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Carpenter v. United States

Citation. 484 U.S. 19 (1987)
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Brief Fact Summary.

Defendants, collectively, entered in to an agreement, which allowed them to take advantage of the stock trade market. Thereafter, the Wall Street Journal and the trade company found out about the agreement. Defendants were charged and convicted for violating the mail and wire-fraud statute and other securities acts. Carpenter, one of the defendant’s roommates, was convicted of aiding and abetting. Winans and Felis, the other two defendants, appealed their convictions.

Synopsis of Rule of Law.

A mail fraud statute is not constricted to solely protecting tangible property rights.


R. Foster Winans, Kenneth Felis, and David Carpenter participated in a plotto take advantage of the stock market by using confidential information. Winans was aWall Street Journal writer who wrote daily columnsabout certain stocks to provided readers of the Journal an insight for future investments. Often times, the information published in the column effected the value of the specific stock. Pursuant to the Journal’s policy, prior to the writer’s publication, the information found in the column was deemed to be confidential information. Nevertheless, even when knowing the Journal’s policy, Winan made an agreement with Felis and Peter Brant, both whom were stock brokers at Kidder Peabody, which stated that Winans would write information, such as dates of several columns to give Felis and Brant a trade advantageprior to publication. During a four-month period, the agreement made comprised of a profit of approximately $690,000. Thereafter, Kidder Peabody and the Journal grew suspicious of the correlation between the columns and the net profit in trades, causing them to discover the agreement between Winan, Felis, and Peter Brant.Subsequently, Winans and Carpenter, Winans’s roommate, approached the Securities and Exchange Commission to disclose the agreement. Both, Winans and Felis, were charged and convicted of violating the mail and wire-fraud statutes and other securities statutes. Specifically, Carpenter was charged and convicted of aiding and abetting. Subsequently, Winans and Felis appealed their convictions alleging their conduct was not a plot to defraud, as defined within the statutes, and the record does not contain evidence that any money or property was take from the Journal, a requisite element for the conviction. 


Whether the mail fraud statute solely protects tangible property rights.


No, the mail fraud statute does not solely protect tangible property rights.


A mail fraud statute is not constricted to solely protecting tangible property rights.

Although the United States Supreme Court previously held that the mail-fraud statute does not protect individuals against plots to defraud the citizens of the intangible rights to an unbiased and truthful government, the Court did not explicitly limit the scope of the statute solely to tangible property rights. McNally v. United States, 483 U.S. 350 (1987). Further, confidential information obtained, intangible property, is property to which the corporation is solely authorized to use and benefit from because this form of property is protected under the statute. Also, fraud encompasses situations such as, embezzlement. Here, the plot to defraud the Journal of the sole use and benefit of the confidential information, the information and release dates, are forms of property protected under the statute. Likewise, whether the plot interfered with the Journal’s original purpose and use of the information, being the first to publish it to the public, is not dispositive. Therefore, Defendant’s actions have satisfied all the requirements to sustain a conviction under the mail and wire-fraud statute, and the lower court’s judgment is affirmed.

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