The square-peg fraud is a kind of case that until very recently enjoyed the widespread support of prosecutors, jurists, and the general public. Rather than punishing a scheme that rids a victim of her money or property, the square-peg prosecution has long focused on deprivations of intangible property. For years, enforcement actors have employed this concept to pursue innumerable varieties of corruption.

Nowhere has the square peg been more essential than in the government’s prosecution of higher education scandals. From the Varsity Blues parents who wrongfully secured elite college slots for their children, to the business school dean who shaped certain facts to inflate his school’s U.S. News ranking, the government has relied on various intangible property “hooks” to shove highly specific fact patterns within fraud law’s boundaries.

The aim of this Essay is to explore this square-peg phenomenon and highlight one of the less-explored reasons for being wary of it, which is its expressive effect. Whatever its benefits, the square-peg prosecution conveys counterproductive signals about victimhood, which stymie the movement towards deeper, systemic reforms.

One of criminal law’s strongest justifications is that it conveys a moral lesson. In the higher education context, however, the square peg perverts that lesson. To show a loss of property in the Varsity Blues cases, prosecutors denominated universities and standardized testing companies as “victims,” notwithstanding their moral complicity in an admissions system that is only superficially meritocratic. To establish an actionable property loss in the rankings fraud case, the government’s case treated the U.S. News graduate school rankings as a reliable arbiter of value. Not only are these narratives questionable, but they also promote the very competitive, winner-take-all attitude that undergirds higher education’s corruption problem.

Recent decisions by the Supreme Court and First Circuit might well dampen the appetite for intangible property fraud prosecutions. But there will always be new theories and new square pegs. Accordingly, we would all do well to take note of the square peg’s drawbacks. Using higher education as its exemplar, this Essay sets us on that path.

This contribution revives an autobiographical genre present in law reviews roughly a half-century ago, in which seasoned legal practitioners offered perspective on vital issues. Here, a senior deputy attorney general, a former federal prosecutor, a corporate defense attorney, and a legal aid lawyer each draw on their career experience to explore what they see as significant problems related to the law of consumer and investor fraud and the nature of consumer and investor trust. Their reflections emphasize the significance of law in action—how key actors seek to deploy legal mechanisms related to fraud and adjust their strategies in light of institutional changes, with powerful implications for legal culture and the practical workings of the legal system. They also offer sometimes conflicting recommendations for how American law might better respond to the enduring, thorny problem of deception in marketplaces. The practitioners all agree about the importance of leveraging data analytics to focus attention on the most problematic practices and firms, as well as the need to design disclosure rules that take behavioral realities into account. But there is instructive disagreement about the extent to which current rules appropriately balance the capacity of individuals who have experienced fraud-related harms to gain redress, against the imperative of shielding innocent firms from abusive allegations of wrongdoing. A brief analytical introduction emphasizes the advantages of an ethnographic approach as a means of understanding both positive and normative dimensions of fraud law.

In health care, trust is a foundational concept. Patients must trust that their medical practitioners are competent to treat them. The trustworthiness of medical practitioners encourages patients to disclose intimate facts about their medical issues. Further, patients must trust health care providers to demonstrate impartial concern for the patients’ well-being, also known as fidelity. In providing care, the needs of the patients, rather than financial incentives, must drive medical practitioners. Without this trust, patients may not cooperate with diagnosis and treatment. In addition to trusting providers, care outcomes are better if patients trust the health care system as a whole.

This Essay examines the importance of the government’s role in building and maintaining trust in health care providers and the health care system. Due to programs such as Medicare and Medicaid, the government is a “participant-payer” in the health care system as well as a “regulator-enforcer” of the system. As regulator-enforcer, the government has many laws and regulations aimed at promoting trustworthy conditions between patients, health care providers, and the health care system. For example, the Anti-Kickback Statute prohibits all health care providers that participate in federal health care programs from benefitting financially from referrals to other providers. It is a criminal law that has substantial penalties attached to it.

While the government’s efforts to promote trustworthy conditions as regulator-enforcer are not without criticism, most of the focus has been on the government’s failure (as participant-payer) to design a payment system that properly incentivizes health care providers to deliver cost-efficient quality care that prioritizes the well-being of patients. Historically, Medicare and Medicaid have used a fee-for-service reimbursement mechanism which reimburses providers for every item or service provided. This incentivizes providers to increase the volume of care, which drives up the costs of providing health care without improving patient outcomes. Thus, fee-for-service reimbursement misaligns the incentives of providers because it serves as an enticement for providers to put their financial aspirations above their patients’ well-being.

The government’s newest reimbursement method—value-based reimbursement—requires the government to pay for outcomes rather than volume of services. With value-based reimbursement, providers take on financial risk based on the quality of care they provide. Value-based reimbursement promotes relationships between providers and continuity of care. Thus, it also has the potential to increase trust in health care providers and the system as a whole because it takes away some of the improper financial incentives inherent in fee-for-service reimbursement.

While value-based reimbursement is promising, it carries its own fraud risks, such as manipulation of quality data, which are not currently addressed by the fraud and abuse laws. This Essay maintains that if value-based reimbursement is going to be successful at realigning incentives, the government as regulator-enforcer must enact criminal fraud laws and regulations to address the fraud risks in value-based reimbursement. Without assurance that the government is closely monitoring fraud and protecting the interests of patients, patients may not trust value-based reimbursement which could ultimately undermine trust in providers and the health care system.