United States v. Pasquantino

Rehearing en banc granted by order
filed 1/14/03; opinion filed 9/30/02
is vacated
 PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

4444444444444444444444444444444444444444444444447
UNITED STATES OF AMERICA,
Plaintiff-Appellee,

v. No. 01-4463

DAVID B. PASQUANTINO,
Defendant-Appellant.
4444444444444444444444444444444444444444444444448
4444444444444444444444444444444444444444444444447
UNITED STATES OF AMERICA,
Plaintiff-Appellee,

v. No. 01-4464

CARL J. PASQUANTINO,
Defendant-Appellant.
4444444444444444444444444444444444444444444444448
4444444444444444444444444444444444444444444444447
UNITED STATES OF AMERICA,
Plaintiff-Appellee,

v. No. 01-4465

ARTHUR HILTS, a/k/a Butch,
Defendant-Appellant.
4444444444444444444444444444444444444444444444448

Appeals from the United States District Court
for the District of Maryland, at Baltimore.
J. Frederick Motz, District Judge.
(CR-00-202-JFM)

Argued: April 5, 2002

Decided: September 30, 2002
 Before GREGORY, Circuit Judge, HAMILTON,
Senior Circuit Judge, and Gerald Bruce LEE,
United States District Judge for the
Eastern District of Virginia, sitting by designation.

____________________________________________________________

Reversed by published opinion. Judge Gregory wrote the majority
opinion, in which Judge Lee joined. Senior Judge Hamilton wrote a
dissenting opinion.

____________________________________________________________

COUNSEL

ARGUED: Bruce Robert Bryan, Syracuse, New York, for Appellant
Carl Pasquantino; Jensen Egerton Barber, JENSEN E. BARBER &
ASSOCIATES, Washington, D.C., for Appellant David Pasquantino;
Isaac Joe, Jr., Baltimore, Maryland, for Appellant Hilts. Gregory
Welsh, First Assistant United States Attorney, Baltimore, Maryland,
for Appellee. ON BRIEF: Michael J. McCarthy, Bowie, Maryland,
for Appellant Carl Pasquantino. Thomas M. DiBiagio, United States
Attorney, Baltimore, Maryland, for Appellee.

____________________________________________________________

OPINION

GREGORY, Circuit Judge:

Appellants were indicted and convicted of engaging in a scheme to
defraud the governments of Canada and the Province of Ontario of
excise duties and tax revenues applicable to the importation and sale
of liquor. They assert that the district court erred in denying their pre-
trial motion to dismiss the indictment because a scheme to defraud a
foreign government of duties and taxes is not cognizable under the
wire fraud statute, 18 U.S.C. § 1343.1 We agree with this assertion,
and for the reasons that follow, we reverse appellants' convictions.
____________________________________________________________
1
Appellants also contend that their motion for judgment of acquittal
should have been granted because the evidence presented at trial was

2
 I.

Years ago, after Canada increased the sin taxes on alcohol and cig-
arettes to such a level that Canada's taxes greatly exceeded compara-
ble United States taxes, a Canadian black market for such goods
emerged. Capitalizing on this situation, appellants David and Carl
Pasquantino, residents of Niagara Falls, New York, developed a
scheme where, with the help of drivers such as appellant Arthur Hilts,
they would purchase large quantities of low-end liquor from discount
liquor stores in Maryland, transport the liquor to New York, store it
there, and then smuggle the liquor into Canada in the trunks of cars.
While all applicable Maryland and federal taxes were paid on the
liquor, there is no evidence that any Canadian taxes or duties were
ever paid on the liquor that was transported into Canada. The enter-
prise began in 1996 and continued through May 2000.

The Bureau of Alcohol, Tobacco and Firearms (BATF) was alerted
to the scheme after agents, routinely tracking Maryland liquor pur-
chases, discovered that eight retail liquor stores in Maryland were
buying unusually large quantities of lower cost liquors from wholesal-
ers. A criminal investigation ensued, with two of the store owners
cooperating proactively with investigating agents.2 These store own-
ers recorded telephone conversations, and advised agents of calls and
visits from appellants.

BATF agents obtained numerous telephone, truck rental, and motel
records, all of which evidenced the scheme.3 Border crossings were
____________________________________________________________
insufficient to support a wire fraud conviction. Appellant Hilts further
argues that if the conviction is upheld, he is entitled to a new sentencing
because the district court failed to make a determination as to the scope
of his jointly undertaken criminal activity. Because we resolve this case
on appellants' first contention, that the indictment should have been dis-
missed, we need not address these secondary arguments.
2
In exchange for their cooperation, the store owners were not prose-
cuted for violations of U.S. Department of Treasury Regulations that
they record and report bulk sales of alcohol.
3
David and Carl Pasquantino made numerous interstate telephone calls
from Niagara Falls, New York to Hagerstown, Maryland in order to
place large liquor orders with the discount stores in Maryland.

3
monitored electronically, tracking license plates of vehicles entering
Canada. Several vehicles, registered to drivers involved in the
scheme, failed to stop for a second inspection when requested. BATF
and Royal Canadian Mounted Police also conducted surveillance on
David and Carl Pasquantino and their associates loading liquor in
Maryland and unloading it in Canada after it was smuggled through
customs. Marked bottles of liquor were recovered in Canada.

Appellants were indicted, along with four other individuals, on six
counts of wire fraud, in violation of 18 U.S.C. § 1343.4 They filed a
motion to dismiss the indictment on the ground that the district court
lacked subject matter jurisdiction, arguing that a scheme to defraud
a foreign government of tax revenues is not cognizable under the wire
fraud statute. The district court denied the motion and the case pro-
ceeded to jury trial.

At trial, the eight Maryland liquor store owners testified for the
government about their dealings with the Pasquantinos. In addition to
the store owners, two men who had been involved in the scheme testi-
fied that they transported liquor for David and Carl Pasquantino from
the United States into Canada, and that the Pasquantinos paid them
cash for each run. Canada Customs intelligence officer Gina Jonah
testified that there is a Canadian federal excise tax and general sales
tax, as well as a Liquor Control Board of Ontario tax and a provincial
sales tax on liquor imported from the United States into Canada. J.A.
177-78. Officer Jonah, a seventeen-year employee with Canada Cus-
toms, explained that the equivalent of approximately $100 in United
States currency would be due and owing on a case of liquor that was
purchased in the United States and imported into Canada. She stated
that generally the amount of Canadian tax due is twice the purchase
price of the case of liquor in the United States.

David and Carl Pasquantino were convicted on all six counts of the
indictment and sentenced to 57 months imprisonment on each count,
to be served concurrently. Before the case was submitted to the jury,
the district court dismissed all but Count I against Arthur Hilts. Hilts
____________________________________________________________
4
They were also indicted in Canada for failure to file excise taxes and
possession of unlawfully imported spirits, though the status and disposi-
tion of the Canadian charges is not evident in the record provided to us.

4
was convicted on that count and sentenced to 21 months. This appeal
followed.

II.

The threshold question here involves whether a scheme to evade
the taxes of another country can be prosecuted as wire fraud by the
United States government. Appellants argue that the trial court erred
in denying their motion to dismiss the indictment. When reviewing
the denial of a motion to dismiss an indictment, this Court reviews the
district court's factual findings for clear error and its legal conclusions
de novo. See United States v. Ward, 171 F.3d 188, 193 (4th Cir.
1999). Because the issue involves a pure question of law, whether the
scheme alleged in the indictment is cognizable under the wire fraud
statute, our review here is de novo. See United States v. United Medi-
cal and Surgical Supply Co., 989 F.2d 1390, 1398 (4th Cir. 1993).

III.

Wire fraud requires proof of 1) a scheme to defraud, and 2) the use
of a wire communication in furtherance of that scheme.5 See United
States v. Bollin, 264 F.3d 391, 407 (4th Cir. 2001). The Supreme
Court has been clear that the mail and wire fraud statutes are limited
in scope to schemes aimed at causing deprivation of money or prop-
erty. See McNally v. United States, 483 U.S. 350 (1987). Appellants
argue that 1) Canada's tax revenues do not qualify as "property"
within the scope of the wire fraud statute, and 2) the prosecution is
barred by the principles underlying the common law revenue rule.
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5
At the time of the offense, the wire fraud statute provided:

Whoever, having devised or intending to devise any scheme
or artifice to defraud, or for obtaining money or property by
means of false or fraudulent pretenses, representations, or prom-
ises, transmits or causes to be transmitted by means of wire . . .
communication 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 impris-
oned not more than five years, or both . . . .

18 U.S.C. § 1343 (2000).

5
 A.

Appellants first argue that under the Supreme Court's recent deci-
sion in Cleveland v. United States, 531 U.S. 12 (2000), Canada's right
to collect taxes and duties is not a property right for purposes of the
wire fraud statute. Appellants point to language from Cleveland,
where the Court explains, "[i]t does not suffice, we clarify, that the
object of the fraud may become property in the recipient's hands; for
purposes of the mail fraud statute, the thing obtained must be property
in the hands of the victim."6Cleveland, 531 U.S. at 15. Appellants'
reliance on this statement evinces a misunderstanding of Cleveland.
In Cleveland, the Court held that an unissued video poker license held
by a state did not constitute property. Id. at 20. Though the license
becomes the property of the licensee (the recipient) after it is issued,
a government regulator does not part with property when it issues a
license. Id. In other words, the license in Cleveland was never capable
of being property in the hands of the victim. On the other hand, it is
well established that "property" may comprise both tangible and
intangible property rights, see Carpenter v. United States, 484 U.S.
19, 25 (1987), and that a government has a property right in tax reve-
nues when they accrue, see Manning v. Seeley Tube & Box Co., 338
U.S. 561, 566 (1950). Cleveland does not say otherwise. Indeed,
Cleveland recognized that the government "nowhere allege[d] that
Cleveland defrauded the State of any money to which the state was
entitled by law." Cleveland, 531 U.S. at 22. Here, it was alleged that
Canada was defrauded of tax revenues it was entitled to by law.7 Can-
____________________________________________________________
6
Because the mail and wire fraud statutes share the same language in
relevant part, we apply the same analysis to both offenses. Carpenter v.
United States, 484 U.S. 19, 25 n.6 (1987).
7
The alleged purpose of appellants' scheme was to defraud Canada of
tax revenue. Though Canada's interest would not vest until appellants
crossed the border, the fact remains that when the scheme came to fru-
ition, if the appellants succeeded in completing border crossings without
paying the duties (which they did here), Canada would be deprived of
revenues. The tax debt would be property in Canada's hands. Because
success of the scheme is irrelevant, see Durland v. United States, 161
U.S. 306, 315 (1896), the inquiry is whether, if the scheme succeeded,
the victim here, the government of Canada, would have been deprived
of something in which it held a property right. Here, it would have.

6
ada's right to collect taxes is therefore a sufficient property right for
wire fraud purposes, unaffected by the Court's decision in Cleveland.

B.

Though Canada's right to collect taxes is a property right for
Cleveland purposes, determination of whether Canada was actually or
would have been entitled to the tax revenues involves an inquiry into
the validity and operation of a foreign revenue law. We find that the
principles underlying the revenue rule bar such an inquiry, and there-
fore bar appellants' prosecution in this case. Whether the revenue rule
is applicable in wire fraud prosecutions is an issue of first impression
in our circuit. Though we have not before considered the issue, two
of our sister circuits have done so, and have reached dramatically dif-
ferent conclusions. The First Circuit, in United States v. Boots, 80
F.3d 580 (1st Cir. 1996), dismissed a similar indictment, while the
Second Circuit has upheld convictions for schemes to defraud a for-
eign government of tax revenues, United States v. Trapilo, 130 F.3d
457 (2d Cir. 1997). As evidenced by the split in authority, this issue
presents a difficult question indeed. However, after careful review, we
agree with the First Circuit that a scheme to defraud a foreign govern-
ment of tax revenues is not cognizable under the wire fraud statute.
The indictment against appellants should have been dismissed by the
district court.

In Boots, the defendants took part in a scheme to transport tobacco
from a Native American reservation in upstate New York into New
Brunswick, Canada, without paying taxes and excise duties on the
tobacco. Id. at 583. To bypass customs checkpoints, the tobacco was
transported surreptitiously into Canada through another reservation in
Maine. Id. The defendants were charged with and found guilty of con-
spiracy to commit wire fraud, in violation of 18 U.S.C. § 371 and
§ 1343. Id. at 584. The First Circuit reversed the convictions, basing
its decision primarily on the revenue rule. Id. The Court explained
that the "rationale of the revenue rule has been said to be that revenue
laws are positive rather than moral law; they directly affect the public
order of another country and hence should not be subject to judicial
scrutiny by American courts; and for our courts effectively to pass on
such laws raises issues of foreign relations which are assigned to and

7
better handled by the legislative and executive branches of govern-
ment." Id.

The First Circuit further explained:

[t]he scheme to defraud at issue—proof of which is essential
to conviction—had as its sole object the violation of Cana-
dian revenue laws. To convict therefore, the district court
and this court must determine whether a violation of Cana-
dian tax laws was intended and, to the extent implemented,
occurred. In so ruling, our courts would have to pass on
defendants' challenges to such laws and any claims not to
have violated or intended to violate them. Where a domestic
court is effectively passing on the validity and operation of
the revenue rules of a foreign country, the important con-
cerns underlying the revenue rule are implicated.

Id. (emphasis added). Of "particular concern" to the First Circuit was
"the principle of noninterference by the federal courts in the legisla-
tive and executive branches' exercise of their foreign policymaking
powers." Id. at 587-88.8

We agree with the First Circuit. When the United States attempts
to punish a crime whose sole objective is the violation of another
country's revenue laws, the "important concerns underlying the reve-
____________________________________________________________
8
In addition to the revenue rule, the First Circuit also noted that the
federal statute criminalizing the smuggling of goods into foreign coun-
tries punishes smuggling only if the foreign government has a reciprocal
law. Boots, 80 F.3d at 588; see 18 U.S.C. § 546. It opined that a decision
to uphold the wire fraud convictions "would have the effect of licensing
prosecutions against persons who use the wires to engage in smuggling
schemes against foreign governments irrespective of whether a particular
government had the reciprocal arrangement called for in section 546." Id.
"Effect cannot be given to section 1343 in these conditions without
threatening the reciprocity provision of section 546, and offending gener-
ally the salutary principles underlying the revenue rule." Id. The Court
then found its conclusion further supported by the "rule of lenity," stating
that if Congress "had meant to authorize the courts to enforce this kind
of application of the wire fraud statute, `it must speak more clearly than
it has.'" Id. (citing McNally v. United States, 483 U.S. 350, 360 (1987)).

8
nue rule" are indeed implicated. Boots, 80 F.3d at 587. Though this
case "does not require us to enforce a foreign tax judgment as such,
upholding [appellants'] section 1343 conviction would amount func-
tionally to penal enforcement of Canadian customs and tax laws." Id.

The revenue rule is a "longstanding common law doctrine provid-
ing that courts of one sovereign will not enforce final tax judgments
or unadjudicated tax claims of other sovereigns." Attorney General of
Canada v. R.J. Reynolds Tobacco Holdings, Inc., 268 F.3d 103, 109
(2d Cir. 2001) (providing a detailed history of the revenue rule). As
the Supreme Court has recognized, many courts in the United States
have adhered to the principle that a court need not give effect to the
penal or revenue laws of foreign countries. See Banco Nacional de
Cuba v. Sabbatino, 376 U.S. 398, 413-14 (1964). In this case, the act
of smuggling liquor into Canada to avoid import taxes is deplorable.
The appellants' scheme was a money-making one, with the govern-
ments of Canada and Ontario as the victims. However, the fact
remains that this prosecution involves Canada's tax laws. As the Sec-
ond Circuit recently explained:

[t]ax laws embody a sovereign's political will. They create
property rights and affect each individual's relationship to
his or her sovereign. They mirror the moral and social sensi-
bilities of a society. Sales taxes, for example, may enforce
political and moral judgments about certain products. Import
and export taxes may reflect a country's ideological leanings
and the political goals of its commercial relationships with
other nations.

R.J. Reynolds, 268 F.3d at 111. We believe that there are essentially
two reasons the revenue rule acts to bar wire fraud prosecutions for
schemes to violate foreign tax laws.

First, we are of the opinion that "[n]o court ought to undertake an
inquiry which it cannot prosecute without determining whether those
laws are consonant with its own notions of what is proper." Moore v.
Mitchell, 30 F.2d 600, 604 (2d Cir. 1929) (Hand, J., concurring).
Expansion of the mail and wire fraud statutes to reach violations of
foreign tax laws "risks turning federal prosecutors and investigators
into de facto criminal law enforcement agents for [certain] foreign tax

9
authorities." Kathryn Keneally, The U.S. Prosecutes Foreign Tax
Evasion as a Domestic Crime—With Far Reaching Consequences, 88
J. Tax'n 224, 229 (April 1998). The revenue rule allows our courts
to avoid becoming ensnared in the difficult decisions concerning
which foreign tax laws we, through criminal prosecutions here, will
help to enforce.9 The revenue rule should not be viewed as a means
for guilty defendants to escape punishment, but rather it should be
seen as an important protection mechanism for our courts.

Second, the revenue rule allows our courts to avoid interpreting
and applying foreign tax laws. The government, arguing that interpre-
tation of foreign laws is not needed here, relies on the Second Cir-
cuit's decision in Trapilo, 130 F.3d 457 (2d Cir. 1997), which
categorically rejected the Boots decision. We find Trapilo's rationale
to be flawed.10 In its rejection of Boots, the Second Circuit explained
____________________________________________________________
9
In a wire fraud prosecution such as this, where the violation of foreign
taxes is at issue, a decision will always have to be made regarding
whether or not to prosecute. In the case at hand, the decision was proba-
bly an easy one, given 1) the United States' good relations with Canada,
and 2) the fact that a tax on liquor is generally thought by most to be
acceptable. Imagine, however, that appellants had engaged in a similar
scheme to travel overseas and defraud Afganistan or Iraq of tax revenues.
Must the United States also prosecute such similar schemes? Where do
we draw the line as to which countries' laws we will help enforce? Fur-
thermore, imagine that Canada imposed an import duty on bibles, and
appellants schemed to smuggle bibles rather than liquor. The revenue
rule was created in part to avoid these types of political and foreign
policy-based determinations. If we were to uphold appellants' convic-
tions, our actions would at most run afoul of the principles underlying
the revenue rule and at least encourage selective prosecution.
10
In Trapilo, the defendants were charged in a one count indictment
with money laundering conspiracy in violation of 18 U.S.C.
§ 1956(a)(1)-(2) and (h). Reversing the district court's dismissal of the
indictment, the Second Circuit found that the language of the wire fraud
statute unambiguously prohibits the use of interstate or foreign commu-
nication systems by anyone who intends to "devise any scheme or arti-
fice to defraud." Trapilo, 130 F.3d at 551 (emphasis in original). The
Court noted that the statute neither expressly, nor impliedly, precludes
the prosecution of a scheme to defraud a foreign government of tax reve-
nue. Id.

10
that under the wire fraud statute, what is proscribed is the use of the
wires "in furtherance of a scheme whereby one intends to defraud
another of property. Nothing more is required. The identity and loca-
tion of the victim, and the success of the scheme, are irrelevant." Id.
at 552 (emphasis added).11 The Court stated that "the common law
revenue rule, inapplicable to the instant case, provides no justification
for departing from the plain meaning of the statute," because "[a]t the
heart of this indictment is the misuse of the wires in furtherance of
a scheme to defraud the Canadian government of tax revenue, not the
validity of a foreign sovereign's revenue laws. "12 Trapilo, 130 F.3d at
551-52 (emphasis added).

Generally, we would agree that the identity and location of the vic-
tim in a wire fraud case are irrelevant. However, when that victim is
a foreign government, that identity takes on a new importance. Here,
in order to determine whether Canada was deprived of property (tax
revenues), a determination must be made into whether Canada's tax
laws were in fact broken, or were intended to be broken. The Second
Circuit opined that the validity of Canada's revenue laws is not an
issue. Rather, it has found that all that is necessary to prosecute a
defendant for wire fraud in the United States is evidence that Canada
imposes a duty on imported liquor, i.e., evidence of the existence of
a foreign tax or duty. United States v. Pierce, 224 F.3d 158, 166 (2d
Cir. 2000). But recognizing the existence of a law is inherently and
inescapably tied to recognizing the validity and scope of that law.
Certainly, prosecuting a defendant for violations of a law, or for
attempting to violate that law, requires an inquiry into the applicabil-
ity and validity of the law.
____________________________________________________________
11
The Court explained that the "intent to defraud does not hinge on
whether or not defendants were successful in violating Canadian revenue
law, as `[s]ection 1341 [as well as § 1343] punishes the scheme, not its
success.'" Trapilo, 130 F.3d at 552 (citing United States v. Helmsley, 941
F.2d 71, 94 (2d Cir. 1991)).
12
Though the Second Circuit has refused to apply the revenue rule in
criminal wire fraud prosecutions, it has recognized the validity of the
rule, and in fact used it to bar a civil RICO claim brought by the Attorney
General of Canada to recover damages for lost tax revenues. R.J. Reyn-
olds, 268 F.3d 103 (2d Cir. 2001). Unlike the R.J. Reynolds majority, we
see "no basis in the revenue rule itself for treating criminal and civil
cases differently." Id. at 138 (Calabresi, J., dissenting).

11
 It is inescapable that in passing on whether defendants intended to
violate Canadian law and deprive Canada of its right to collect taxes
and duties, "our courts would have to pass on defendants' challenges
to such laws and any claims not to have violated or intended to violate
them." Boots, 80 F.3d at 587. For example, a defendant accused of
wire fraud may assert a defense of legal impossibility. If what a
defendant intended to do was not a violation of the law, then certainly
there could be no deprivation of property for wire fraud purposes.
There would be no property right with which a defendant attempted
to interfere. In such a case a United States court would be required
to determine whether the defense to a Canadian law would lie.

In this case, the validity and operation of a foreign law is at issue.
The Second Circuit, certainly justified in wanting to punish this
smuggling scheme, has attempted to side step the important concerns
underlying the revenue rule. We believe that the First Circuit took the
better course, and we hold that a scheme to defraud a foreign govern-
ment of tax revenues is not cognizable under the wire fraud statute.

IV.

For the foregoing reasons, we reverse appellants' convictions and
remand to the district court with instructions to dismiss the indict-
ment.

REVERSED

HAMILTON, Senior Circuit Judge, dissenting:

I fully agree with the majority opinion's holding that a govern-
ment's right to collect taxes based upon its revenue laws is a suffi-
cient property right for purposes of the federal wire fraud statute, 18
U.S.C. § 1343. Ante at 7. However, I sharply disagree with the major-
ity opinion's holding "that a scheme to defraud a foreign government
of tax revenues is not cognizable under the [federal] wire fraud stat-
ute." Ante at 12. Thus, on this second point, I respectfully dissent.

As the majority opinion acknowledges, "[t]he revenue rule is a
`longstanding common law doctrine providing that courts of one sov-

12
ereign will not enforce final tax judgments or unadjudicated tax
claims of other sovereigns.'" Ante at 9 (quoting Attorney Gen. of Can-
ada v. R.J. Reynolds Tobacco Holdings, Inc., 268 F.3d 103, 109 (2d
Cir. 2001)). The majority candidly admits that "this case `does not
require us to enforce a foreign tax judgment as such. . . .'" Id. (quot-
ing United States v. Boots, 80 F.3d 580, 587 (1st Cir. 1996)). How-
ever, the majority opinion goes on to hold that the common law
revenue rule bars the appellants' prosecution for the multiple federal
wire fraud violations as charged in their indictment because such
prosecution "`amount[s] functionally to penal enforcement of Cana-
dian customs and tax laws.'" Id. (quoting Boots, 80 F.3d at 587). This
holding by the majority rests upon flawed premises and is at odds
with Supreme Court precedent. Accordingly, I am constrained to dis-
sent.

Critically, prosecution of the appellants in this case for multiple
violations of the federal wire fraud statute, 18 U.S.C. § 1343, does
nothing civilly or criminally to enforce any tax judgments or claims
that Canada or the Province of Ontario has or will obtain against the
appellants based upon the appellants' conduct in this case. Rather,
prosecution of the appellants enforces a criminal statute enacted by
the United States Congress and contained in the United States Code
that plainly prohibits the very conduct in which the appellants
engaged—i.e., the use of wire communications in the United States,
in interstate or foreign commerce, for the purpose of executing a
scheme or artifice to defraud another of its property. Such enforce-
ment has the singular goal of vindicating the intended purpose of the
federal wire fraud statute "to prevent the use of [our telecommunica-
tion systems] in furtherance of fraudulent enterprises." United States
v. Trapilo, 130 F.3d 547, 552 (2d Cir. 1997) (internal quotation marks
omitted) (alteration in original). Here, the fact that the property at
issue in the appellants' wire fraud scheme belonged to foreign gov-
ernments by virtue of those governments' respective revenue laws is
merely incidental to the application of the federal wire fraud statute.
Id. (federal wire fraud statute proscribes use of telecommunication
systems of the United States in furtherance of scheme whereby one
intends to defraud another of property, and identity and location of
victim are irrelevant). In short, the common law revenue rule does not
require that we reverse the appellants' convictions and remand with
instructions that the indictment be dismissed. Id. at 551 ("The [federal

13
wire fraud] statute neither expressly, nor impliedly, precludes the
prosecution of a scheme to defraud a foreign government of tax reve-
nue, and the common law revenue rule . . . provides no justification
for departing from the plain meaning of the statute.").

The majority holding is also at odds with Supreme Court precedent
holding that federal courts are not free to alter the plain language of
a federal statute as a matter of policy. See Astoria Fed. Sav. & Loan
Ass'n v. Solimino, 501 U.S. 104, 108 (1991) ("Courts do not, of
course, have free rein to impose [common law] rules of preclusion,
as a matter of policy, when the interpretation of a statute is at hand.").
Admittedly, "where a common-law principle is well established . . .
the courts may take it as given that Congress has legislated with an
expectation that the principle will apply except when a statutory pur-
pose to the contrary is evident." Id. (internal quotation marks and cita-
tions omitted). However, such is definitely not the situation here.
There is simply no basis on which to reasonably conclude that prior
to Congress' enactment of the federal wire fraud statute on July 16,
1952, well established common law provided that the courts of one
sovereign would not criminally prosecute a person who devised or
intended to devise a wire fraud scheme to defraud a foreign sovereign
of its property rights when such property rights are in the nature of
accrued tax revenue. Accordingly, the majority opinion's holding that
"a scheme to defraud a foreign government of tax revenues is not cog-
nizable under the [federal] wire fraud statute," ante at 12, is purely an
imposition of its own expanded version of the common law revenue
rule on the federal wire fraud statute as a matter of judicial policy.
As such, the majority opinion does nothing less than judicially rewrite
the plain language of the wire fraud statute so that it no longer prohib-
its a person from devising or intending to devise a wire fraud scheme
to defraud a foreign sovereign of its property rights when such prop-
erty rights are in the nature of accrued tax revenues. Because federal
courts have no authority to engage in such an exercise, I cannot agree
with the majority opinion. I would affirm the appellants' convictions
across the board.

14