United States v. Walter

Background

An indictment charged several people in three counts: conspiring to make and present fraudulent claims for payment against the Emergency Fleet Corporation, a corporation created under District of Columbia law in which the United States owned all the stock, and conspiring to defraud the United States. The District Court sustained a demurrer (dismissed the indictment as legally insufficient), saying the 1918 law covering conspiracies against “any corporation in which the United States is a stockholder” could not be stretched to these corporations and that the alleged fraud was not a fraud upon the United States.

Reasoning

The Court asked whether Congress’s 1918 amendment and the statute punishing conspiracies to defraud the United States reach frauds against government-created instrumentalities. The Court interpreted the 1918 Act to apply to corporations like the Emergency Fleet Corporation—entities created to serve government purposes in which the United States owned stock—and held that the United States may protect its property by criminal law. The Court further held that a conspiracy to defraud such a corporation would fall within the statute punishing conspiracies to defraud the United States because a successful fraud would directly cause a monetary loss to the United States and impair the instrument’s efficiency. For these reasons the Court found the District Court’s dismissal wrong.

Real world impact

The decision means people who conspire to submit or obtain payment of fraudulent claims against corporations owned or created on behalf of the United States can be prosecuted under the 1918 law or as conspiracies to defraud the United States. The lower court’s judgment is reversed, allowing the criminal case to proceed.