For years, prosecutors have brought federal wire fraud charges alleging that a defendant has deprived a counterparty of the “right to control” its assets, often in the context of a business transaction. Under the wire fraud statute, the government must demonstrate that a defendant “obtained money or property by means of false or fraudulent pretenses, representations, or promises.” 18 U.S.C. Section 1343. The right-to-control theory expanded that statute to reach schemes to deprive the victim of potentially valuable economic information, where the deprivation “can or does result in tangible economic harm … such as by increasing the price the victim paid for a good … or … by providing the victim with lower-quality goods than it otherwise could have received.” See United States v. Finazzo, 850 F.3d 94, 111 (2d Cir. 2017) (collecting cases). In such circumstances, the U.S. Court of Appeals for the Second Circuit had long held the victim is deprived of a property interest—the “right to control” his assets.

In United States v. Ciminelli, 598 U.S. ___ (2023), a unanimous U.S. Supreme Court invalidated the right-to-control theory, holding that the right to valuable economic information is not a traditional property interest, and thus cannot form the basis of a federal fraud conviction. This decision is sure to be welcomed by the defense bar, which had long argued that the right-to-control theory is overbroad and criminalized ordinary business disputes. However, the court’s decision did not foreclose an alternative theory presented by the government—one which, if pursued by the government in other cases and accepted by courts, may expand the breadth of the wire fraud statute further and lead to difficult line-drawing exercises.