Conspiracies

It is a federal crime “if two or more persons conspire . . . to defraud the United States, or any agency thereof in any manner or for any purpose.” 18 U.S.C. § 371 (2013). This language is the second clause or “defraud prong” of the federal conspiracy statute that creates criminal liability for anyone who conspires “either to commit any offense against the United States, or to defraud the United States . . . .” Id. The gist of the crime is an agreement to defraud the United States by interfering or obstructing lawful government functions through deceit, craft or trickery, and by means that are dishonest. United States v. Caldwell, 989 F.2d 1056, 1058 (9th Cir. 1993). Violating the defraud prong may also be accomplished by conspiring to cheat the U.S. government of money or property, or to interfere with its operations.

Charging the conspiracy to defraud prong of § 371 enables prosecutors to develop a theory of fraudulent conduct which is broader than common law fraud.  However, the conspiracy to defraud prong is not without its limitations and courts have expressed concerns about its scope. See Mubayyid, 658 F.3d at 59 (“We are of course always wary of the dangers associated with a § 371 conspiracy.”) (quoting United States v. Goldberg, 105 F.3d 770, 775 (1st Cir. 1997) (“[T]he defraud clause of section 371 has a special capacity for abuse because of the vagueness of the concept of interfering with a proper government function.”)).

The Federal government regularly uses conspiracy prosecutions in an effort to combat often illusive or difficult to prove white collar crimes and organized crime where multiple participants are alleged to have contributed to a common scheme or plan.