The "Right to Control" Theory of Fraud: When Deception Without Harm Becomes a Crime
50 Pages Posted: 5 May 2021
Date Written: May 1, 2021
It is supposed to be well-established that mere deceit is insufficient to convict someone of fraud and that there must also be proof the defendant intended to cause harm to a victim's "money or property." Yet, for many decades, federal prosecutors have persisted in pushing expansive theories of criminality to encompass all forms of deceptive behavior, even where the defendants intended no pecuniary harm. The so-called "right to control" theory of fraud is arguably the most extreme (and successful) of these theories. It holds that one's right to control his or her assets qualifies as "property." Thus, even if defendants did not intend harm, they may be convicted if they withheld from the putative victims "potentially valuable economic information," thereby depriving them of their right to control their assets. This Article examines the theory and argues that it is flawed on multiple levels. It confuses the right to control assets, which is normally thought to be an attribute of ownership of property with the property itself, resulting in a conflation of the separate elements of "property," "intent to harm," and "materiality." A material misrepresentation about an economic factor can satisfy all three elements simultaneously. The doctrine effectively flouts the principle that mere deceit cannot suffice for fraud convictions. The Supreme Court's recent unanimous decision in Kelly v. United States suggests that, when the Court addresses the right to control theory, it will reject the confused thesis. Such repudiation will be critical to returning the law of fraud to its core purpose of prohibiting the wrongful taking of property and realigning it with the Due Process Clause's demand for clear notice of criminal laws.
Keywords: theory of fraud, crime, deception, intent to harm, due process, wrongfulness, over-criminalization
JEL Classification: K14, K22
Suggested Citation: Suggested Citation