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In 1985, the U.S. Navy contracted with two shipyards for the production of a new fleet of destroyers. Each destroyer required an electrical generator set to provide electricity. Several companies became involved in the project to build the generator sets. None of these companies billed the federal government, but rather billed the company directly above them in the chain of production. The company directly above them did not include these bills when submitting for payment from the government. This case began when two whistleblowers sued their former employer and other government subcontractors under the False Claims Act. The U.S. District Court for the Southern District of Ohio dismissed their claim after holding that no FCA violation could occur without evidence that the federal government actually relied on a fraudulent bill. On appeal, the U.S. Court of Appeals for the Sixth Circuit held that the case should continue because the False Claims Act does not categorically require proof that the fraudulent bill was actually presented to the federal government. The ultimate decision by the Supreme Court could have important economic consequences for taxpayers, government contractors, and any party who seeks to file suit under the False Claims Act.

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The United States convicted Petitioners Conrad Black, John Boultbee, and Mark Kipnis of mail and wire fraud under 18 U.S.C. § 1341. The Seventh Circuit affirmed the convictions, rejecting arguments that the trial judge erred in failing to instruct the jury that a violation of 18 U.S.C. § 1346 requires contemplation of economic harm to the party to whom one owes “honest services.” The Seventh Circuit further held that objection to the prosecution’s request for a special verdict constituted waiver of the right to challenge the trial judge’s instruction in light of the fact that a special verdict would have clarified whether the trial judge’s instruction regarding honest services fraud was the basis for the convictions. The Supreme Court’s decision will determine the limits of the honest services provision and the means by which to preserve instructional error.

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Manoj Nijhawan was convicted of conspiracy to commit bank, mail, and wire fraud, and for conspiracy to commit money laundering. Upon his conviction, Immigration Court proceedings were brought against him and he was found to be subject to deportation under 8 U.S.C. § 1101(a)(43)(M)(i) ("Subsection (M)(i)"). Subsection (M)(i) provides that an "aggravated felony," for purposes of deportation, includes a conviction for "an offense that (i) involves fraud or deceit in which the loss to the victim exceeds $10,000." On appeal, the Third Circuit Court of Appeals held that the loss determination used for sentencing was sufficient to meet the loss requirement under Subsection (M)(i), even though it was not a necessary element of his conviction. Nijhawan challenges this ruling arguing that both the "fraud or deceit" and "loss" elements must be found by a jury in order for Subsection (M)(i) to apply. Accordingly, he argues that he cannot be deported because the elements of the criminal statute under which he was convicted do not match those required for deportation under Subsection (M)(i). The United States argues that the loss element follows a "qualifier" and therefore need not be an element of the conviction for Subsection (M)(i) to apply.

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The federal False Claims Act permits private citizens and company employees, known as relators, to bring suit in the name of the United States (known as a qui tam suit) against a corporation that has committed fraud against the government, and to share in any judgment thereon. James Stone, a former engineer for Rockwell International, brought a qui tam suit against Rockwell for environmental health and safety violations at the Rocky Flats weapons facility. However, Rockwell claimed that Stone was ineligible to bring suit because the knowledge he had was not sufficiently “direct and independent” to qualify him as an “original source” under the statute. The Supreme Court’s decision in this case will resolve a split among the circuit courts regarding precisely what level of “direct and independent knowledge” a potential qui tam plaintiff must have to qualify as an original source. The Court’s decision will ultimately affect any business that contracts with the federal government or participates in government programs, and could make it either substantially easier or more difficult for potential whistleblowers to bring suit under the False Claims Act.

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This case presents the Supreme Court with an opportunity to decide whether the plain language of the federal bank fraud statute requires proof of, in addition to intent to deceive a financial institution, a specific intent to target the financial institution’s property. See Brief for Petitioner, Lawrence Eugene Shaw at 15. The case arises out of Lawrence Eugene Shaw’s conviction of bank fraud under 18 U.S.C. § 1344(1), after Shaw withdrew funds from a Taiwanese businessman’s Bank of America account, albeit without any harm to Bank of America. See United States v. Shaw, 781 F.3d 1130, 1133 (9th Cir. 2015). Shaw argues the plain language of § 1344(1) requires proof of intent to deprive that institution of its own property. See Brief for Petitioner at 15. The government responds that because the Congressional intent behind the statute was to target all forms of bank fraud, the statute must be interpreted broadly: without concern for schemers’ mental states as to whose property they sought to defraud. See Brief for Respondent, United States at 44–45. Potentially at stake is the balance between federal and state police power, with federal police power increasing the broader the Supreme Court interprets a statute. See Brief for Amicus Curiae National Association of Criminal Defense Lawyers ("NACDL"), in Support of Petitioner at 5.

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Stoneridge Investment Partners, LLC, brought a securities fraud class action against Charter Communications' vendors Scientific Atlanta and Motorola, alleging a scheme in which Charter contracted with the vendors to purchase set-top cable boxes at higher-than-normal prices and sell advertising at higher-than-normal rates. These transactions served to artificially inflate Charter's stock price. The United States District Court for the Eastern District of Missouri held that Stoneridge's claim was foreclosed by the Supreme Court's decision in Central Bank, N.A. v. First Interstate Bank, N.A., 511 U.S. 164 (1994), in which the Court determined that mere "aiders and abettors" of fraud cannot be held liable.  The Eighth Circuit affirmed. Thus, the issue before the Supreme Court is whether a party may be held liable for fraud where it made no misleading public statements (or omissions), and had no duty to do make disclosures, but engaged in transactions with a public corporation designed to artificially enhance the public corporation's financial statements.  How the Supreme Court decides this case may set a new standard for determining whether third-parties can be held liable for investor-related fraud.

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