire is the content of
the article. The adoption of the form of a news article is necessary for
the satire to work. But it also suggests to the audience that the article is
legitimate. This means that the satire must overcome the otherwise le-
gitimate form in which it is presented to obtain protection.
The reputation of the defendant may indicate satire. For example,
the pig named “Spa’am” in the film Muppet Treasure Island was held
not to infringe the trademark of the food product “SPAM” in part be-
cause viewers would recognize The Muppets as satire.
302
Thus,
297
. Mink v. Knox, 613 F.3d 995, 1007 (10th Cir. 2010).
298
. Id.
299
. See United States v. New South Farm & Home Co., 241 U.S. 64, 71 (1916); Harrison
v. United States, 200 F. 662, 665, 669 (6th Cir. 1912).
300
. See, e.g., Freedlander, 734 F. Supp. at 228 (concerning song broadcast on morning
comedy and music show); Cardtoons v. Major League Baseball Players, 95 F.3d 959, 967
(10th Cir. 1996) (concerning parody baseball cards carrying logo of manufacturer).
301
. See, e.g., Polygram Records, Inc. v. Superior Court, 170 Cal.App.3d 543, 552-53
(1985).
302
. Hormel Foods Corp. v. Jim Henson Prod. Inc., 73 F.3d 497, 503 (2nd Cir. 1996).
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publications like The Onion may be readily characterized as satire on
account of their satirical fame.
The presence of a disclaimer may indicate satire.
303
Here there is
a need for caution. Many fake news websites contain disclaimers stating
that the content is not true or is intended to be satire. Sometimes these
disclaimers appear below or alongside each article. Other times they
appear elsewhere on the website—on the “About Us” page, for example.
However, most readers access fake news by clicking links on social me-
dia or in search results.
304
These links may contain a title, short descrip-
tion and picture. But they will not contain the disclaimer. This means
the reader may share or click the link without being exposed to the dis-
claimer, the result being that the scheme is fully executed before the dis-
claimer appears.
The content may indicate satire. Here there is a similar need for
caution. If a statement describes events that are physically impossible,
305
or even illogical or nonsensical,
306
it may readily be characterized as sat-
ire. However, as research demonstrates that most social media users
share and comment upon news articles without reading the stories them-
selves,
307
it may be inappropriate to place weight on the content of an
article. The courts have emphasized that the reasonable person “does
not represent the lowest common denominator, but reasonable intelli-
gence and learning,”
308
and there is also authority that a person who
forms an opinion “after reading a sentence or two” of a newspaper article
303
. See, e.g., Hustler Magazine, Inc. v. Falwell, 485 U.S. 46, 48 (1988) (concerning small
print stating “ad parody—not to be taken seriously” beneath fake advertisement and contents
labelled “Fiction; Ad and Personality parody”)); L.L. Bean, Inc., 811 F.2d at 27 (concerning
Back-To-School-Sex-Catalog labelled as “humor” and “parody” in contents); Cardtoons, 95
F.3d 962, 967 (concerning parody baseball cards carrying statement that they were not li-
censed by Major League Baseball Players Association). The courts have also rejected the no-
tion that a disclaimer or identification is necessary to indicate satire. See Yankee Publ’g, Inc.
v. News Am. Publ’g, Inc., 809 F. Supp 267, 281 (S.D.N.Y. 1992) (“There is no requirement
that a parody identify itself by a label stating, ‘a parody.’”); Acuff-Rose Music, Inc., 510 U.S.
at 583 n.17 (“Parody serves its goals whether labeled or not, and there is no reason to require
parody to state the obvious (or even the reasonably perceived).”).
304
. See Allcott & Gentzkow, supra note 1, at 222.
305
. See, e.g., Pring v. Penthouse Int’l, Ltd., 695 F.2d 438, 441, 443 (10th Cir. 1983)
(holding impossibility of fellatio causing recipient to levitate into air to be indicative of satire).
306
. See, e.g., Freedlander, 734 F. Supp. at 228.
307
. Maksym Gabielkov et al., Social Clicks: What and Who Gets Read on Twitter?, ACM
SIGMETRICS (Apr. 13, 2016), https://dl.acm.org/doi/pdf/10.1145/2896377.2901462 (finding
59% of links shared on Twitter are never clicked).
308
. Patrick v. Superior Court, 22 Cal. App. 4th 814, 821 (1994) (unpublished opinion)
(“[T]he hypothetical reasonable person . . . is no dullard.”); New Times, Inc., 146 S.W.3d at
157 (“The person of ‘ordinary intelligence’ . . . is a prototype of a person who exercises care
and prudence, but not omniscience, when evaluating allegedly defamatory communica-
tions.”).
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92 SANTA CLARA LAW REVIEW [Vol:60
“out of context” is not “an objectively reasonable reader.”
309
But the
same reasoning may not apply to articles, or at least not all articles,
shared on social media. The better approach may be to judge the im-
pression given by the post, not the article itself.
These propositions focus on the way in which reasonable people
would interpret a false statement. They pay no regard to the intent of the
publisher. If a statement can reasonably be interpreted as stating actual
facts, it does not matter that the publisher never intended to state actual
facts; the statement is defamatory.
Allegedly fraudulent statements cannot be treated in the same way.
The wire fraud statute requires proof that the defendant possessed the
requisite intent—defined earlier as intent to deceive and intent to gain.
310
This means that a further defense may be available to a true satirist
wrongly accused of fraud. The satirist may be able to argue that he him-
self did not intend for the statement to be interpreted as a false statement
of fact.
Many factors relevant to whether a statement may reasonably be
interpreted as stating facts are also relevant to intent. A publisher who
has a recognized satirical brand would have a better chance at disproving
intent than a publisher who hops from domain to domain building no
familiarity with readers.
311
A publisher who publishes outrageous or hi-
larious stories would have a better chance at disproving intent than a
publisher who publishes believable stories where the joke is obscure.
And a publisher who makes use of disclaimers would have a better
chance at disproving intent than a publisher who takes no steps to iden-
tify the falsity of the content.
Another factor relevant to intent is the attitude of the publisher.
Consider Paul Horner, for example. Horner was perhaps the most infa-
mous fake news publisher during the lead up to the 2016 presidential
election.
312
He was responsible for several of the most popular fake news
stories and operated websites like www.abcnews.com.co and
www.cnn.com.de.
313
In response to evidence that many people believed
309
. New Times, Inc., 146 S.W.3d at 159 (citing Acuff-Rose Music, Inc., 510 U.S. at 583).
310
. See supra Section (VI)(A).
311
. See Craig Silverman, Publishers Are Switching Domain Names To Try And Stay
Ahead Of Facebook’s Algorithm Changes, BUZZFEED NEWS (Mar. 1, 2018),
https://www.buzzfeednews.com/article/craigsilverman/publishers-are-switching-domain-
names-to-try-and-stay-ahead (describing publishers registering new domain names over and
over again to avoid being censored by platforms).
312
. Abby Ohleiser, Who do you Believe When a Famous Internet Hoaxer is said to be
Dead?, WASH. POST, Sep. 27, 2017.
313
. Christina Caron, Paul Horner, Fake News Writer Who Took Credit for Trump Vic-
tory, Dies at 38, N.Y. TIMES, Sep. 27, 2017; Ohleiser, supra note 312; Maria L La Ganga,
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his story about protesters being paid to attend Donald Trump rallies,
Horner added the following disclaimer to the story:
This story is not real. No one needs money to protest Donald Trump.
I personally went to two Donald Trump rallies and I can say with
100% certainty that NONE of the protesters were getting paid. This
story is mocking all of you sheep who think protesters are getting
paid. Do your own thinking, retards.
314
Horner continued to publish false stories despite clear evidence that
many readers were not “getting” the joke. His statement that the story
was mocking “sheep” and “retards” evinces a certain nastiness. In
Horner’s eyes, the content of the story was not the joke; the people who
believed it were the joke. A true satirist would be unlikely to feel such
disdain for his audience.
The final factor relevant to intent encompasses other activities un-
dertaken by the publisher on the fake news website. Consider Alex
Jones, for example. Jones is the creator and host of Infowars.
315
In ad-
dition to peddling fake news and conspiracy theories, Jones operates a
side hustle selling Infowars branded supplements like “Brain Force
PLUS”:
Top scientists and researchers agree: we are being hit by toxic weap-
ons in the food and water supply that are making us fat, sick, and
stupid . . . . It’s time to fight back with Brain Force PLUS from In-
fowars and Infowars Life, the next generation of advanced neural
activation and nootropics.
316
Brain Force PLUS is one of many dubious supplements sold by
Jones on the Infowars Store.
317
The products tend to be tied into false
pretenses peddled on the show—in relation to Brain Force PLUS, that
“top scientists and researchers agree that toxic weapons have been intro-
duced to the food and water supply.”
318
The relationship between Jones’
false stories and the sale of products on the Infowars Store is further
Paul Horner: How the Fake-News Kingpin’s Life and Death Blurred Fact and Fiction, THE
GUARDIAN, Sep. 30, 2017.
314
. Ishmael N. Daro, The Toronto Sun Fell For An Obvious Hoax About Paid Anti-
Trump Protesters, BUZZFEED NEWS (Feb. 28, 2017),
https://www.buzzfeed.com/ishmaeldaro/toronto-sun-wyd.
315
. See generally Josh Owens, I Worked for Alex Jones. I Regret It, THE N.Y. TIMES
MAGAZINE, Dec. 5, 2019.
316
. INFOWARS STORE, https://www.infowarsstore.com/brain-force.html (last visited
Jun. 23, 2019).
317
. Steven Salzberg, Conspiracy Theories And Dubious Health Advice, Courtesy of Alex
Jones, FORBES, Aug. 17, 2018; Luis Ferre-Sadurni & Jesse McKinley, Alex Jones Is Told to
Stop Selling Sham Anti-Coronavirus Toothpaste, N.Y. TIMES, Mar. 13, 2020; Andrew Ma-
rantz, Alex Jones’s Bogus Coronavirus Cures, THE NEW YORKER, Mar. 30, 2020.
318
. INFOWARS STORE, supra note 316.
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94 SANTA CLARA LAW REVIEW [Vol:60
evidence of intent to deceive. Jones’ use of false stories to increase the
likelihood of his supplement sales blends false pretenses with puffery in
the style of a frontier snake oil salesman.
C. Obviously Fake Fake News
Many fake news articles are obviously fake. Some are so obviously
fake that the publisher may feel entitled to argue that the readers should
have known better than to believe them. The previous section explained
that a satirist should be able to rely upon a “The readers should have
known it was a joke” defense. Non-satirical fake news publishers may
seek to rely upon a similar defense—“The readers should have known
the story was not true.” This defense is not available. The obviousness
of the falsity of a fake news article has no bearing upon the guilt or in-
nocence of its publisher. To claim that the readers should have known
the story was false is to blame the victim.
The law of criminal fraud has a long and convoluted history of vic-
tim blaming. Here there is space for only a summary. Prior to the de-
velopment of cheating at common law, there appears to be no evidence
that the courts considered whether or not the victim should have known
better than to believe the defendant. For example, in the late sixteenth
century, Lambarde wrote of the need for the law to “straine the line of
Justice beyond the ordinarie length and wonted measure” to punish those
who “lay Hookes, and make Traps as it were for the taking, intangling,
and snaring of silly and simple folks.”
319
That changed following the decision of the Queen’s Bench in R v.
Jones.
320
Jones pretended to have been sent to collect a debt from the
prosecutor.
321
The prosecutor paid him the money.
322
Upon discovering
that Jones had not been sent to collect the debt, the prosecutor indicted
Jones for cheating.
323
The Queen’s Bench quashed the indictment.
324
Chief Justice Holt asked, “Shall we indict one man for making a fool of
another?”
325
His decision appears to have been the origin of the rule that
a cheat had to be beyond detection of a man of ordinary capacity. Ac-
cording to Hawkins, there was no need to provide severe laws to prevent
319
. WILLIAM LAMBARDE, ARCHEION: OR, A DISCOURSE UPON THE HIGH COURTS OF
JUSTICE IN ENGLAND 85-86 (Charles H. McIlwain ed., Harv. Univ. Press 1957) (1635) (em-
phasis added).
320
. (1703) 1 Salk. 379, 91 Eng. Rep. 330.
321
. Id.
322
. Id.
323
. Id.
324
. Id.
325
. R v. Jones (1703) 2 Ld. Raym. 1013; 92 Eng. Rep. 174.
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cheats “against which common Prudence and Caution may be a suffi-
cient Security.”
326
The unpopularity of the rule in R v. Jones prompted the enactment
of the False Pretences Act of 1757.
327
Its enactment shifted the focus of
the law from the credulity of the victim to the dishonesty of the defend-
ant.
328
Justice Ashurst described its purpose in the following way, “The
Legislature saw that all men were not equally prudent, and this statute
was passed to protect the weaker part of mankind.”
329
Thus, the obvi-
ousness of the fraud or the imprudence of the victim has not been a de-
fense in England for more than two hundred and fifty years. In one case,
for example, the defendant paid for a drink with a £1 note and tricked
the cashier into paying him change for £5.
330
He was convicted of ob-
taining £4 by false pretenses.
331
The courts of the United States stumbled in their reception of this
aspect of English law.
332
Some held that the fraud had to be capable of
deceiving a person of “ordinary caution.”
333
Others held that the law
would not protect those who had the means of detecting the fraud “in
their own hands.”
334
Others held that the law did not extend to pretenses
326
. HAWKINS, supra note 27, at 187-88.
327
. 30 Geo. II c. 24.
328
. See, e.g., R v. Wickham (1839) 10 Ad. & E. 34, 36; 113 E.R. 14, 15 (Lord Denman
C.J.) (“Why is it the prosecutor’s folly more than the defendant’s fraud? This point is some-
times put as if a lie were something laudable. There are indeed cases where the pretence is so
very foolish that it is difficult to say that an imposition is practiced; but still, who is to give
the measure?”).
329
. Young v. The King (1788) 1 Leach 505, 508; 168 Eng. Rep. 354, 356. See also R v.
Woolley (1850) 1 Den. 559, 564; 169 Eng. Rep. 372, 374 (“It was once thought that the law
was only for the protection of the strong and prudent. That notion has ceased to prevail.”).
330
. R v. Jessop (1858) Dears. & B. 442; 169 Eng. Rep. 1074, 1075.
331
. Id.
332
. The confusion was understandable. Some states received the English law as it existed
in 1775. Others received the law as it existed in 1607. The former received the offense of
obtaining property by false pretenses. But the latter received only cheating. The position was
further complicated by the enactment of statutory false pretenses offenses in some states. See
generally WAYNE LAFAVE, SUBSTANTIVE CRIMINAL LAW §§ 2.1(c)-(e), 19.7(a) n. 4 (5th ed.
2010).
333
. People v. Johnson, 12 Johns. 292, 293 (N.Y. 1815); People v. Haynes, 11 Wend. 557,
566 (N.Y. Sup. Ct. 1834); People v. Haynes, 14 Wend. 546, 571-72 (N.Y. 1835); State v.
Magee, 11 Ind. 154, 155 (Ind. 1858); Jones v. State, 50 Ind. 473, 477 (Ind. 1875); Clifford v.
State, 56 Ind. 245, 249 (Ind. 1877); Bonnell v. State, 64 Ind. 498, 506 (Ind. 1878); Perkins v.
State, 67 Ind. 270, 275-76 (Ind. 1879); Miller v. State, 73 Ind. 88, 91 (Ind. 1880); Wagoner v.
State, 90 Ind. 504, 507-08 (Ind. 1883).
334
. Commonwealth v. Drew, 36 Mass. 179, 184-185 (Mass. 1837); Commonwealth v.
Hutchinson, 2 Pa. L.J. 241, 243 (Pa. 1843); Commonwealth v. Grady, 13 Bush. 285, 287 (Ky.
1877); Woodbury v. State, 69 Ala. 242, 245-46 (Ala. 1881); State v. Cameron, 117 Mo. 641,
643 (Mo. 1893); Walker v. State, 68 Fla. 278, 282 (1914). See also State v. Estes, 46 Me. 150,
151 (Me. 1858) (“Under these circumstances, if the pawner is chargeable with turpitude, the
pawnee is equally so with stupidity. The Government cannot punish the one or protect the
other.”).
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96 SANTA CLARA LAW REVIEW [Vol:60
that were “absurd or irrational.”
335
Over time, however, the view that
the capacity of the victim and the quality of the fraud was irrelevant pre-
vailed,
336
and the states of the United States fell into line with the English
position—but not before their decisions infected the law relating to mail
fraud.
337
In Oesting v. United States,
338
the Ninth Circuit rejected an argu-
ment that a scheme to defraud under the mail fraud statute had to be
calculated to deceive in the same manner as a false pretense.
339
“All that
is necessary is that it be a scheme reasonably calculated to deceive per-
sons of ordinary comprehension and prudence and that the mail service
of the United States be used and intended to be used in execution of the
same.”
340
For nearly five decades, courts used the Ninth Circuit’s state-
ment as it did—to emphasize that the scheme did not have to involve a
“false pretense.”
341
But the statement later came to be expressed in dif-
ferent language. “The scheme is one to defraud if it is reasonably calcu-
lated to deceive persons of ordinary prudence and comprehension.”
342
And it was also picked up as a statement as to the requisite intent. “The
government proves specific intent if it proves that the scheme was ‘rea-
sonably calculated to deceive persons of ordinary prudence and compre-
hension.’”
343
335
. Commonwealth v. Hutchinson, 2 Pa. L.J. 241, 243 (Pa. 1843); Buckalew v. State, 11
Tex. App. 352, 354-55 (Tex. Ct. App. 1882); State v. Cameron, 117 Mo. 641, 643 (Mo. 1893);
Walker v. State, 68 Fla. 278, 282 (Fla. 1914).
336
. State v. Mills, 17 Me. 211, 218 (Me. 1840); Commonwealth v. Burdick, 2 Pa. 163,
164-65 (Pa. 1845); Commonwealth v. Henry, 22 Pa. 253, 256 (Pa. 1853); Re Greenough, 31
Vt. 279, 290-91 (Vt. 1858); State v. Phifer, 65 N.C. 321, 326 (N.C. 1871); Lefler v. State, 153
Ind. 82, 86-88 (Ind. 1899); People v. Gilman, 121 Mich. 187, 189 (Mich. 1899); State v.
Phelps, 41 Wash. 470, 473 (Wash. 1906).
337
. See, e.g., United States v. Fay, 83 F. 839 (E.D. Mo. 1897) rejected by United States
v. Calwer, 292 F. 1007, 1008 (D. Mont. 1923).
338
. Oesting v. United States, 234 F. 304 (9th Cir. 1916).
339
. Id. at 307.
340
. Id. (emphasis added).
341
. See, e.g., Silverman v. United States, 213 F.2d 405, 407 (5th Cir. 1954); Linden v.
United States, 254 F.2d 560, 566 (4th Cir. 1958); United States v. Baren, 305 F.2d 527, 533
(2nd Cir. 1962); Irwin v. United States, 338 F.2d 770, 773 (9th Cir. 1964); United States v.
Bruce, 488 F.2d 1224, 1229 (5th Cir. 1974); United States v. McNeive, 536 F.2d 1245, 1249
(8th Cir. 1976); United States v. Pearlstein, 576 F.2d 531, 535 (3rd Cir. 1978); Kehr Packages,
Inc. v. Fidelcor Inc., 926 F.2d 1406, 1415, 1416 (3rd Cir. 1991); United States v. Goodman,
984 F.2d 235, 237-39 (8th Cir. 1993).
342
. Gusow v. United States, 347 F.2d 755, 756 (10th Cir. 1965); see also United States
v. Seasholtz, 435 F.2d 4, 8 (10th Cir. 1970); United States v. Ammons, 464 F.2d 414, 417
(8th Cir. 1972); United States v. Beitscher, 467 F.2d 269, 273 (10th Cir. 1972); United States
v. Schall, 371 F. Supp. 912, 916-17 (D.C. W.D. Pa. 1974); United States v. Netterville, 553
F.2d 903, 909 (5th Cir. 1977).
343
. United States v. Bohonus, 628 F.2d 1167, 1172 (9th Cir. 1980); see also United
States v. Green, 745 F.2d 1205, 1207 (9th Cir. 1984).
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Eventually, a defendant relied on this language in an attempt to
evade conviction by blaming the victim. In United States v. Brown, the
defendants were charged with concocting an elaborate scheme whereby
they sold property in Florida at highly inflated prices.
344
They claimed
that the scheme was not “reasonably calculated to deceive persons of
ordinary comprehension and prudence.”
345
In spite of authority from
other circuits that the quality of the fraud and the prudence of the victim
was irrelevant,
346
the Eleventh Circuit agreed and ordered their acquittal,
holding that “federal criminal fraud requires proof that a person of ordi-
nary prudence would rely on a representation or a deception.”
347
The decision in Brown was unpopular. It resurrected a form of vic-
tim blaming that had not been seen in the United States since the end of
the nineteenth century. It left the people most in need of protection ex-
posed to the schemes of those who would prey upon their imprudence.
348
It failed to recognize the shortcomings of the victims as vulnerabilities
ripe for exploitation. It was criticized.
349
It was not followed in other
circuits.
350
The Eleventh Circuit overruled it thirteen years later in
United States v. Svete.
351
Its fall was the last stand for victim blaming in
fraud in the United States.
The overruling of Brown means that neither the obviousness falsity
of a fake news story nor the credulity of the readers has any bearing upon
whether its publication constitutes wire fraud. This point may go against
what some believe to be the spirit of the market—the ancient maxim
caveat emptor. Some may think that the law should ask people to take
responsibility for their own interests—that a person should not be held
344
. 79 F.3d 1550, 1553-55 (11th Cir. 1996).
345
. Id. at 1557 (citing Pelletier, 921 F.2d at 1498-99).
346
. See, e.g., Tucker v. United States, 224 F. 833, 837 (6th Cir. 1917); Whitehead v.
United States, 245 F. 385, 388 (5th Cir. 1917); United States v. Brien, 617 F.2d 299, 311 (1st
Cir. 1980).
347
. United States v. Brown, 79 F.3d 1550, 1558 (11th Cir. 1996).
348
. People v. Gilman, 121 Mich. 187, 189 (Mich. 1899) (“The law is more necessary to
the protection of the unwary and simple-minded, who are not looking for duplicity and deceit,
than shrewder persons. Designing persons do not ply their nefarious vocations among the
latter class, but seek for victims among those whose credulity makes them more easily de-
ceived.”).
349
. See generally Mark Zingale, Fashioning a Victim Standard in Mail and Wire Fraud:
Ordinarily Prudent Person or Monumentally Credulous Gull?, 99 COLUM. L. REV. 795
(1999). Cf. Jason T. Elder, Federal Mail Fraud Unleashed: Revisiting the Criminal Catch-
All, 77 OR. L. REV. 707, 727 (1998).
350
. See, e.g., United States v. Cabe, 57 F. App’x 542, 545-46 (4th Cir. 2003); United
States v. Thomas, 377 F.3d 232, 241-44 (2nd Cir. 2004); United States v. Davis, 226 F.3d
346, 359 (5th Cir. 2007); United States v. Amico, 486 F.3d 764, 780 (2nd Cir. 2007).
351
. 556 F.3d 1157, 1166 (2009).
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98 SANTA CLARA LAW REVIEW [Vol:60
responsible for lies detectable by means of common prudence.
352
But
experience demonstrates that this approach is misguided. Common pru-
dence is not common. It was not common in the sixteenth century. It is
not common today.
The fake news phenomenon has demonstrated just how uncommon
“common prudence” really is. News anchors have promoted false infor-
mation sourced in fake news stories.
353
The President of the United
States has promoted false information sourced in fake news stories.
354
Edgar Welch drove from North Carolina to Washington to storm a pizza
restaurant because he read online that the Democratic Party was operat-
ing a child-sex ring on the premises.
355
He was sentenced to four years
imprisonment for assault with a dangerous weapon
356
—the perpetrator
of one crime but victim of another.
It is hard to have sympathy for someone as imprudent as Edgar
Welch. But it does not follow that the law should sympathize with some-
one like Sean Adl-Tabatabai. Adl-Tabatabai published an article spread-
ing the “PizzaGate” hoax on his fake news website www.YourNews-
Wire.com.
357
His publication of the story as a news article gave it added
authenticity. It also repackaged the story in a form able to be shared on
social media. Adl-Tabatabai was not the creator of the hoax. But he was
one of many fake news publishers who exploited those who believed it
for financial gain.
The law precludes consideration of the obviousness of the fraud and
the credulity of the victim for the same reason it extends to lossless
schemes to defraud. Criminal fraud is concerned with the prevention
352
. See STUART P. GREEN, THIRTEEN WAYS TO STEAL A BICYCLE 129 (2012) (discuss-
ing reaction to fraud of Bernie Madoff and the suggestion by some that “the victim who is
duped by a fraudster should have known better and therefore is partially to blame”).
353
. Dewey, supra note 8 (describing Fox News report of fake story that President Obama
funded Muslim culture museum); Becky Bratu et al., Tall Tale or Satire? Authors of So-Called
‘Fake News’ Feel Misjudged, NBC NEWS (Dec. 15, 2016),
https://www.nbcnews.com/news/us-news/tall-tale-or-satire-authors-so-called-fake-news-
feel-n689421 (describing Sean Hannity reporting false story about settlement of 250,000 Syr-
ians in United States).
354
. See Sapna Maheshwari, 10 Times Trump Spread Fake News, N.Y. TIMES, Jan. 18,
2017.
355
. Marc Fisher, John Woodrow Cox & Peter Hermann, Pizzagate: From Rumor, to
Hashtag, to Gunfire in D.C., WASH. POST, Dec. 6, 2016.
356
. Matthew Haag & Waya Salam, Gunman in ‘Pizzagate’ Shooting Is Sentenced to 4
Years in Prison, N.Y. TIMES, Jun. 23, 2017, at A14.
357
. Craig Silverman, How the Bizarre Conspiracy Theory Behind “Pizzagate” Was
Spread, BUZZFEED NEWS (Dec. 6, 2016), https://www.buzzfeed.com/craigsilverman/fever-
swamp-election; Daniel Funke, Fact-Checkers Have Debunked This Fake News Site 80 Times.
It’s Still Publishing on Facebook, POYTNER (Jul. 20, 2018), https://www.poynter.org/fact-
checking/2018/fact-checkers-have-debunked-this-fake-news-site-80-times-its-still-publish-
ing-on-facebook/.
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and punishment of deceptive economic exploitation as well as harm. It
does not matter if the victim does not suffer a loss because the defendant
has obtained a dishonest gain. And it does not matter if the victim could
have detected the deception because the failure of the victim is evidence
of vulnerability exploited by the defendant. All frauds exploit trust.
Many exploit financial vulnerabilities such as desperation, a lack of fi-
nancial literacy, or a predisposition to believing things that are “too good
to be true.” Fake news publishers exploit a lack of online literacy as well
as other vulnerabilities—rabid political partisanship, skepticism of insti-
tutions, stress, and anxiety in times of emergency and sickness. These
vulnerabilities are worthy of protection.
VII. CONCLUSION
This Article has attempted to advance a forceful argument in favor
of prosecuting those who publish fake news for profit for wire fraud un-
der 18 U.S.C. § 1343. This solution alone cannot solve the problem. But
it is capable of holding those responsible to account. And it is the solu-
tion that best captures the nature of publishing fake news—a rare exam-
ple of a fraud that does not defraud made possible by the use of a two-
sided market on the internet. But for the conjunctive interpretation in
Cleveland, frauds that do not defraud would constitute wire fraud.
Cleveland must be overruled. Its conjunctive interpretation strays too
far from the plain meaning of the statute and is ill-equipped to fight the
new frontier of online fraud. Without a disjunctive interpretation, the
people who Paul Horner described as “sheep” and “retards”—those who
Justice Ashurst more eloquently referred to as “the weaker part of man-
kind”—will remain ripe for exploitation. Their financial interests may
not be harmed. But they and society along with them are rightly called
victims—victims of an interpretation that preserves an economic incen-
tive to be dishonest.
