No Internet Shortcut: Creditor’s Right to Repayment and Escrow Possession Qualify as “Property” Under Wire Fraud; Interstate Proof Required for Online Wires

Introduction

In United States v. Baker, the Tenth Circuit refines three important edges of federal criminal law. First, for the federal wire-fraud statute, it holds that “property” includes a creditor’s enforceable right to be repaid and an escrow agent’s possessory and economic interests in funds under escrow. Second, it reaffirms that the government must prove the charged wire communication actually crossed state lines for 18 U.S.C. § 1343—there is no “Internet exception.” Third, it clarifies procedural authority by holding that criminal contempt under 18 U.S.C. § 401 may be initiated by grand-jury indictment.

The case arises from a family debt and a lucrative real-estate assignment. Matthew Baker borrowed $445,000 from his brother Shane but never repaid him. When a real-estate deal produced a $767,000 assignment fee payable to Cap Fund 783, LLC (formed with Shane as manager), Matthew tried to have the escrow agent, Old Republic National Title Company, divert the money to his personal account and then altered Cap Fund’s state business records online to put himself in charge. A jury convicted him of two wire-fraud counts (the phone call to the escrow agent and the online change), and the district court later convicted him of criminal contempt and felon-in-possession of ammunition. On appeal, Baker challenged (1) whether the wire-fraud counts implicated a protected “property” interest, (2) the exclusion of a state interpleader judgment, and (3) proof that the online communication crossed state lines. He also challenged the contempt charge and the ammunition conviction.

The Tenth Circuit affirmed one wire-fraud count (the call), reversed the other (the online change) for lack of interstate proof, affirmed the contempt conviction and the felon-in-possession conviction, and remanded for resentencing on the remaining counts.

Summary of the Opinion

• Wire fraud—“property” element: The court holds that Matthew’s scheme targeted two cognizable “property” interests:
  • Shane’s property interest as a creditor in the right to be repaid the $445,000 debt (an entitlement to money that is “property” under the fraud statutes).
  • Old Republic’s property interest in escrowed funds (both its possessory rights as holder and its economic “collateral benefits” under the escrow agreement), analogized to bank property interests in Shaw v. United States.
  The conviction on Count I (the phone call) stands.
• Wire fraud—interstate element for Internet activity: The government failed to prove that the online change to the Utah business-entity website crossed state lines. The court reverses Count II, reiterating that Internet use alone does not satisfy § 1343’s “in interstate commerce” requirement.
• Evidentiary issue: The district court did not err (plain or otherwise) by failing sua sponte to admit a state interpleader judgment that the defense never offered at trial; the judgment was also not clearly relevant.
• Sentencing: No recalculation of loss is required on the wire-fraud count; the “property” was the debt, not the assignment fee or collateral.
• Criminal contempt: Prosecutors may initiate a § 401 contempt proceeding by grand-jury indictment; contempt is an “offense against the United States,” and indictment is a permissible charging vehicle.
• Felon-in-possession: The Second Amendment challenge to 18 U.S.C. § 922(g)(1) fails under Tenth Circuit precedent (Vincent v. Bondi); conviction affirmed.

Analysis

Precedents Cited and How They Shaped the Decision

• Pasquantino v. United States, 544 U.S. 349 (2005): Central to the court’s “property” analysis for Shane. Pasquantino held that a government’s right to collect taxes is “property” because the right to be paid money is a valuable entitlement. The Tenth Circuit extends this logic to a private creditor’s right to repayment: obstructing collection on a lawful debt is a scheme to obtain “money or property.”
• Shaw v. United States, 580 U.S. 63 (2016): Used to ground Old Republic’s property interest in escrowed funds. Shaw teaches that a bank has property rights in customer funds both as owner and as bailee with possessory rights; the Tenth Circuit treats an escroweer similarly, emphasizing exclusive possession and “collateral benefits” under the escrow instructions.
• United States v. Schaefer, 501 F.3d 1197 (10th Cir. 2007), and United States v. Kieffer, 681 F.3d 1143 (10th Cir. 2012): Reaffirmed for the interstate element. The government must prove the charged wire actually crossed state lines; Internet use alone is insufficient. Kieffer offers permissible proof pathways (e.g., out-of-state server or out-of-state access to the same site), which the government failed to invoke here.
• Cleveland v. United States, Kelly v. United States, and Ciminelli v. United States: These recent Supreme Court decisions limit fraud theories to traditional property “in the victim’s hands” and reject expansive theories (like “right-to-control”). The majority reasons its “right to be paid” and “escrow possession” theories fit squarely within traditional property, not disapproved “right-to-control.”
• United States v. Stewart (10th Cir.), United States v. Ali (9th Cir.), United States v. Sullivan (2d Cir.), United States v. Jones (9th Cir.), United States v. Van Doren (8th Cir.): Cited as examples where misrepresentations deprived victims of money to which they were entitled (e.g., thwarting creditors or vendors of full payment). Together, these cases underscore that fraud includes schemes to impair a victim’s entitlement to payment, not only taking “cash in hand.”
• In re First Capital Mortgage Loan Corp. (10th Cir. en banc): A footnote suggested an escrow holder lacks title, but the court treats any contrary inference as superseded by Shaw’s broader view of property and possessory interests.
• Pendergast v. United States, Ex Parte Grossman, Williams, Morales, and Fed. R. Crim. P. 7: These authorities establish that criminal contempt is an offense “against the United States” that federal prosecutors may bring and that indictment is a permissible initiation device.
• Vincent v. Bondi (10th Cir. 2025): Controls the Second Amendment challenge to § 922(g)(1); the panel follows circuit precedent upholding the statute as applied to nonviolent felons.

Legal Reasoning

The majority’s core rationale is that “property” under § 1343 covers more than tangible cash or chattels. Two distinct property theories sustain Count I:

• Shane’s property—right to be paid: The court treats Shane’s right to be repaid $445,000 as a classic property interest, emphasized by Pasquantino’s recognition that enforceable rights to money are “property” for federal fraud. The government’s trial theory, as the majority reads the record, was that Matthew lied to the escrow agent and falsified corporate records to keep Shane from learning of the assignment fee and thus from collecting on the debt. Mere nonpayment is not fraud; what crosses the line is the deliberate deceit designed to frustrate collection.
• Old Republic’s property—escrow possession and benefits: Consistent with Shaw, Old Republic had (i) possessory rights to the escrowed funds (the right to hold funds “against all the world” except as the escrow agreement permits) and (ii) contractual “collateral benefits” (banking perks and earnings that accrue to the escrow agent under the escrow instructions). Attempting to trick the escrow agent into releasing funds to the wrong person was a scheme to obtain the escrow agent’s property.

On the interstate element, the court returns to first principles. Section 1343 prohibits transmissions “in interstate or foreign commerce.” The government therefore must show that the charged transmission actually crossed a state line. The record showed that Matthew made an online change to Utah’s business-entity website and that Utah-based escrow employees later checked that site—facts that at most show intrastate activity. Although the website is accessible nationally, that proves only the potential for interstate transmission, not that the charged communication crossed state lines. Because the government did not prove out-of-state access or an out-of-state host/server implicated in the charged communication, Count II fails.

The evidentiary ruling is resolved on simple preservation and relevance grounds. The district court explicitly reserved ruling on the government’s motion in limine and invited the defense to offer the interpleader judgment at trial; it never did. There is no error—plain or otherwise—in a court’s failure to sua sponte admit unoffered evidence, especially where the document’s relevance is doubtful and potentially confusing.

On criminal contempt, the court draws a clean separation between § 401’s grant of judicial power to punish and the Executive’s power to prosecute offenses “against the United States.” Prosecutors may therefore bring contempt by indictment, and nothing in § 401’s text or title implies otherwise.

Finally, the Second Amendment challenge is foreclosed by circuit precedent upholding § 922(g)(1) for nonviolent offenders; the panel follows that binding authority.

The Dissent

Judge Phillips agrees with all but the affirmance of Count I. He argues that the majority affirms on theories not presented to the jury, contrary to McCormick and Ciminelli, which forbid affirming criminal convictions on a new legal theory not tried below. In his view, the government’s trial theory was that Shane had a property interest in the assignment fee itself (as Cap Fund’s manager) and that Old Republic’s interest was avoiding liability if it paid the wrong party—not that Shane had a property interest in the debt or that Old Republic had escrow-based property rights. He also warns that the majority’s theory risks expanding wire fraud to reach any debtor who receives unrelated funds without disclosing them to a creditor, and questions whether the record establishes legally enforceable loans rather than gifts.

The majority responds that its reading of the opening statement and the general “money or property” instructions show no theory-switch: the jury was told the scheme was to keep Matthew from paying his brother back; no instruction or limitation required the jury to find a specific form of property, and neither side sought a narrowing instruction.

Impact

• Wire fraud property theories remain capacious but bounded by deceit: The decision confirms that a creditor’s enforceable right to be paid money is “property” under § 1343. Prosecutors can charge schemes that use lies to conceal assets and frustrate collection, even when the theft is not of funds already “in hand.” Defense counsel should focus on whether the government can prove deliberate deceit aimed at impairing collection—mere nonpayment is not enough.
• Escrow agents are not passive bystanders—they have property interests: Parties who attempt to divert escrowed funds by deceit now face a clearer path to wire-fraud liability because the escrow agent’s possessory rights and contractual benefits are “property” targeted by the scheme. Title and escrow companies should tighten verification procedures; defense counsel should consider whether any alleged misstatements actually affected the escrow agent’s possessory interests.
• No “Internet shortcut” for the interstate element: The Tenth Circuit doubles down on Schaefer and Kieffer: Internet use, standing alone, does not prove interstate communications. Prosecutors should marshal concrete proof:
  • Hosting/server location outside the state of the user;
  • Evidence of out-of-state access to the specific content at issue;
  • Domain registration and routing records showing cross-border transmission;
  • Carrier logs, IP geolocation, or content delivery network (CDN) paths establishing interstate hops.
  Defense counsel should press the government on this element in online-fraud prosecutions.
• Contempt charging clarified: Within the Tenth Circuit, there is no procedural bar to bringing § 401 contempt by indictment. Courts may still proceed by order to show cause, but the Executive Branch may also utilize the grand jury.
• Second Amendment landscape: The panel adheres to circuit precedent upholding § 922(g)(1) for nonviolent felons. Until the Supreme Court or the Tenth Circuit en banc says otherwise, challenges in this circuit will face an uphill fight.
• Appellate preservation matters: The court’s handling of the interpleader judgment is a stark reminder: if a party wants a document in evidence, it must offer it. Reliance on a reserved ruling and in limine skirmishes is not enough.

Complex Concepts Simplified

• “Property in the victim’s hands”: Federal fraud requires targeting the victim’s property. That includes not only tangible money but also the legal right to be paid money and the possessory rights associated with holding funds (like an escrow agent’s right to exclude others and to receive contractual benefits).
• Creditor’s right to payment: This is a legal entitlement to receive money. When a debtor lies to hide assets or misleads third parties to thwart repayment, that deceit can “obtain” the creditor’s property by impeding the creditor’s collection of what is legally due.
• Bailee/Escrow possessory interest: A bailee holds property for others but has the right to possess it against everyone except the bailor and those authorized by the underlying agreement. An escrow agent’s right to hold and control funds and receive agreed collateral benefits is a property interest.
• “In interstate commerce” under § 1343: The government must prove the specific communication crossed a state line. Because a website can be intrastate (user and server in one state), courts will not assume interstate transmission just because the Internet was used.
• Interpleader judgment: A civil court order determining who is entitled to contested funds. Even if facially favorable to a defendant, it may be irrelevant to a criminal fraud theory focused on deceptive interference with a creditor’s collection rights.
• Invited error and plain error: If a party fails to offer evidence after being invited to do so, any complaint about its absence may be treated as waived (invited error). Unraised trial objections typically face “plain error” review on appeal—relief is rare unless the error is obvious and affects fairness.
• Loss calculation and collateral (U.S.S.G. § 2B1.1): “Loss” is tied to the victim’s property interest harmed by the scheme. If the property is the debt (and not a specific fee as collateral), collateral offsets may not apply unless the debt was in fact collateralized.

Practical Guidance

• For prosecutors:
  • In online-wire cases, gather technical proof of interstate crossing: host locations, DNS/WHOIS records, ISP logs, and evidence of out-of-state access to the charged content.
  • Plead and prove the “property” with clarity. Where multiple victims are alleged (creditor and custodian), ensure the record shows how each was targeted.
  • When relying on escrow-based theories, introduce the escrow instructions and testimony establishing possessory rights and benefits to the escrow agent.
• For defense counsel:
  • Press for a specific “property” instruction if the government’s theory is diffuse; request clarifying instructions distinguishing mere nonpayment from deceitful obstruction.
  • Vigorously contest the interstate element in Internet cases; require the government to “connect the dots.”
  • Preserve evidentiary issues by making offers of proof; do not rely on reserved rulings.
• For escrow and title companies:
  • Document policies establishing possession and collateral benefits; these can be pivotal if your institution is a fraud victim.
  • Maintain systematic verification against state business registries and preserve contemporaneous records; such steps can foil fraud and support later prosecutions.

Conclusion

United States v. Baker makes three durable contributions to federal criminal law in the Tenth Circuit. It confirms that a creditor’s right to be paid and an escrow agent’s possessory and economic interests are “property” under the wire-fraud statute when deceit is used to frustrate repayment or divert escrowed funds. It firmly rejects any “Internet shortcut” to the interstate element—prosecutors must prove that the charged communication actually crossed a state line. And it clarifies that federal prosecutors may initiate criminal contempt through a grand-jury indictment. The partial dissent flags a live debate—how tightly appellate courts must adhere to the government’s trial theory under Ciminelli and McCormick. But on its own terms, Baker is a detailed blueprint: it shows how to frame “property” in fraud prosecutions without resorting to discredited “right-to-control” theories, how to prove (or defeat) the interstate element in digital cases, and how to charge contempt in the ordinary course. As such, it will shape both the charging decisions and trial proofs in financial-fraud cases across the circuit.