U.S. Supreme Court Justice Sonia Sotomayor decided on Feb. 3 to rescind a temporary stay that had prevented a second fraud trial for four New York businessmen whose convictions were overturned by the high court in 2023.
The plan, led at the time by then-New York Gov. Andrew Cuomo, envisioned the construction of a solar panel factory, among other projects, and was aimed at attracting more than $8 billion in investments for Buffalo and the rest of western New York. Cuomo unveiled the plan in his 2012 State of the State address.
The decision came after the Supreme Court backed away in 2023 from the longstanding right-to-control theory of fraud which held federal fraud statutes protect a victim’s economic information that is needed to make reasoned economic decisions. The now-abandoned theory held that the deprivation of complete and accurate information a person needs to make an economic decision constitutes property fraud even if the victim was not deprived of tangible property.
The Supreme Court held that the statutes protect traditional property rights, which do not encompass information needed to make economic decisions. This means fraud is deemed to take place only when a wrongdoer uses deception to deprive a victim of a property interest such as money or physical assets.
Supreme Court rules allow applicants to refile an application rejected by a justice with another justice. It is unclear if they will do so.
At that time the cases were remanded to the Second Circuit for reconsideration in light of two rulings the Supreme Court handed down the same month—Percoco v. United States and United States v. Ciminelli—that limited the application of the federal honest services fraud statute and the right-to-control theory of fraud.
In that ruling, the Supreme Court limited the reach of the honest services fraud statute, which some lawyers and civil libertarians say is vague and overbroad.
Federal law defines honest services fraud as “a scheme or artifice to deprive another of the intangible right of honest services.” Although the law was created to combat government corruption, its application isn’t limited just to government officials and can cover private citizens.
The phrase “honest services” is not defined, which has allowed the courts to decide on the law’s reach. For honest services fraud to take place, someone must pay a bribe and someone must be harmed by it. The thinking behind the law is that the person accepting the bribe owes a duty to someone else, such as the citizenry.
Prosecutors claimed Ciminelli rigged bids for state contracts. He was convicted of conspiracy to commit wire fraud and other charges by a federal court in Manhattan in 2018.
Ciminelli claimed that the right-to-control theory of fraud the government argued and the Second Circuit upheld in the case, was invalid.
The Supreme Court agreed with Ciminelli and rejected the right-to-control theory.
They told the high court it should grant the requested stay because “there is both ‘a reasonable probability’ that the Court will grant [review] again and a ‘fair prospect’ that the Court will reverse again.”
The Second Circuit’s ruling “brazenly defies this Court’s mandate in Ciminelli, which required the court below to follow this Court’s clear precedent.”
The applicants are “incorrect” when they claim that the Supreme Court “is likely to grant review.”
“Applicants’ contention that a court of appeals must review the sufficiency of the evidence presented at trial under a legal standard not adopted until after trial lacks merit,” she wrote.
The Epoch Times reached out for comment to the applicants’ attorney, former U.S. Solicitor General Paul Clement of Clement and Murphy in Alexandria, Virginia, and the U.S. Department of Justice.
No replies were received by publication time.
