Calling bullshit? (wire fraud edition)

Note: This is the first of three blog posts on the case of U.S. v. Porat.

I mentioned in a previous post that Moshe Porat, the former dean of Temple University’s business school, was recently charged by the Feds with one count of conspiracy to commit wire fraud and one count of wire fraud for submitting fake data to U.S. News & World Report about Temple business school’s online MBA and part-time MBA programs in order to inflate his school’s rankings in the annual U.S. News surveys. Today, I want to take a closer look at this fascinating Twitter thread by my colleague and friend Orin S. Kerr, a law professor at Cal Berkeley, about some of the legal issues posed by this wire fraud case.

In summary, Kerr correctly notes that the federal wire fraud statute, which is codified at 18 U.S.C. §1343, makes it a crime to commit fraud across State lines in order to obtain money or valuable property. Professor Kerr then poses the following two questions:

  1. What exactly is criminal, if anything, about submitting fake data to US News?
  2. And who was tricked into giving up their money?

It turns out that these two questions are one and the same. Why? Because to obtain a conviction under the federal wire fraud statute it’s not enough to prove that the defendant knowingly and intentionally made a fraudulent and material misstatement of fact (e.g. a business school dean who provides fake data to US News about his school’s programs). The prosecution must also prove that someone was actually harmed by the defendant’s fraudulent activity. But in the case of Moshe Porat, the former disgraced dean of Temple’s business school who allegedly sent fake data to US News in order to improve his school’s ranking, the key legal question is, Who was harmed by Dean Porat’s alleged fraud?

One could argue, or course, that it was the many applicants and wealthy donors to Temple’s business school who were harmed–at least to the extent that they applied or donated money to Temple under false pretenses–but at the same time one could just as well argue that the annual US News survey of graduate schools is not a reliable indicator of a school’s true worth or quality. To the point, if the annual US News survey of graduate schools is a bunch of bullshit to begin with, then no one is really harmed if this annual survey is based on doctored data! (Or in the more dignified words of Professor Kerr: “… Deans who submit fake U.S. Numbers aren’t trying to harm applicants and donors. They think their schools are fantastic, and that the U.S. News isn’t realizing how fantastic they truly are.”)

For lack of a technical or proper legal term, let’s call this the “calling bullshit” defense to wire fraud. Even if a business school dean in fact provides fake data to a third party like US News in order to fraudulently improve his school’s relative ranking, there is no crime of fraud if the US News annual survey of graduate programs is itself bullshit, which it probably is (see here, for example), though a full analysis of the utility of those annual surveys would require another series of blog posts. Instead of rehashing the same old pro and con arguments about these academic beauty contests, I will consider former prosecutor Michael Levy’s expert analysis of Porat’s case in my next post …

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About F. E. Guerra-Pujol

When I’m not blogging, I am a business law professor at the University of Central Florida.
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