United States v. Cohn

Background

Cohn, who ran a cigar business, was indicted for allegedly using false statements and a scheme to obtain possession of imported cigars from the customs collector. The cigars were consigned to order and a bill of lading with an unpaid draft had arrived in Chicago; Cohn induced brokers to obtain the cigars on a bond by saying the bill had not arrived. Although the cigars were duty free, Customs Regulations required entry and usually a bill of lading, and allowed entry on bond in some cases. The District Court sustained a demurrer and dismissed the indictment. The Government secured a writ of error to review whether the statute covered this conduct.

Reasoning

The key question was whether the statute criminalized conduct done to obtain the approval of a “claim upon or against” the Government or to “defraud” the Government. The Court read the statute to target frauds that obtain money or property from the Government. It held that taking possession of non-dutiable merchandise temporarily held by a government agent is not the approval of a claim against the Government, and that “defrauding” in the statute means cheating the Government out of money or property, not merely interfering with a government function. Because the indictment did not allege fraud to get money or property from the Government, the statute did not reach Cohn’s conduct, and the dismissal was proper.

Real world impact

The decision narrows the criminal reach of the statute: prosecutors cannot rely on it to criminalize wrongful possession of non-dutiable imports or to convert routine customs entry disputes into federal fraud crimes. Customs regulations and civil or administrative remedies remain the primary means to resolve such disputes.