## Facts

- From 1996 to 2000, David and Carl Pasquantino arranged from New York to buy discounted liquor from Maryland stores using telephone calls.
- They used Arthur Hilts and other drivers to transport the liquor into Canada.
- The drivers concealed the liquor and failed to declare it to Canadian customs officials to avoid paying Canadian excise taxes.
- Canada imposed substantial taxes on imported alcohol; the avoided taxes were roughly twice the liquor’s purchase price.
- The United States charged the participants with federal wire fraud under 18 U.S.C. § 1343 based on the interstate phone calls used to order the liquor.
- A federal jury convicted the defendants; the convictions were affirmed by the en banc Fourth Circuit.

## Issues

1. Whether a scheme to deprive a foreign government of tax revenue constitutes a “scheme or artifice to defraud” to obtain “money or property” under 18 U.S.C. § 1343.
2. Whether the common-law revenue rule bars a federal wire-fraud prosecution when the object of the scheme is evasion of foreign taxes.

## Decision

- The Supreme Court affirmed the Fourth Circuit.
- Canada’s right to uncollected excise taxes was “property” for purposes of § 1343.
- The defendants’ concealment and nondisclosure at the border constituted a fraudulent scheme intended to deprive Canada of that property.
- Applying § 1343 did not violate the revenue rule because the United States was prosecuting domestic criminal conduct, not directly enforcing or collecting a foreign tax claim.
- The Court rejected objections based on extraterritoriality and foreign-relations concerns because the charged offense relied on domestic use of interstate wires.

## Legal Principles

- A foreign sovereign’s entitlement to collect taxes can qualify as “money or property” under the federal wire fraud statute.
- A wire-fraud “scheme or artifice to defraud” includes deceptive conduct aimed at depriving a victim of a valuable entitlement to money.
- The revenue rule generally bars direct judicial enforcement of foreign tax laws or judgments, but it does not bar a U.S. criminal prosecution under a domestic statute merely because the scheme’s object includes evasion of foreign taxes.
- Use of U.S. interstate wires to execute the scheme supports application of § 1343 even when the victim is foreign and the scheme’s effects occur abroad.

## Conclusion

The Court held that using interstate telephone calls to carry out a plan to smuggle liquor into Canada while evading Canadian excise taxes constituted wire fraud because Canada’s right to tax revenue is “property,” and prosecuting the scheme did not amount to judicial enforcement of foreign tax law barred by the revenue rule.


Pasquantino v. United States, 544 U.S. 349 (2005)