Appeal

McNally and Gray appealed to the United States Court of Appeals for the Sixth Circuit, arguing that Hunt's fraud, which they had been convicted of abetting, was not honest services fraud because he had no fiduciary duty to the people of Kentucky. The Sixth Circuit, noting Gray's fiduciary duty to the people of Kentucky as Secretary of Public Protection and Regulation, concluded that Hunt also had a fiduciary duty to the people of Kentucky as a de facto public official due to his substantial participation in governmental affairs and "de facto control" of the awarding of the insurance contract to Wombwell.^[2]

The appellants also argued that their rights to due process of law were violated by the indictment, contending that it failed to allege that Hunt and Gray had a fiduciary duty to the citizens of Kentucky, a fact of which they necessarily had to be informed in order to understand the elements of the charges against them. The Sixth Circuit rejected this argument as well, stating that the indictment contained sufficient information for the defendants to be apprised of the charges, including the identification of the roles Hunt and Gray played in the conspiracy to defraud.^[2]

The Sixth Circuit affirmed the convictions on May 12, 1986. The Supreme Court of the United States granted certiorari and reversed the decision of the lower court; the case was argued before the Court on April 22, 1987, and decided on June 24 of that year.

Majority

Justice White wrote the opinion of the Court, holding that the federal mail fraud statute only protected money and property, not the public's intangible right to honest government:

Rather than construe the statute in a manner that leaves its outer boundaries ambiguous and involves the Federal Government in setting standards of disclosure and good government for local and state officials, we read 1341 as limited in scope to the protection of property rights. If Congress desires to go further, it must speak more clearly than it has.^[3]

The law, passed in 1872 during a postal law recodification, originally only criminalized "any scheme or artifice to defraud." In March 1909, Congress added another clause, reading "or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises." In McNally, the Court therefore concluded that Congress intended the mail fraud statute's scope to be limited to protecting money and property,^[3] citing its ruling in United States v. Universal C. I. T. Credit Corp., which stated that "when choice has to be made between two readings of what conduct Congress has made a crime, it is appropriate, before we choose the harsher alternative, to require that Congress should have spoken in language that is clear and definite. We should not derive criminal outlawry from some ambiguous implication."^[4]

The convictions of McNally and Gray were thus reversed.

Dissent

Justice Stevens wrote the dissenting opinion, arguing that "nothing in the words 'any scheme or artifice to defraud,' or in the purpose of the statute, justifies limiting its application to schemes intended to deprive victims of money or property."^[3]