[00:00:00] Speaker 00: case under 22, 30, 11 at out the United States of America at balance versus Paul Michael curtain. [00:00:08] Speaker 00: Mr. Lenners for the equivalent cross epaulee. [00:00:10] Speaker 00: Mr. P for the athlete front of balance. [00:00:14] Speaker 02: Good morning, Council. [00:00:15] Speaker 02: Mr. Lenners, please proceed when you're ready. [00:00:22] Speaker 03: Thank you, Your Honor. [00:00:23] Speaker 03: Good morning and may I please record Dan Lenners, the United States. [00:00:27] Speaker 03: If I might request four minutes for rattle. [00:00:31] Speaker 03: The indictment in this case properly charged a scheme to defraud for the purpose of obtaining money or property. [00:00:40] Speaker 03: When faced with the decision whether to renew Wharton's top-secret security clearance, the State Department was faced with a concrete binary decision that went to an essential job qualification. [00:00:54] Speaker 03: If we're obtained a renewed security clearance, he would be employed in the future and would obtain those future salary payments. [00:01:01] Speaker 03: Were he not to obtain the renewed security clearance, he would lose his job. [00:01:06] Speaker 03: This case is thus like those in which employers make the decision to hire someone to give them a bonus. [00:01:14] Speaker 03: to give them promotion, to enter into a contract. [00:01:17] Speaker 03: There is a discreet and predetermined decision point that the State Department was faced with here. [00:01:24] Speaker 03: And Guertin lied to secure that renewed top secret security clearance and thus to obtain the future salary payments that would come with his employment in the future. [00:01:35] Speaker 03: The district court dared by, in this case, characterizing this as a mere salary maintenance theory of liability. [00:01:49] Speaker 03: ephemeral job characteristics such as productivity or wasting time on the internet. [00:01:56] Speaker 03: Instead, the need to have top-secret security clearance was an essential job qualification. [00:02:02] Speaker 03: It was a binary decision whether to renew it or to deny that renewal. [00:02:07] Speaker 02: And were that renewal denied, Burton would have eventually been fired. [00:02:10] Speaker 02: So in the situation of wasting time on the internet, which since you raised it, that's the hypothetical that's used at the Yates case, as you know. [00:02:19] Speaker 02: And the supposition on the part of the Ninth Circuit is that if your theory is correct, then that person would be guilty of wire fraud because it would have violated. [00:02:32] Speaker 02: And we can definitely manufacture the specific rule if we construct the hypo in the right way that bars the use of the internet for personal business on the work premises. [00:02:45] Speaker 02: And we can make that a binary requirement, too. [00:02:48] Speaker 02: and it's just an on-off switch and somebody lies about that. [00:02:51] Speaker 02: And does your theory mean that that person has committed wire fraud with the obtaining relating to the obtaining of a future salary stream continuation of their current payments? [00:03:06] Speaker 03: I think the answer is yes, if I understand the hypothetical correctly, which is [00:03:12] Speaker 03: Part of what's key here to the government's theory of wire fraud is that there is a discreet decision that the State Department was faced with, that it was a binary decision, whether to fire him or deny his security clearance or re-up it and allow him to be employed in the future, and that this was set in advance, that it was part of [00:03:38] Speaker 03: you know, not just a general review of the employee's productivity as in the Yates case, but instead was something that Gwerton knew about. [00:03:46] Speaker 03: And in fact, he knew that if he would lose a security clearance, he would lose his job. [00:03:51] Speaker 02: And so the court need not decide sort of the broader issue as to whether any future salary would... But it seems to me that you're promising, you're basing a lot of your argument on the notion that this is a discrete binary condition. [00:04:07] Speaker 02: And I guess my question is, it seems like we could make basically everything in the workplace a discrete binary condition, as long as you have an employee manual that's given to you on day one that spells out, here's the various discrete binary things that you can or can't do, one of which in a list of 500, is you can't use the internet at work for personal business. [00:04:30] Speaker 02: You just can't. [00:04:31] Speaker 02: And so everybody knows if they read the 500 discrete binary requirements that that's one of them. [00:04:37] Speaker 02: And I take it that if that is spelled out in the employee manual that you read on the first day you show up at work, that the violation of that can be the graviment of a wire fraud prosecution. [00:04:52] Speaker 02: If the other elements of wire fraud are met, which I think also protect. [00:04:56] Speaker 03: Is there a reason not to think that those won't be met? [00:04:59] Speaker 03: Well, here the employee has to have an intent to defraud, so a specific intent to defraud the company. [00:05:06] Speaker 03: The lie has to be material, so material to obtaining those future salary payments, meaning material to keeping the employee's job. [00:05:15] Speaker 03: There has to be some sort of certification of, you know, it's a lie. [00:05:20] Speaker 03: There has to be a knowing and intentional lie. [00:05:24] Speaker 02: And so I think that... And why do any of those seem [00:05:28] Speaker 02: like much of a limiting principle, because if the employer spells that out in the employee manual, presumably the employer thinks it's important. [00:05:36] Speaker 02: And let's just suppose the employer does. [00:05:37] Speaker 02: They check, you know, every month, just making sure that you haven't breached any of the hundred discrete binary preconditions that I atomized in your employee, in the employee manual I gave you, you showed up. [00:05:51] Speaker 02: And it turns out that there was a lie with respect to one of them. [00:05:54] Speaker 02: And of course the employee knows that if I lie, I could be fired because I've been told that when I got the employee man. [00:06:01] Speaker 02: I'm not saying this necessarily means that your theory can't. [00:06:05] Speaker 02: win, but I'm just wondering about the implications because in your briefing you sought to distinguish the hypo and Yates about the person who is on the job and uses the internet for personal business. [00:06:17] Speaker 02: It just doesn't seem like that's really very much out of bounds to me because it seems like that can very much be in bounds as long as the employer does the thing where they give the employee manual that shows that's a requirement they [00:06:31] Speaker 03: Well, I think as a practical matter, though, the requirement that the employer really cares about limits these situations. [00:06:39] Speaker 03: It would be unwieldy as a real matter of realism to list a hundred binary items and check them every month. [00:06:46] Speaker 03: But also important to your Honour's hypotheticals, it's not just that the employee knows what it is. [00:06:51] Speaker 03: to obtain have a specific intent to defraud and for the law to be material to obtain future salary payments. [00:06:58] Speaker 03: It has to be a higher employee has to know he's going to lose his job. [00:07:03] Speaker 03: Or it's certainly where he met that here. [00:07:06] Speaker 02: He has to know that they could lose their job. [00:07:09] Speaker 02: I don't think the government. [00:07:11] Speaker 02: You think the government has showed that they know that they would lose their job? [00:07:17] Speaker 03: It makes it harder to prove that the purpose of the lie was to obtain future salary payments if the person only knows they could lose their job. [00:07:24] Speaker 03: Because then it may not be material to the employer's decision. [00:07:29] Speaker 03: The defendant may be able to argue that the lie wasn't for purposes of obtaining salary they weren't otherwise entitled to. [00:07:38] Speaker 03: And so I'm not sure that the government has to prove it. [00:07:42] Speaker 03: It certainly distinguishes this case from the hypothetical your honor has given. [00:07:48] Speaker 03: And I think some of these limiting principles go to the concerns for the honest services fraud and void for vagueness and sort of criminalizing common workplace misconduct. [00:08:00] Speaker 03: the top secret security clearance process is none of this. [00:08:05] Speaker 03: It is spelled out in advance. [00:08:07] Speaker 03: Wharton was well aware of it. [00:08:09] Speaker 03: Employees are warned that if they lie during the process, it's prosecutable as a crime. [00:08:14] Speaker 03: And it's an essential job qualification for a Foreign Service officer to maintain a top secret security clearance. [00:08:22] Speaker 03: And so even if [00:08:24] Speaker 03: there could be a broader theory of wire fraud that would be actionable. [00:08:28] Speaker 03: It seems like this much more narrower, much more narrow theory is actionable in the district court area. [00:08:34] Speaker 02: How about a still narrower one? [00:08:35] Speaker 02: Because by narrower, you mean a discrete binary condition that the employee knows about. [00:08:42] Speaker 02: That's what you mean. [00:08:43] Speaker 02: Yes. [00:08:45] Speaker 02: And how about our still narrow one, which is that it's a discrete binary condition that the employee knows about and that was also imposed as a condition of getting the job in the first place. [00:08:56] Speaker 02: So it wouldn't apply to things that only occur on the work premises, which could sweep in all kinds of stuff. [00:09:06] Speaker 02: That's dishonesty in some measure in the workplace, which is what the Supreme Court appeared concerned about in the scaling case. [00:09:14] Speaker 02: The conditions that are imposed as a prerequisite to getting the job in the first place, which everybody agrees is a possible subject of a wire fraud prosecution, that are then carried over and repeated when you're on the job also. [00:09:30] Speaker 03: That's certainly true here, that exists here. [00:09:32] Speaker 03: How to reconcile that with the plain language of the wire fraud statute is not something I've thought about. [00:09:38] Speaker 03: It also fits in the contracting cases where a contractor has to certify, say, that they have sufficient disadvantaged business subcontractors, and then has to recertify that throughout the course of the contract. [00:09:54] Speaker 03: One would think those should be treated identically, [00:09:56] Speaker 03: because both are for the purposes of obtaining the future benefits of the contract or the future benefits of the employee. [00:10:05] Speaker 03: Sounds like maintaining. [00:10:08] Speaker 03: But I disagree that it's maintaining because each time... I know there are certain things you have to do to maintain. [00:10:16] Speaker 03: Because the employer has a choice to make. [00:10:19] Speaker 03: that it doesn't have in the run of the mill employee contract. [00:10:23] Speaker 03: It has a time to make it. [00:10:25] Speaker 03: It has this decision whether to renew the security clearance or not. [00:10:29] Speaker 03: And that is a preset decision that the employee knows about. [00:10:34] Speaker 03: And so in that case, this is, this is sort of conceptually, I think the same as obtaining the job in the first place, obtaining the promotion, obtaining the bonus, as opposed to just sort of staying employed while furthering the wait time. [00:10:51] Speaker 01: Mr. Linners, looking at the text of the wire fraud statute, the Supreme Court in Kelly said that although the first two parts are disjunctive, you need to read money or property into a scheme to defraud. [00:11:06] Speaker 01: But what about the word obtain? [00:11:08] Speaker 01: Do you have to read obtain also into the first disjunctive part of the wire fraud statute? [00:11:16] Speaker 01: Does Kelly require reading the word obtain into the first part? [00:11:26] Speaker 03: I certainly have assumed it does, and I assume that went back to McNally. [00:11:33] Speaker 03: I could be wrong, but the Supreme Court, as I understand McNally, even predating Kelly, said that a scheme to defraud that was not to get money or property is not properly chargeable. [00:11:45] Speaker 03: That's just honest services fraud. [00:11:47] Speaker 03: and that looking back at the history of the fraud statutes and the understanding of fraud, that the fraud had to be to get something, whether it be money or property. [00:11:59] Speaker 01: Getting in some general sense doesn't go to the distinction that's at issue in this case between maintaining and obtaining, arguably, because nothing turned on that distinction in either McNally or Kelly, perhaps. [00:12:14] Speaker 03: I mean, I think that's right that Mcnally and Kelly did not address the specific question at issue here to the degree that the question is whether future salary is money or property. [00:12:25] Speaker 03: The Supreme Court said, I don't remember the name of the case, but it reads property broadly. [00:12:32] Speaker 03: And it should read money broadly as well, that there shouldn't be a limiting principle there. [00:12:38] Speaker 03: And so to the degree there's any question about whether these future salary payments are obtaining money, you would think that the Supreme Court would read that broadly. [00:12:47] Speaker 03: The narrowing principle meaning being that the scheme to defraud has to relate to money or property as opposed to some other thing. [00:12:55] Speaker 01: I'm not sure that the government can benefit from any distinction that I just drew here, because the indictment alleges it was obtaining money or property. [00:13:04] Speaker 01: But I was wondering if it is the government's view that there can be a scheme to defraud for money or property that does not involve obtaining the money or property. [00:13:17] Speaker 01: Some other verb, perhaps. [00:13:20] Speaker 01: I'm not sure what that would be. [00:13:23] Speaker 01: I guess what I'm saying is that it's possible that under the first disjunctive part of the wire fraud statute, you could have a scheme to defraud or maintaining money or property. [00:13:33] Speaker 01: Maybe. [00:13:34] Speaker 01: I'm not sure under Kelly and McNally. [00:13:37] Speaker 03: I don't know the answer to that, Your Honor. [00:13:41] Speaker 03: Certainly, the Honest Services Fraud Statute 1346 means that if the charged defendant doesn't have to obtain money or property, generally speaking, a bribery or kickback scheme is to obtain money or property, but you could imagine a person who is being bribed with something different. [00:14:04] Speaker 03: You know, services of sexual nature or something like that. [00:14:08] Speaker 03: And that was still a bribery scheme that would be chargeable under the wire. [00:14:13] Speaker 03: I don't. [00:14:15] Speaker 03: I just. [00:14:16] Speaker 03: We focus much more narrowly on the fact that this scheme isn't just for maintaining, it is for obtaining. [00:14:24] Speaker 03: So regardless of whether other verbs might fit, it comfortably fits within the meaning of obtaining because without a nude of secret security clearance, we're just going to lose his job and his salary. [00:14:41] Speaker 02: We'll give you some time for rebuttal. [00:14:42] Speaker 02: Thank you so much. [00:14:43] Speaker 02: Thank you. [00:14:46] Speaker 02: Mr. Pete. [00:14:51] Speaker 04: May I please support Matthew P on behalf of Mr. Gert. [00:14:56] Speaker 04: As the court's questions illuminated, it really is the limiting principle to the concrete binary claim by the government other than the one suggested of something that has to be at the moment of hiring. [00:15:08] Speaker 04: I think what Yates points to is that when it talks about a specific [00:15:13] Speaker 04: performance metric is talking about something tied to compensation. [00:15:17] Speaker 04: And I think that is a true living principle that ties misconduct or dishonesty to money or property under the wire of fraud statute. [00:15:27] Speaker 04: If there's a performance metric tied to compensation, like a bonus, a raise, or a promotion, then the government has legs to stand on. [00:15:35] Speaker 04: But without that, you're left with simply nothing that's being obtained by that dishonesty, just maintaining an employment stat. [00:15:43] Speaker 02: I have to say, I don't understand the supposed continental divide between obtaining and maintaining. [00:15:50] Speaker 02: It just seems to me to be entirely on to say, I'm maintaining my ability to obtain my future payments. [00:15:56] Speaker 02: It's both. [00:15:58] Speaker 02: You're maintaining the payments that you've gotten to date, but that's not to the entire exclusion of also saying, I'm trying to obtain the future payments that I haven't yet gotten. [00:16:11] Speaker 04: Well, I would point, [00:16:13] Speaker 04: The court to the language and McNally in the descent it talked about salary as something that is always there being offered to the employer employee that the employer is losing out on of course that theory didn't. [00:16:27] Speaker 04: period of court. [00:16:28] Speaker 04: So there's a notion of salary inherent that's been discussed by the Supreme Court inherent in the context of the wire fraud statute. [00:16:34] Speaker 02: But it wasn't an issue in McNally because McNally was an honest, that was about whether you've been deprived of the honest services, not whether you've been deprived of a future stream of income. [00:16:44] Speaker 04: Correct, Your Honor. [00:16:45] Speaker 04: But the point of dissent was the employer is not getting what the employer bargained for. [00:16:52] Speaker 04: not getting what the employer is paying for. [00:16:54] Speaker 04: What they're paying is salary. [00:16:56] Speaker 04: And so I think that fact that salary is a concept in the context of wire fraud means there is a distinction between obtaining a position which comes with a salary and maintaining that position. [00:17:09] Speaker 04: Because the salary has been obtained. [00:17:10] Speaker 04: The salary's going to continue to flow. [00:17:12] Speaker 02: It hasn't. [00:17:13] Speaker 02: What's been obtained, you don't have an entitlement, contractual or otherwise, to the future payments. [00:17:20] Speaker 02: I mean, you can manufacture a situation in which you do. [00:17:24] Speaker 02: But as a general matter, you might have an expectation that as long as I'm not fired, I'm going to continue to get the same payments that I've gotten every, let's just say it's monthly, make it easy. [00:17:34] Speaker 02: I'm going to continue to get the same payment in future months as I've gotten in past months, as long as I don't get fired. [00:17:40] Speaker 02: But the employer, why can't the employer just construct the terms of employment? [00:17:45] Speaker 02: like they generally are and like they presumably were here to say, here's your salary and you'll continue to get that payment at the beginning of every month unless the following things happen. [00:17:57] Speaker 02: So you shouldn't assume that you're entitled to the future payments. [00:18:01] Speaker 02: You only get the future payments if the following things happen, including [00:18:04] Speaker 02: that you continue to have security clearance. [00:18:08] Speaker 02: And then you have no expectation that you're going to get the future one. [00:18:12] Speaker 02: You always have to keep maintaining your security clearance so that you can obtain the future payments. [00:18:18] Speaker 04: Well, as the district court pointed out, there's a kind of construction committed with that, but it is somewhat torture. [00:18:24] Speaker 04: And so, of course, the court looked to precedent to understand the language, and the court looked to the dictionary to understand the term. [00:18:31] Speaker 04: And then the court looked to the rule of lenity because it's a criminal case. [00:18:34] Speaker 04: and applying all three of those, the context of the Supreme Court cases, the dictionary definition of obtain versus maintain, and the rule of lenity, I think Ditch Court was right to counsel against that kind of accuracy. [00:18:46] Speaker 02: Just putting aside lenity for one second, and just focusing on dictionary definitions, I don't know that I understand what's definitionally difficult about this. [00:18:55] Speaker 02: If the terms of employment are that you're not entitled [00:18:59] Speaker 02: to next month's salary unless you have a good security clearance. [00:19:05] Speaker 02: You're just not entitled to it. [00:19:06] Speaker 02: You're told that from the very first day you show up at work. [00:19:09] Speaker 02: Yes, you can expect that you'll continue to get these payments, but you're not entitled to a future payment unless you maintain your security clearance in good standing. [00:19:17] Speaker 02: And then it seems totally natural in the English language to say, I'm hoping that I can obtain my next salary payment [00:19:26] Speaker 02: And as long as I have a good security clearance, I will be able to obtain it. [00:19:30] Speaker 02: But if I don't, I won't. [00:19:33] Speaker 04: Well, I think the difference here is that the employee is doing work for those salary payments. [00:19:40] Speaker 04: And so it's not just the employer setting the terms and saying, you got to do all this. [00:19:43] Speaker 04: The employee is doing the work that entitles them to the salary payments before the work performed. [00:19:49] Speaker 04: And the employer can say, well, these are my conditions. [00:19:51] Speaker 04: But the employee has done the work. [00:19:53] Speaker 04: And so the question is, is it fraud? [00:19:54] Speaker 04: is obtaining that money or property by fraud when an employee is doing the work. [00:19:59] Speaker 04: And I think obtaining position is a moment of bargaining, and it may or may not be essential to the bargain, the dishonest statement that the employee made to get the position. [00:20:13] Speaker 05: But doing the work with a security client. [00:20:18] Speaker 05: It's like having to come to a job with a certain uniform [00:20:21] Speaker 05: It's not enough of a response to say, well, I brought the hammer. [00:20:26] Speaker 05: I don't have to wear all that other stuff. [00:20:29] Speaker 05: You're not doing the work the way the employer wants it done. [00:20:32] Speaker 05: That is with security clearance. [00:20:34] Speaker 05: And if you come to work without a security clearance, it seems a shallow argument to say, well, I'm prepared to do everything else you wanted me to do. [00:20:43] Speaker 04: Well, Mr. Curtin always has security clearance when he did the work. [00:20:46] Speaker 04: And so this alleged scheme is that [00:20:49] Speaker 04: He was lying to keep his security clearance so that he could keep his job, so that he couldn't do his job. [00:20:54] Speaker 02: So that after doing his job, he would get his salary payments for that job. [00:20:57] Speaker 02: But he shouldn't have had a security clearance. [00:20:59] Speaker 02: That's the employer's problem. [00:21:03] Speaker 04: Right, but the alleged misdemeanor tentations are about the 216 clearance process, which never completed. [00:21:09] Speaker 04: The allegations and the indictment, it's beyond any statute of limitations. [00:21:13] Speaker 04: Anything happened in 2010, and there's no allegation he got his security clearance improperly. [00:21:18] Speaker 04: So we're talking about someone who obtained a position and then started working that position with the security. [00:21:24] Speaker 02: Suppose you have to maintain good standing in the bar. [00:21:27] Speaker 02: Let's just shift to that. [00:21:29] Speaker 02: And then what the employee does, and let's just assume it's employee-employee-employee-employee-employee-employer relationship. [00:21:36] Speaker 02: And what the employee does is lie about whether they've maintained good standing because they actually lost their bar, or they're not in good standing. [00:21:47] Speaker 02: And they do that just so they can continue to collect the payments. [00:21:50] Speaker 02: Under your theory, that would not be wire. [00:21:55] Speaker 02: So in that one, it's actually already happened. [00:21:59] Speaker 02: You're just not in good standing anymore. [00:22:02] Speaker 02: But you just lie about it. [00:22:04] Speaker 04: You have a position and you lie to keep the position. [00:22:09] Speaker 04: I think in that situation, you're lying to maintain something you've already obtained. [00:22:13] Speaker 04: And you didn't obtain it with a lie. [00:22:16] Speaker 04: you have it now you're lying to maintain it. [00:22:19] Speaker 02: It's a very fine distinction but it's one that you know you're lying to obtain future payments to which you're not entitled unless you're in good standing because if you're not in good standing you can't obtain those future [00:22:29] Speaker 04: I think it would depend on the nature of the payments and the nature of the job, whether it is something that is more akin to promotion or to a new contract, or whether it's more akin to a contract you already have. [00:22:38] Speaker 04: You may start building a house that you obtained the contract to build the house when you had your license, and you get two-thirds of the way through, and you lose your construction license, but you finish the house. [00:22:46] Speaker 04: And so the question is, did you obtain anything or maintain it? [00:22:51] Speaker 01: Mr. P, does your argument in part turn on the nature of being a Foreign Service agent, you know, being part of the Civil Service, where you're not exactly an employee at will? [00:23:03] Speaker 01: Does that matter? [00:23:04] Speaker 04: It does matter. [00:23:06] Speaker 04: I'm glad you brought that up because there's an important issue that unfortunately doesn't help the court with the very academic question of maintain versus obtain, but I think it's very important to this closing this case. [00:23:19] Speaker 04: It is not true that we have conceded that Mr. Burton would have lost his job after he lost his, or more specifically lost his access to his salary stream. [00:23:31] Speaker 04: The indictment is somewhat inconsistent with itself because it does have a line saying it's a security clearance with a condition of employment, but it refers to the FAM regulation. [00:23:42] Speaker 04: And I would point the court to FAM regulation 12, FAM 2362-2, which is in the statutory appendix. [00:23:50] Speaker 04: What it states is losing your security clearance does not mean you lose your job or your salary stream because you're a civil servant. [00:23:58] Speaker 04: There's lots of protection. [00:24:00] Speaker 04: Obviously, there's a whole process of whether you keep your clearance or not. [00:24:04] Speaker 04: That's not what I'm saying. [00:24:05] Speaker 04: I'm saying at the end of that process, even if you lose your clearance in the discretionary determination by the secretary, whether there's some other position in which you could maintain that salary without affecting national security for Mr. Burton, there was he already been offered that. [00:24:21] Speaker 04: And so the whole government's entire theory of a concrete binary choice that metrics [00:24:27] Speaker 04: that without which you cannot get that salary stream does not apply. [00:24:30] Speaker 02: So the government can't terminate the employment of somebody who lies on their security clearance application to re-up their security clearance, to maintain their security clearance? [00:24:42] Speaker 02: Well, whether they can terminate them for lying, of course they can terminate for lying. [00:24:46] Speaker 02: And they can terminate them. [00:24:48] Speaker 02: Or they can't terminate them for not having the security clearance. [00:24:51] Speaker 02: Correct. [00:24:52] Speaker 02: At all. [00:24:53] Speaker 02: It's not that they have, it's not that [00:24:56] Speaker 02: I mean, is the question whether it necessarily follows that they're terminated, or is the question whether the government has any ability to terminate them at all? [00:25:05] Speaker 04: The government's articulation of the loading principle. [00:25:09] Speaker 04: It has to be the case that this is a requirement without which you will lose your job and your access to salary stream. [00:25:15] Speaker 02: I guess why can't it just be a requirement without which you might lose your job? [00:25:19] Speaker 02: And that's why you try to show that you still satisfy the requirement because you know you might lose your job. [00:25:25] Speaker 02: Now, it doesn't have to be that you'll automatically lose your job. [00:25:28] Speaker 02: It's just that you do it because you know that there's a reasonable likelihood. [00:25:32] Speaker 02: Does that not work? [00:25:33] Speaker 04: I think it doesn't work for the reasons that we're coming to the court with from McNally and [00:25:39] Speaker 04: everything else that has forced the government to position of articulating a standard to avoid saying any workplace, um, dishonesty is actionable and as wire fraud, which they recognize a serious process concerns recognized by the Supreme Court. [00:25:55] Speaker 04: The government has said, okay, it has to be a binary concrete metric that you would not have gotten a job without it and you will lose the job. [00:26:04] Speaker 02: Is that also true at the moment you get the job so that [00:26:07] Speaker 02: the lack of a security clearance, does that automatically mean you can't get the job to begin with? [00:26:13] Speaker 02: Or does it just mean that that's a reason that the government can choose not to hire you? [00:26:17] Speaker 04: You cannot get the job without a security clearance. [00:26:19] Speaker 04: And that is, again, another reason that obtaining and maintaining are different. [00:26:24] Speaker 04: You cannot get the job without a clearance. [00:26:25] Speaker 04: But once you have it, you have a whole set of new rights because now you're an employee. [00:26:29] Speaker 04: And those rights include the due process of keeping your security clearance or not. [00:26:34] Speaker 04: And then, even if it's taken away, the right to have a job unless the secretary determines that you are a national security risk and decides to fire you. [00:26:41] Speaker 04: So, it's discretionary and it's based on that particular determination. [00:26:45] Speaker 04: So, even in the regulations, there's a difference between an applicant and an employee, and the government's theory depends on there being no difference between applicant and employee. [00:26:52] Speaker 02: But your theory also depends, your theory also would still apply even if there were no difference, right? [00:26:58] Speaker 02: Because your distinction between maintaining and obtaining would definitely cover the situation in which the very same thing is both a condition of obtaining the job to begin with and a condition of avoiding being fired. [00:27:12] Speaker 04: Yes. [00:27:13] Speaker 04: And has to be related to the bargain. [00:27:15] Speaker 04: I think there's about eight different pegs that I would argue we can win on and the government has to win all of them. [00:27:21] Speaker 04: I would maintain if the transportation is not essential to the bargain, it doesn't necessarily fall as a gift of wire. [00:27:29] Speaker 04: You know, you have the case of someone being lured into a bar to buy more expensive drinks. [00:27:33] Speaker 04: The luring itself didn't go to the bargain of the drink. [00:27:37] Speaker 04: You know, I think it's a close call whether someone has to be a citizen to obtain a position, and they lie about that. [00:27:41] Speaker 04: But it has nothing to do with the job requirement. [00:27:44] Speaker 04: You know, is that fraud, or is it just fireable and actionable in other statutes? [00:27:49] Speaker 04: But putting that aside, I do agree that, you know, [00:27:51] Speaker 04: My theory would work, my theory would work if it is. [00:27:53] Speaker 01: How much work, Mr. P, does the rule of lenity have to do here in your view? [00:28:01] Speaker 04: In my view, it doesn't have to do very much work because first you look at the dictionary definitions of obtained and maintained as the district court did. [00:28:09] Speaker 04: And then you look at the context of Supreme Court decisions, which actually discuss in a relative context in a way that anyone coming to this statute would understand what [00:28:20] Speaker 04: what is prohibited and not in the same way as addiction. [00:28:23] Speaker 04: But I think if you can still get past those, then it does play a role here. [00:28:29] Speaker 04: We're looking at the stretching of the criminal law in a context in which there's nothing that someone looking at it would know the way that it's going to be applied. [00:28:39] Speaker 04: So you can get that somewhere, but it's obviously the last resort. [00:28:43] Speaker 04: I don't think it's [00:28:44] Speaker 01: If we thought the distinction between obtaining and maintaining is hard to really hang our hats on, then can the rule of lenity caution in favor of affirmance here? [00:29:01] Speaker 04: Absolutely. [00:29:01] Speaker 04: Criminal statutes are always construed strictly. [00:29:10] Speaker 04: I do think it does enough work here to counsel in favor of [00:29:15] Speaker 02: You wouldn't have as much uncertainty if the government's ability to carry out prosecution in a case like this would only be seen from our opinion in this case to apply in a situation in which it's the same condition that was in place, both as a prerequisite to obtaining the job to begin with and as a condition of keeping the job. [00:29:41] Speaker 04: I think that is a useful [00:29:45] Speaker 04: living principle. [00:29:47] Speaker 04: Um, but I think especially here where there is a distinction between an applicant and an employee, the regulations treat them different. [00:29:55] Speaker 04: You have new rights. [00:29:56] Speaker 04: And that means that maintaining is still different. [00:30:04] Speaker 02: Okay. [00:30:04] Speaker 02: Thank you, Mr. Pete. [00:30:10] Speaker 02: Mr. Lines will give you three minutes for well, [00:30:14] Speaker 03: Thank you, honor. [00:30:15] Speaker 03: There's just two points I'd like to briefly address. [00:30:17] Speaker 03: The first is, um, certainty with which where it would be fired or to lose the security. [00:30:25] Speaker 03: That certainty is relevant to his intent to defraud and the materiality of his life. [00:30:31] Speaker 03: So the intent to defraud has to be an intent to obtain money or property he doesn't have. [00:30:36] Speaker 03: So he has to think he will be fired. [00:30:38] Speaker 03: And there's good reason to think he'll be fired, because there is a presumption that a person who loses their security clearance will lose their job at the State Department unless the secretary in his or her discretion [00:30:51] Speaker 03: finds that another employment position is suitable. [00:30:55] Speaker 03: And so it doesn't ultimately matter if, as a matter of fact, he would be fired. [00:31:00] Speaker 03: It's whether he had the intent to defraud, meaning he thought he would be fired, and thus that's what drove his lives. [00:31:07] Speaker 03: Um, as to the questions about the distinction between maintain and obtain and the work that, uh, the world is doing. [00:31:16] Speaker 03: I think that, you know, clear statement from the Supreme Court on this is in McNally. [00:31:25] Speaker 03: page 358, where the court said that to defraud commonly refers to wronging one in his property rights by dishonest methods or schemes, and usually signify the deprivation of something of value by trick to see chicane or overreach. [00:31:42] Speaker 03: They said the codification does not indicate that Congress was departing from this common understanding. [00:31:48] Speaker 03: Adding the second phrase, meaning obtain money or property, simply made it unmistakable that the statute reached false promises and misrepresentations as to the future, as well as other frauds involving money or property. [00:32:01] Speaker 03: And although not entirely clear, saying that obtain money or property is simply a way of getting frauds that go to the future would seem to cover this circumstance exactly, which is Wharton's fraud went to obtaining his futures. [00:32:18] Speaker 02: Can I just ask you one question on the Ninth Circuit's opinion in Yates? [00:32:25] Speaker 02: As I understand it, your position is that we wouldn't have to disagree with Yates because this case involves a specific, specific performance metric using the language of Yates. [00:32:37] Speaker 02: And Yates did not. [00:32:38] Speaker 02: And I guess the sentence in which that appears says we agree that if an employer offers a raise or bonus tied to some specific performance metric, um, [00:32:50] Speaker 02: An employee who lies about having achieved that metric has deprived the employer of something of value. [00:32:54] Speaker 02: And I take it that the use of raise our bonus was an advert one because that is obtaining something different from what you'd already been receiving before. [00:33:07] Speaker 02: So from that standpoint, the fact that this case under your approach involves a specific performance metric wouldn't be enough. [00:33:17] Speaker 03: To distinguish, I'm not sure if that's right. [00:33:21] Speaker 03: Yates dealt with bank employees who lied to the board of directors about the bank's performance to keep their jobs, their standard salary, and their standard end of year bonuses. [00:33:33] Speaker 03: And so it's not clear to me that Yates would have come out the same way. [00:33:38] Speaker 03: had there been a specific performance metric that the employees were lying about to obtain those future salary payments and those bonuses. [00:33:49] Speaker 03: So I don't know that Yates itself is clear as to whether it would come out differently if there was a specific performance metric as opposed to generalized about the bank's financial condition. [00:34:03] Speaker 02: But the only sentence, I think, in Yates that uses specific forms metric, which is the language that you understandably latch onto, is one that ties it to a razor or a bonus. [00:34:11] Speaker 02: And it's just pretty stark. [00:34:13] Speaker 02: The formulation involves a raise or a bonus, given that a raise or a bonus would actually satisfy the opposing side's argument too, because that's something different from what was being seen. [00:34:24] Speaker 03: That's true, Your Honor. [00:34:25] Speaker 03: And if the court wants to say we disagree with Yates and Yates was wrongly decided, the government would agree with that. [00:34:32] Speaker 03: But I don't think the court has [00:34:37] Speaker 02: All right, thank you, counsel. [00:34:38] Speaker 02: Thank you to both counsel. [00:34:39] Speaker 02: We'll take this case under submission. [00:34:42] Speaker 02: Mr. Pede, you're appointed by the court to represent the appellee in this matter, and the court thanks you for your assistance.