As a recent post on PointofLaw.com noted, the Tenth Circuit recently affirmed the convictions of Howard O. Kieffer. Kieffer, who for several years practiced criminal defense law, had a problem - he never went to law school and had no license to practice law. A California resident, Kieffer held himself out as a criminal defense attorney via a domain name with a Virginia company, which also hosted the web site. The government argued that the web site he maintained, which was accessed by two of his victims, in Colorado and Tennessee, was a “wire communication in interstate commerce” sufficient to establish jurisdiction under the federal wire fraud statute.
One aspect, in particular, of the Tenth Circuit decision raises eyebrows. The issue is what constitutes an interstate wire for the purpose of the wire fraud statute. The White Collar Crime Professor Blog identified this as a particularly important issue in the cyber-connected world we now live in. This issue has been evolving for some time, as shown in United States v. Phillips, 376 F. Supp2d 6 (D. Mass. 2005). There, the court rejected the government argument that “in order to satisfy the elements of the wire fraud offense, it was not necessary to present evidence that the pertinent wire communications themselves actually crossed state lines, as long as the communications (whether interstate or intrastate) traveled via an ‘instrument of an integrated system of interstate commerce,’ such as the interstate phone system.” More recently, the Tenth Circuit, in United States v. Schaefer, 501 F.3d 1197 (10th Cir. 2007), held that one person’s use of the internet, “standing alone” was insufficient evidence that the item “traveled across state lines in interstate commerce.”
Therefore, it is now somewhat surprising to read in Kieffer that the Tenth Circuit changed its position. The court noted that before the website could reach the local host server, it had been uploaded by Kieffer to the Virginia company, and then transmitted from Virginia to Colorado and Tennessee. Based on those facts, the court held that "[t]he presence of end users in different states, coupled with the very character of the internet” permitted the jury to infer transmission across state lines. Now, under Kieffer, an allegation that a web site was used to perpetrate fraud would give rise to federal wire fraud jurisdiction in nearly every case. Stated differently, given the “the very character of the internet,” it is unlikely that a defendant will reside in the same state as his web site host and victims.
Now, as Paul F. Enzinna noted, unless other courts reject Kieffer, the potential exists for a surge in federal wire fraud prosecutions. With Kieffer seemingly establishing such minimal interstate contact requirements, it would seem that virtually any viewing or use of a web site could be used to trigger federal jurisdiction.