described in 12 U.S.C. 1715z-4(a) (i.e., a mortgage covering multifamily housing), or as a stockholder of a corporation owning such property, or as a beneficial owner under any business organization or trust owning such property, or as an officer, director, or agent of any such owner, (1) willfully uses or authorizes the use of any part of the rents or other funds derived from the property covered by such mortgage in violation of a regulation promulgated by the Secretary of Housing and Urban Development under 12 U.S.C. 1715z-4(a), or (2) if such mortgage is determined to be exempt from or is not otherwise covered by such regulation, willfully and knowingly uses or authorizes the use of any part of the rents or other funds derived from the property covered by such mortgage for any purpose other than to meet actual and necessary expenses arising in connection with such property (including amortization charges under the mortgage). No reported prosecutions under these statutes yet exist. C. Land Sale or Lease Fraud 15 U.S.C. 1703, part of the Interstate Land Sales Full Disclosure Act, makes it unlawful for any developer or agent to use any means or instrument of transportation or communication in interstate commerce, or of the mails (i) to sell or lease any lot in any subdivision unless a statement of record with respect to such lot is in effect in accordance with 15 U.S.C. 1706 and a printed property report, meeting the requirements of 15 U.S.C. 1707, is furnished by the purchaser in advance of the signing of any contract or agreement for sale or lease by the purchaser, and (ii) in selling or leasing, or offering to sell or lease, any lot in a subdivision, (a) to employ any device, scheme or artifice to defraud, (b) to obtain money or property by means of a material misrepresentation with respect to any information included in the statement of record or the property report or with respect to any other information pertinent to the lot or the subdivision and upon which the purchaser relies, or (c) to engage in any practice, transaction, or course of business which operates or would operate as a fraud or deceit upon a purchaser. The terms "person," "subdivision," "agent," "interstate commerce," "purchaser," and "offer" are defined in 15 U.S.C. 1701. 15 U.S.C. 1702 contains a number of exemptions, including the sale or lease of real estate under court order and the sale or lease of real estate by any government or government agency. 15 U.S.C. 1717 is the penalty section and provides that any person who "willfully violates" any of the provisions of this chapter (including 15 U.S.C. 1703), or the rules and regulations issued pursuant thereto, may be imprisoned upon conviction for up to five years. D. Copyrights 17 U.S.C. 101 provides various civil remedies for copyright infringement. Expanding on this protection, 17 U.S.C. 104 provides up to a one-year sentence for: Any person who willfully and for profit shall infringe any A proviso exempts performances of religious or secular works by public schools, church choirs, or vocal societies, if "the performance is given for charitable or educational purposes and not for profit." 156 3. The Offense Subsection (a) (1) provides that a person is guilty of an offense if, "with intent to defraud," he: uses or reveals information relative to a formula of a product This substantially reenacts 7 U.S.C. 1367(b)(3). The forbidden conduct is "uses or reveals information." Since no culpability level is specifically designated, the applicable state of mind to be proved is at least "knowing," i.e., that the defendant was aware of the nature of his actions.157 The phrase "with intent to defraud” is intended to bear its same meaning in current law and states the particular purpo-e for which it must be established that the conduct was performed.15a The further element that the information used or revealed was "relative to a formula of a product" is an existing circumstance. Since no culpability standard is specifically set forth, the applicable state of mind that must be shown is, at a minimum, "reckless," i.e., that the defendant was conscious of but disregarded the risk that the circumstance existed.158 The final element that the formula was "acquired under the authority" of 7 U.S.C. 136a is also an existing circumstance. However, as it is preceded by the term "in fact," no mental state need be shown as to this element.159 Subsection (a) (2) provides that a person is guilty of an offense if he "violates" section 912 of the Housing and Urban Development Act of 1970 (12 U.S.C. 1709-2) or section 239 (b) of the National Housing Act, as added by the Act of August 1, 1968 (12 U.S.C. 1715z-4(b)) (relating to equity skimming in Federally insured mortgages of single or multiple family dwellings). This recodifies the provisions of 12 U.S.C. 1709-2 and 1715z-4(b). The term "violate" is defined in section 111 to mean to engage in conduct which is prohibited, proscribed, declared unlawful, or made subject to a penalty. Thus, this section carries forward the precise elements of the offense (including scienter) in existing law. Under section 303 (d) (1) (A), no mental state need be proved as to the fact that particular conduct violated a statute; hence it is not an element of this offense that the defendant knew he was violating 12 U.S.C. 1709-2 or 1715z-4(b). The description in parenthesis of the underlying statutes is not to be read as limiting the scope or application of their provisions. 160 156 Only one reported case under this statute as yet exists. See United States v. Taxe, 380 F. Supp. 1010 (C.D. Cal. 1974). 157 See sections 303(b) (1) and 302(b) (1). 157 It is the intent to defraud element that distinguishes the offense of revealing information in this section from the general misdemeanor offense in section 1524 (Revealing Private Information Submitted for a Government Purpose). 158 See sections 303 (b) (2) and 302(c) (1). See section 303 (a) (2). This would appear to be the proper construction of the present statute, which this section is intended to perpetuate. Cf. United States v. International Min'ls Corp., 402 U.S. 558 (1971). Absent some more clear manifestation of congressional purpose, it is not likely that the courts would interpret the law to require any knowledge or awareness of the particular law pursuant to which the formula was obtained. 160 See section 112 (b). Subsection (a) (3) provides that a person is guilty of an offense if he "violates" the provisions of section 1404 of the Interstate Land Sales Full Disclosure Act (15 U.S.C. 1703) (relating to the sale or lease of lots in real estate subdivisions), or a regulation, rule, or order issued pursuant thereto. This brings forward the offenses described in 15 U.S.C. 1703 and 1717. The same analysis with respect to the term "violates" and the effect of the parenthetical explanation of the underlying statute applicable under the preceding offense applies here also. Subsection (a) (4) provides that a person is guilty of an offense if, "with intent to defraud," he: infringes for profit a copyright on a sound recording in fact This substantially reenacts 17 U.S.C. 104. The forbidden conduct is "infringes... a copyright" and, as no culpability level is specifically prescribed, the applicable state of mind that must be shown is at least "knowing," i.e., that the offender was aware of the nature of his actions.161 The element "for profit" states the purpose for which it must be proved that the conduct was performed. The element that the copyright infringed was "on a sound recording" is an existing circumstance, as to which the applicable state of mind is at a minimum "reckless." 162 The element that the copyright was "secured pursuant to title 17" requires no proof of any mental state since it is preceded by the phrase "in fact." 163 The "aid or abet" provision of current law is not duplicated in this section but will be covered by the general provisions of section 401 (Liability of an Accomplice). The proviso contained in 17 U.S.C. 104 has been deleted as redundant and unnecessary; the infringement must be for profit both under existing and proposed Federal law, and the exemption in section 104 specifically states that it is only applicable when the performance is "not for profit." Further, as to uses not for profit, the exemption could be unduly limited as drafted since it applies only to "performances" by schools, choirs, and vocal societies. 4. Jurisdiction This section contains no subsection setting forth the extent to which there is Federal jurisdiction over an offense herein. Therefore, by operation of section 201 (b) (2), Federal jurisdiction is present if the crime is committed within the general jurisdiction of the United States, as defined in section 202.16+ 5. Grading An offense under this section is graded as a Class E felony (up to three years in prison). This approximates the present penalty level under 7 U.S.C. 136a, 12 U.S.C. 1709-2, and 15 U.S.C. 1717. However, the offense under 17 U.S.C. 104 has been increased from a misdemeanor (one year) to a felony. The Committee has been informed by the Criminal Division of the Department of Justice, which now administers section 104, that the existing penalty is inadequate. The reason is that sound recording "piracy" has become so lucrative that violators, 16 See sections 303 (b) (1) and 302 (b) (1). 162 See sections 303(b) (2) and 302 (c) (1). 103 See section 303 (a) (2). 164 See Article I, section 8, clause 8 of the United States Constitution. Section 1738. especially organized criminal elements, are not deterred by the current one-year classification. Moreover, the present inadequacy of the penalty has been recognized by the Senate, which recently passed legislation (S. 3976, 93d Cong., 2d Sess.) to increase the offense to a three-year felony.165 SECTION 1738. GENERAL PROVISIONS FOR SUBCHAPTER D Section 1738 contains definitions and general provisions relating to matters of proof for this subchapter. Each provision has been explained in the discussion of the sections to which they apply. SUBCHAPTER E.-COUNTERFEITING, FORGERY, AND RELATED OFFENSES (Sections 1741–1746) The offenses included within this subchapter are: Counterfeiting, (section 1741); Forgery (section 1742); Criminal Signing or Endorsement of a written Instrument (section 1743); Criminal Issuance of a Written Instrument (section 1744); and Trafficking in a Counterfeiting Implement (section 1745). Definitions for the various terms of art used throughout the subchapter appear in section 1746. The chief virtue of this subchapter is the consolidation and, consequently, the clarification of a great number of offenses found throughout the United States Code (principally in title 18) dealing with counterfeiting,1 forgery,2 and related matters. In addition, these sections harmonize and simplify multiple and seemingly arbitrary standards of culpability, as well as inconsistent levels of punishment that exist throughout the current statutes. 5 The current statutes proscribing counterfeiting, forgery, and related offenses were enacted piecemeal over the years and are distinguishable from each other by the different written instruments or symbols of value which are protected," the different Federal agencies 165 See 120 Cong. Rec. S 16185-16186 (Sept. 9, 1974 (daily ed.)). The penalty would have increased to a maximum of seven years in prison for a subsequent offense. But see P.L. 93-573, Dec. 31, 1974, retaining a one-year maximum penalty for a first offense, although providing for felony treatment for a subsequent offense. 1 See, e.g., 18 U.S.C. 331, 471-473, 484–486. 2 See. e.g., 18 U.S.C. 471-473, 484, 495, 500, 502. See, e.g., 18 U.S.C. 334 (prohibiting Federal Reserve Agents, or an agent or employee of such Agent, or of the Board of Governors of the Federal Reserve System from issuing Federal reserves notes without complying with regulations regarding such issuance); 18 U.S.C. 335 (prohibiting certain persons connected with a corporation created by an Act of Congress, the charter of which has expired, from issuing any securities of such corporation) and 18 U.S.C. 500 prohibiting the issuance of postal money orders, without having received the full amount payable therefor, for the purpose of fraudulently receiving from the United States a sum of money). Compare 18 U.S.C. 472 (with intent to defraud"); 18 U.S.C. 482 ("with intent to defraud, falsely"); and 18 U.S.C. 485 ("falsely"). Compare 18 U.S.C. 331 (fine of not more than $2,000 and imprisonment for not more than five years for fraudulent alteration or falsification of coins) with 18 U.S.C. 483 (fine of not more than $5,000 and imprisonment for not more than fifteen years for the counterfeiting or forgery of coins). Compare 18 U.S.C. 485 (prohibiting the forgery or counterfeiting of coins of a denomination higher than five cents) with 18 U.S.C. 490 (prohibiting the forgery or counterfeiting of nickels and pennies (minor coins)). Section 1742. associated with certain statutes, and the interstate aspect provided in various statutes. All of these offenses, however, have a common ground in that they involve in some way false dealings in regard to writings or symbols of value (issuing an authentic document without authority) or the falsification or attempted falsification of such materials. The offenses in this subchapter share this common ground. Thus, sections 1741 and 1742 proscribe the making, uttering, or possession, with the intent to deceive or harm another person or a government, of a counterfeited written instrument (section 1741) and of a forged written instrument (section 1742). Section 1743 penalizes the signing or endorsing of a written instrument in such a manner that it falsely purports to have been signed or endorsed on behalf of another. Section 1744, on the other hand, essentially proscribes the issuance of an authentic written instrument without authority. Finally, Section 1745 prohibits the production, trafficking in, or possession of counterfeiting and forging implements. 1. In General SECTION 1741. COUNTERFEITING SECTION 1742. FORGERY Because of their close relationship, counterfeiting (section 1741) and forgery (section 1742) are discussed together. Indeed, in its broadest sense, counterfeiting includes forgery and, at common law, the two terms were used interchangeably. Thus, both terms were used at common law to define the concept of falsely making a writing whether by manufacturing it falsely or falsely altering it in some fashion.10 More narrowly, however, counterfeiting has generally been defined as the making of a false or spurious thing to resemble a genuine thing," and forgery has been defined as the false making or material alteration, with intent to defraud, or any writing which, if genuine, might apparently be of legal efficacy or the foundation of a legal liability.12 Eventually, through usage, the term "forgery" became restricted to writings and the term "counterfeiting" became restricted to money or the equipment for making money.13 Nevertheless, throughout the United States Code, the terms "forge" and "counterfeit" are coupled together in section after section, whether the offense is clearly counterfeiting 15 or clearly forgery 16 under traditional concepts. 14 S. 1, as reported, however, for the first time in Federal legislation proposes to draw a distinction between items that are counterfeited and items that are forged. The two types of conduct are clearly dis 7 Compare 18 U.S.C. 1008 (prohibitig the forgery or counterfeiting of any document or the uttering of such a document, for the purpose of influencing in any way the action of the Federal Savings and Loan Insurance Corporation) with 18 U.S.C. 1010 (prohibiting the same conduct when undertaken for the purpose of obtaining any loan or advance credit from any person or firm with the intent that such loan or advance of credit shall be offered to or accepted by the Department of Housing and Urban Development for insurance, or for the purpose of influencing in any other way the action of such department). 8 Thus, for example, 18 U.S.C. 2315, prohibits the knowing receipt, concealment, storing, bartering, selling or disposing of forged or counterfeited securities or tax stamps which are "moving as, or, which are a part of, or which constitute interstate or foreign commerce." 92 Wharton, Criminal Law, section 652 (1957). 10 See 2 East, Pleas of the Crown, p. 852 (1803). 11 2 Wharton supra note 9, section 652. 12 Id., section 621. 13 Id., section 652 (1957). 14 See, e... 18 U.S.C. 471, 472 473. 15 See 18 U.S.C. 485 (counterfeiting gold or silver coins); 18 U.S.C. 490 (counterfeiting "minor" coins). See 18 U.S.C. 495 (forging deed, contract, and the like to obtain money from the United States). |