Court: Supreme Court of the United States; March 1, 1926; Federal Supreme Court; Federal Appellate Court
Cohn was indicted for violating section 35 of the Penal Code, amended by the Act of October 23, 1918, which prohibits fraudulent actions against the U.S. government. The indictment was initially dismissed on demurrer, asserting the statute did not classify the alleged actions as a crime. This dismissal prompted the United States to seek a writ of error under the Criminal Appeals Act, allowing for direct appeal from judgments sustaining demurrers based on statutory interpretation.
The statute criminalizes knowingly and willfully falsifying or concealing material facts to defraud the U.S. government or its departments. In this case, Cohn was accused of fraudulently obtaining possession of imported cigars by misleading customhouse brokers and the collector of customs. Cohn allegedly misrepresented the status of a bill of lading tied to the cigars, falsely claiming it had not arrived in Chicago and that he was entitled to the cigars, thereby inducing the collector to grant possession based on these fraudulent statements. The indictment detailed how Cohn's actions obstructed the proper administration of U.S. customs laws.
Cigars were allowed entry into the U.S. duty-free but required to be officially entered at the customhouse, with a bill of lading necessary for establishing the right to entry. The holder of the indorsed bill of lading was deemed the property owner and could make the entry. The collector had discretion to permit entry without the bill of lading upon a bond ensuring its future production.
Assuming, for argument's sake, that Cohn could not enter and possess the cigars without paying the draft and obtaining the bill of lading, the actions leading to possession did not constitute an offense against the U.S. unless they were aimed at either obtaining approval of a claim against the government or defrauding it. The U.S. argued that the possession was wrongfully obtained for these purposes, but this was not supported.
Obtaining non-dutiable merchandise from a collector does not equate to asserting a claim against the government, which is defined in the statute as a demand for money or property based on the government’s liability. The cigars, being non-dutiable, did not involve such a claim, as there was no assertion against the government regarding them.
Additionally, the wrongful obtaining of non-dutiable merchandise does not constitute 'defrauding' the government. The U.S. attempted to draw parallels with prior cases regarding conspiracy to defraud, suggesting that 'defrauding' should encompass obstructing governmental functions through deceit. However, this broader interpretation was not applicable in this scenario.
The statutes in question differ significantly, undermining any perceived analogy. Section 37 explicitly encompasses all conspiracies to defraud the United States, lacking any limitations in its language. In contrast, Section 35 restricts the term "defrauding" to its conventional interpretation, closely associated with "cheating or swindling," which pertains specifically to fraudulent actions resulting in monetary or property losses. This interpretation is reinforced by references within Section 35 to acquiring government funds through false claims, emphasizing the wrongful acquisition of government property rather than obstructing government functions. Consequently, the indictment failed to demonstrate, as required by Section 35, an intent to obtain approval for a claim against the United States or to defraud it. The demurrer was appropriately upheld, and the District Court's judgment was affirmed.
Sec. 35 outlines various fraudulent activities related to claims against the United States government or its affiliated corporations. It criminalizes the making or presenting of false claims with the intent to defraud, including falsifying material facts, making fraudulent statements, or using deceptive documents. The section also addresses theft of government property and conspiracies to defraud the government. Individuals in possession of public property who intend to defraud and deliver less than what was received are also criminalized. Violations can result in fines up to $10,000 or imprisonment for up to ten years, or both. Additional references include a certificate by a District Judge and provisions from the Tariff Act of 1913.
