## Facts

- A CMS employee (Worrall) had access to confidential, predecisional information about the timing and content of proposed Medicare/Medicaid reimbursement-rate changes.
- The government alleged Worrall disclosed this nonpublic information to Blaszczak, a former CMS employee working as a political-intelligence consultant.
- Blaszczak allegedly passed the information to hedge fund employees (Huber and Olan) at Deerfield Management.
- Deerfield allegedly traded in advance of CMS announcements and profited when the announcements moved stock prices.
- Defendants were charged under both Title 18 (wire fraud, securities fraud, conversion, and conspiracy) and Title 15 (Exchange Act securities fraud).
- The jury acquitted on the Title 15 counts but convicted on multiple Title 18 substantive and conspiracy counts.
- The Second Circuit initially affirmed most convictions, but the Supreme Court vacated and remanded for reconsideration in light of Kelly v. United States.
- On remand, the government conceded that CMS’s confidential, predecisional regulatory information was not “property” or a “thing of value” under the relevant Title 18 statutes.

## Issues

1. Whether confidential, predecisional CMS reimbursement-rate information constitutes “property” (or a “thing of value”) for purposes of 18 U.S.C. §§ 1343, 1348, and 641 after Kelly.
2. Whether § 371 conspiracy convictions may stand where the jury was instructed on multiple objects, including objects that became legally invalid post-Kelly.
3. What relief is required when substantive convictions depend on an invalid property theory and conspiracy verdicts may rest on mixed objects.

## Decision

- The court held that, after Kelly and the government’s concession, CMS’s confidential, predecisional reimbursement-rate information is not “property” under §§ 1343 and 1348 and not a “thing of value” under § 641.
- The court vacated the substantive Title 18 convictions predicated on the property/thing-of-value theory and remanded with instructions to dismiss those counts.
- The court vacated the § 371 conspiracy convictions because the jury received mixed-object instructions (some objects invalid post-Kelly) and the general verdict did not show reliance solely on a valid object.
- The court remanded for further proceedings, leaving the government the option to retry conspiracy charges on a legally valid, non-property-based theory.
- A separate opinion would have been more willing to sustain the conspiracy convictions on a defraud-the-United-States object.

## Legal Principles

- Federal fraud statutes requiring “money or property” do not reach schemes aimed at influencing or exploiting governmental regulatory decisionmaking unless obtaining property is an object of the scheme.
- A government agency’s interest in the confidentiality of predecisional regulatory information, without more, is a regulatory interest rather than “property” for purposes of 18 U.S.C. §§ 1343 and 1348.
- Confidential governmental regulatory information is not necessarily a “thing of value” under 18 U.S.C. § 641 when the asserted interest is tied to regulatory functions rather than a proprietary asset.
- A § 371 conspiracy conviction based on a general verdict cannot stand when the jury was instructed it could convict on any of multiple objects and at least one object is later deemed legally invalid, unless it is clear the verdict rested on a valid object.

## Conclusion

The Second Circuit, applying Kelly, held that CMS’s confidential, predecisional reimbursement-rate information was not “property” or a “thing of value” under the charged Title 18 statutes, requiring dismissal of the substantive fraud and conversion counts, and it vacated the conspiracy convictions because the jury’s mixed-object instructions made the general verdict unreliable as to any remaining valid conspiracy theory.


United States v. Blaszczak, 56 F.4th 230 (2d Cir. 2022)