Friday, April 26, 2024

Oral Argument in Supreme Court Case on Trump Immunity Discussing the Defraud / Klein Conspiracy (4/26/24)

I have written many blogs over the years on the defraud conspiracy (aka Klein conspiracy) in 18 USC § 371, here. I collect at the end of this email some of the more noteworthy (in my imagination) of those blogs on the subject I discuss today. That subject is the potential breadth of the defraud conspiracy, particularly when the Supreme Court interpreted the word “defraud” in § 371 to not be limited to fraud in the usual federal law criminal sense to require some taking or intent to take property. In Hammerschmidt v. United States, 265 U.S. 182, 188 (1924), the Court held that the defraud conspiracy certainly means to cheat or attempt to cheat the Government out of property or money, but it also means to interfere with or obstruct lawful governmental functions “by deceit, craft or trickery, or at least by means that are dishonest” even if no fraud in its normal meaning is the object. As interpreted, that means defraud includes simply an object of the conspiracy to impair the lawful functions of Government. The Hammerschmidt interpretation of defraud was an outlier from the normal interpretation and was not based upon any objective indication that Congress meant the broader interpretation. But, as noted, Hammerschmidt is a long-ago case that is now entrenched in jurisprudence (perhaps even settled law, as some Justices used the term to get past confirmation hearings). (Note, however, that in the current Supreme Court settled law may not be settled after all.)

In yesterday’s oral argument in Trump v. United States, No. 23-939 (4/25/24) (Transcript here; and docket here), the defraud conspiracy came up at least briefly. That is perhaps not surprising because the indictment, CL here, alleged the defraud conspiracy as Count One. The oral argument focused on Presidential immunity for conduct alleged in various counts (including the defraud conspiracy and the two counts under 18 USC § §  1512 (Counts Two and Three). The focus was on presidential immunity rather than the contours of the statutes. 

I don’t propose to discuss the issue of presidential immunity here. My purpose is to relate the discussions of the potential scope of the defraud conspiracy, § 371, aka Klein conspiracy.

Justices Alito, Gorsuch, and Kavanaugh engaged at least glancingly with Michael R. Dreeben, Counselor to the Special Counsel, Jack Smith. I offer the excerpts (with some surrounding potentially relevant content; page numbers are indicated in brackets with asterisk (e.g. [*97]]):



* * * *


* * * *


And making a mistake is not what lands you in a criminal prosecution. There's been some talk about the statutes that are at issue in this case. I think they are fairly described as malum in se statutes, engaging in conspiracies to defraud the United States with respect to one of the most important functions, namely, the certification of the next president.

JUSTICE ALITO: Well, I don't want to dispute the particular application of --of that, of 371, conspiracy to defraud the United States, to the particular facts here, but would you not agree that that is a peculiarly open-ended statutory prohibition? In that -that fraud under that provision, unlike under most other fraud provisions, does not have to do --doesn't require any impairment of a property interest.

MR. DREEBEN: It's designed to protect the functions of the United States government. And it's difficult to think of a more critical function than the certification of who won the election.

JUSTICE ALITO: You know, I'm not -as I said, I'm not discussing the particular [*99] facts of this case, but it applies to any fraud that interferes seriously with any government operation, right?

MR. DREEBEN: So what --what the government needs to show is an intent to impede, interfere, or defeat a lawful government function by deception, and it has to be done with scienter. These are not the kinds of activities that I think any of us would think a president needs to engage in, in order to fulfill his Article II duties. And particularly in a case like this one.

I --I want to pick up on something that the Court said earlier about the distinction between a public official acting to achieve public ends and a public official acting to achieve private ends.

As applied to this case, the president has no functions with respect to the certification of the winner of the presidential election. It seems likely that the Framers designed the Constitution that way because, at the time of the founding, presidents had no two-term limit. They could run again and again [*100] and were expected, potentially, to want to do that.

So the potential for self-interest would explain why the states conduct the elections. They send electors to certify who won those elections and to provide votes. And then Congress in a joint --extraordinary joint session certifies the vote.

And the president doesn't have an official role in that proceeding. So it's difficult for me to understand how there could be a serious constitutional question about saying you can't use fraud to defeat that function. You can't obstruct it through deception. You can't deprive millions of voters of their right to have their vote counted for the candidate who they chose.

CHIEF JUSTICE ROBERTS: Thank you, counsel.

* * * *


JUSTICE GORSUCH: Whether it's re-election or who knows what "corrupt" means in [*139] 1512, right? We --we don't know what that means. Maybe we'll find out sometime soon.

But the --the dangerousness of accusing your political opponent of having bad motives.

MR. DREEBEN: Mm-hmm.

JUSTICE GORSUCH: And --and if that's enough to overcome your core powers or any other limits. Reactions, thoughts?

MR. DREEBEN: Yeah. So --so I --I think that you're raising a very difficult question

 JUSTICE GORSUCH: That's the idea, right I mean -

MR. DREEBEN: That is the idea. And-

JUSTICE GORSUCH: Testing --testing the limits of both sides' arguments.

MR. DREEBEN: And --and I'm going to say something that I don't normally say, which is that's really not involved in this case.


MR. DREEBEN: We don't have bad political motive in that sense. I would start


JUSTICE GORSUCH: I --I --I understand that. I appreciate that, but you also appreciate that we're -


JUSTICE GORSUCH: --writing a rule for -


JUSTICE GORSUCH: --for the ages.

MR. DREEBEN: Yes. And --and I think I would start by looking at the statutes and -and seeing what restrictions they do place on the President's conduct.

And, for example, the statute that prohibits fraud to defeat the lawful functions of the United States, the statute defines what the purpose is that the Defendant has to have in mind. It has to be to defeat something that the United States is doing. And it has to be by deception.

I don't think that that gets us into the realm of mode of hunting in the area where we are as concerned, I think, as the Court would be, about doing something that would undermine the presidency and the executive branch.

And 1512(c)(2), we may have different [*141] views on the clarity and the scope of that statute. I think if the Court does interpret "corruptly" as involving a consciousness of wrongdoing and elevates that to consciousness of illegality, then we're in a different realm. Wanting to get reelected is not an illegal motive, and you don't have to worry about prosecuting presidents for that.

JUSTICE GORSUCH: Yeah. Okay. Thank you, Mr. Dreeben.

* * * *


Second, another point, you said talking about the criminal statutes, it's very easy to characterize presidential actions as false or misleading under vague statutes. So President Lyndon Johnson, statements about the Vietnam War -

MR. DREEBEN: Mm-hmm.

JUSTICE KAVANAUGH: --say something's false, turns out to be false that he says about the Vietnam War, 371 prosecution -


JUSTICE KAVANAUGH: --after he leaves office?

MR. DREEBEN: --I think not, but when you --this is an area that I do think that merits some serious and nuanced consideration. Statements that are made by a president to the [*148] public are not really coming within the realm of criminal statutes. They've never been prosecuted.

I realize that the Court can say: Well, what if they were? And then I think you get to what I would regard as a hard constitutional question that I would probably guide the Court away from trying to resolve today, although I do think it's very different from our case and distinguishable in important ways, but you're dealing here with two branches of government that have a paramount interest in the integrity and freedom of their interactions with each other.

On the one hand, the president, of course, should be very free to send, usually, his cabinet officials and sub-cabinet officials to testify to Congress to provide them with the information needed to enact legislation and to make national policy. And we're very concerned about anything that would trammel that.

On the other side of the equation, Congress has a compelling interest in receiving accurate information and at the very least -



MR. DREEBEN: --not information that is intentionally and knowingly false.


MR. DREEBEN: That would pollute the legislative process.

JUSTICE KAVANAUGH: How about, I think it came up before, President Ford's pardon?

MR. DREEBEN: Mm-hmm.

JUSTICE KAVANAUGH: Very controversial in the moment.


JUSTICE KAVANAUGH: Hugely unpopular, probably why he lost in '76.


JUSTICE KAVANAUGH: Now looked upon as one of the better decisions in presidential history, I think, by most people. If he's thinking about, well, if I grant this pardon to Richard Nixon, could I be investigated myself for obstruction of justice on the theory that I'm interfering with the investigation of Richard Nixon?

MR. DREEBEN: So this would fall into that small core area that I mentioned to Justice Kagan and Justice Gorsuch of presidential [*149]  responsibilities that Congress cannot regulate.

JUSTICE KAVANAUGH: How about President Obama's drone strikes?

MR. DREEBEN: So the --the Office of Legal Counsel looked at this very carefully and determined that, number one, the federal murder statute does apply to the executive branch. The president wasn't personally carrying out the strike, but the aiding and abetting laws are broad, and it determined that a public authority exception that's built into statutes and that applied particularly to the murder statute, because it talks about unlawful killing, did not apply to the drone strike.

So this is actually the way that the system should function. The Department of Justice takes criminal law very seriously. It runs it through the analysis very carefully with established principles. It documents them. It explains them. And then the president can go forward in accordance with it. And there is no risk of prosecution for that course of activity.

JUSTICE KAVANAUGH: Thank you for your answers.

Since I have covered my thoughts on the subject of the defraud conspiracy, § 371, before (see e.g., the items linked below), I don’t propose to get into depth other than to note that the Hammerschmidt interpretation is a stand-alone interpretation of the word defraud and the related word fraud and could potentially cover a broad range of seemingly innocent or at least not criminal conduct so long as its object was to impair or impede the lawful functioning of the IRS.  See John A. Townsend, Tax Obstruction Crimes: Is Making the IRS's Job Harder Enough, 9 Hous. Bus. & Tax. L.J. 255 (2009), here, and its online appendix with examples Tax Obstruction Crimes: Is Making the IRS's Job Harder Enough? Online Appendix, 9 Hous. Bus. & Tax L.J. A-1 (2009), here.

I doubt that correcting or adjusting the Hammerschmidt interpretation of the defraud conspiracy, now apparently settled law, will happen in this case. But maybe in the future someone will again seek cert on the issue. Trump could have made a reassessment of Hammerschmidt a part of the petition for cert. But the focus was on immunity and a frontal attack on Hammerschmidt would have been a distraction. Trump's main brief does mention (brief here at p. 40) Hammerschmidt as part of an argument that criminal laws not specifying their application to a President should not apply to a President:

Likewise, 18 U.S.C. § 371 forbids citizens “[t]o conspire to defraud the United States,” which “means primarily to cheat the government out of property or money.” Hammerschmidt v. United States, 265  U.S. 182, 188 (1924). This statute contains no clear statement that Congress intended to criminalize any official action of the President, that falls squarely within his duties—including Presidential advocacy to Congress or members of state legislators, the President’s selection of Cabinet-level officers or his direction of the Department of Justice, public statements by a President on matters of enormous public concern, ensuring and safeguarding proper and fraud-less federal elections, or any other conduct alleged in the indictment. J.A.185-86, 193-95, 196-206; 186-87, 199, 203, 206-07, 215-20; 181, 188-92, 195, 197, 202-07, 221-23, 225-32. The same logic applies to § 241. 

Note the bold-face I applied to "primarily." I am not sure that, as applied, the holding in Hammerschmit is primarily to the category of cheating the government out of property or money. Having said that, I will also say that in tax cases, the defraud / Klein conspiracy almost always involves some tax obligation that the conspirators intend to avoid. The avoided / evaded tax is not an object of the defraud conspiracy offense, but it is needed to climb the scale in the sentencing calculation to serve the important government imperative of using criminal convictions and sentencing to discourage tax misconduct.

Prior Blog entries most relevant:

  • Coplan #1 - Panel Questions Validity of Klein Conspiracy (Federal Tax Crimes Blog 12/1/12), here.
  • Petition for Certiorari Seizing the Gauntlet Laid Down by the Second Circuit Majority Panel to Question the Klein Conspiracy (Federal Tax Crimes Blog 5/2/13), here.
  • Supreme Court Reverses Bridgegate Convictions, Holding that Fraud Means Fraud; Implications for Defraud/Klein Conspiracy? (Federal Tax Crimes Blog 5/7/20), here.

On somewhat related subjects, see:

  • Good Eleventh Circuit Analysis on the Meaning of Defraud in the Mail and Wire Fraud Statutes (Federal Tax Crimes Blog 7/22/16), here.
  • Update on Wartime Suspension of Limitations Act ("WSLA"), 18 USC 3287, and Tax Crimes (Federal Tax Crimes Blog 4/1/23; 4/2/23), here.

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