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United States v. Alkaabi

September 23, 2002

UNITED STATES OF AMERICA
v.
OMAR ALKAABI, A/K/A OMAR AL-KAABI
UNITED STATES OF AMERICA
v.
TARIK I. ALSUGAIR



The opinion of the court was delivered by: Hon. Stephen M. Orlofsky

FOR PUBLICATION

OPINION

These cases present a novel question of law under the federal mail fraud statute, 18 U.S.C. § 1341 (2002). Specifically, does an alleged scheme to deprive the Educational Testing Service, Inc. ("ETS") of an "interest in maintaining the integrity of the testing process" constitute a deprivation of property, within the meaning of the mail fraud statute? For the reasons discussed below, I conclude that ETS's alleged property interest is not a traditional property interest cognizable under the mail fraud statute. Accordingly, I shall grant the motions of Defendants, Omar Alkaabi ("Alkaabi"), a/k/a Omar Al-kaabi, and Tarik L. Alsugair ("Alsugair"), to dismiss the Indictments.

I. BACKGROUND

The Test of English as a Foreign Language, commonly known as the TOEFL, is administered by ETS, a New Jersey corporation that designs and administers standardized exams. *fn1 See Alkaabi and Alsugair Indictments ("Indicts.") *fn2 ¶ 1(A). Many schools and colleges throughout the United States require foreign students to pass the TOEFL examination as a condition of admission to their academic programs. Id.

The Indictments charge each Defendant with conspiracy to violate the federal mail fraud statute, in violation of 18 U.S.C. § 371 (2002), and with the substantive charge of mail fraud, in violation of 18 U.S.C. § 1341 (2002). *fn3 The Government alleges that Alkaabi and Alsugair each violated these criminal statutes by having an imposter take and pass the TOEFL on his behalf. See Indicts., Count I, ¶¶ 2,6. In each case, the imposter appeared at a test site and identified himself as the student who had to take the exam. Id. ¶¶ 3,7. The imposter, posing as the student, had his photo taken at the test site, sat for the TOEFL exam, and directed that the exam results be mailed to a predetermined location. Id. Once the test results arrived, the real student's photograph was substituted for the imposter's photograph, id., and the fraudulent TOEFL exam results were then mailed to schools requiring the real student's exam results in a phony ETS envelope. Id. ¶ 3.

There are approximately sixty criminal cases pending in the District of New Jersey that charge Arab or Moslem defendants with fraud in connection with the TOEFL examination. See Amicus Br. at 1. The defendants in these TOEFL cases are all students taking undergraduate or graduate courses at colleges and universities in the United States. Id.

II. DEFENDANTS' MOTIONS TO DISMISS THE INDICTMENT

C. Legal Standard Governing Motions to Dismiss Under Fed. R. Crim. P. 12(b)

Alkaabi and Alsugair each move, pursuant to Fed. R. Crim. P. 12(b) (West 2002), to dismiss their respective Indictments. *fn4 Fed R. Crim. P. 12 provides, in relevant part, that "[a]ny defense, objection or request which is capable of determination without the trial of the general issue may be raised before trial by motion." Id. "Defenses and objections based on defects in the indictment or information" must be raised prior to trial. Fed. R. Crim. P. 12(b).

The Government correctly asserts that Alkaabi and Alsugair cannot move to dismiss their Indictments to assert a premature challenge to the sufficiency of the Government's evidence. As the Third Circuit has previously held, "[u]nless there is a stipulated record, or unless immunity issues are implicated, a pretrial motion to dismiss an indictment is not a permissible vehicle for addressing the sufficiency of the government's evidence." United States v. DeLaurentis, 230 F.3d 659, 660-61 (3d Cir. 2000). Alkaabi and Alsugair, however, are not challenging the sufficiency of the evidence to be presented against them at trial. *fn5 Rather, they challenge the facial sufficiency of the allegations contained in the Indictments brought against them. Id. at 661.

The Government argues that the charges as alleged in the Indictments withstand Alkaabi's and Alsugair's motions to dismiss because the Indictments track the language of the mail fraud statute, 18 U.S.C. § 1341 (2001). Gov't Brs. at 9. *fn6 Unfortunately, the Government has completely ignored the holding of United States v. Panarella, 277 F.3d 678, 685 (3d Cir. 2002), a case decided earlier this year. In Panarella, Chief Judge Becker wrote:

We are thus constrained to reject the government's contention that an indictment or information charges an offense, for purposes of Rule 12(b)(2), as long as it recites in general terms the essential elements of the offense, even if the specific facts alleged in the charging instrument fail to satisfy those elements. Instead, we hold that, for purposes of Rule 12(b)(2), a charging document fails to state an offense if the specific facts alleged in the charging document fall beyond the scope of the relevant criminal statute, as a matter of statutory interpretation. Id. *fn7

It is clear that the Third Circuit's decision in Panarella, not DeLaurentis, is controlling in these cases. Thus, I must determine whether the facts as alleged in the Indictments adequately allege the elements of mail fraud under 18 U.S.C. § 1341. Contrary to the Government's assertion, DeLaurentis is no bar to this undertaking. In these cases, unlike DeLaurentis, this Court is not considering a motion to dismiss the Indictments "on the basis of predictions as to what the trial evidence will be." Id., 230 F.3d at 661.

D. The "Property" Element of 18 U.S.C. § 1341

The mail fraud statute, 18 U.S.C. § 1341 (West 2002), provides in relevant part:

Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises. . . for the purpose of executing such scheme or artifice or attempting so to do, places in any post office or authorized depository for mail matter. . . shall be fined under this title or imprisoned not more than 20 years, or both. Id. (emphasis added).

The United States Supreme Court has explained that "the original impetus behind the mail fraud statute was to protect the people from schemes to deprive them of their money or property." McNally v. United States, 483 U.S. 350, 356 (1987). Although the statute contains disjunctive language, McNally made it clear that 18 U.S.C. § 1341 does not reach any "scheme or artifice to defraud," id., but is "limited in scope to the protection of property rights." McNally, 483 U.S. at 358- 60; see also Cleveland v. United States, 531 U.S. 12, 19 (2000) (1909 amendment to Section 1341 signaled no intent by Congress to depart from the common understanding that the words "to defraud" commonly refer to wronging one in his property rights).

In McNally, the Supreme Court held that the mail fraud statute did not reach "the intangible right of the citizenry to good government." See id., 483 U.S. at 356. *fn8 McNally, however, did not broadly limit the scope of § 1341 to tangible as distinguished from intangible property rights. See Carpenter v. United States, 484 U.S. 19, 25 (1987). In fact, in the same year it decided McNally, the Supreme Court applied 18 U.S.C. § 1341 to intangible property rights in Carpenter, 484 U.S. at 25, 28, a case in which it held that confidential business information, which the defendant had compiled for a Wall Street Journal investment column, was within the ambit of the mail and wire fraud statutes. *fn9 Id. The Carpenter Court explained that "[c]onfidential business information has long been recognized as property." Id. at 26 (citations omitted).

C. ETS's Alleged Property Interest in the TOEFL

1. "Maintaining the Integrity of the Testing Process"

The issue before this court is whether the "property" element of the mail fraud statute, 18 U.S.C. § 1341, encompasses an alleged scheme to deprive ETS of any property interest in "maintaining the integrity of its testing process." Indicts. ¶ I(A). "For purposes of the mail fraud statute, the thing obtained must be property in the hands of the victim." Cleveland, 531 U.S. at 15. Thus, I must determine whether ETS, the alleged victim in these cases, was deprived of any property as a result of the alleged TOEFL scheme.

Not content to rely on the language of the Indictments, the Government advances in its brief three alternative forms of ETS's property interest: (1) ETS's copyrighted test and trademarked score sheet; (2) ETS's administration and scoring services; and (3) ETS's goodwill based on the integrity of its testing process. Gov't Brs. at 11. Curiously, however, the Indictments only allege ETS's interest in "maintaining the integrity of the testing process," Indicts. ¶ I(A), as the property interest of which ETS was deprived under 18 U.S.C. § 1341.

The Government did not include its three alternative property theories in the Indictments presented to the Grand Jury, and it cannot do so now. *fn10 This is because "a court cannot permit a defendant to be tried on charges that are not made in the indictment against him." Stirone v. United States, 361 U.S. 212, 217 (1960); United States v. Zauber, 857 F.2d 137, 144 (3d Cir. 1988) ("It is settled law that nothing can be added to an indictment without the concurrence of the grand jury by which the bill was found.") (citation omitted). Indeed, United States v. Schramm, 75 F.3d 156 (3d Cir. 1996), eloquently sets forth the reasons why such meticulous attention must be paid to the language contained in the Indictments:

The principle that an indictment must contain the essential elements of the offense charged is premised upon three distinct constitutional commands which we cannot ignore.

First, the indictment must be sufficiently precise to inform the defendant of the charges against which he or she must defend, as required by the Sixth amendment. Second, the indictment must enable an individual to determine whether he or she may plead a prior acquittal or conviction to bar future prosecutions for the same offense, in accordance with the Fifth Amendment. . . . Third, the purpose of an indictment is to shield a defendant in a federal felony case from unfounded prosecutorial charges and to require him to defend in court only those allegations returned by an independent grand jury, as provided by the Fifth Amendment. . . . By sufficiently articulating the critical elements of the underlying offense, an indictment insures that the accused has been duly ...


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