In the 1961 case of Hartman v. United States, the Supreme Court ruled on whether a taxpayer could deduct losses from a fraudulent investment scheme as theft under federal tax law. The petitioner, Hartman, had invested in an oil lease deal that turned out to be fraudulent and sought to claim his financial loss as a deduction for theft loss under section 23(e)(3) of the Internal Revenue Code. However, both lower courts denied this claim arguing that there was no proof of criminal intent by those who sold him the leases since they were not convicted or even charged with any crime related to fraud. The Supreme Court reversed these decisions stating that it is not necessary for someone to be criminally charged or convicted in order for their actions to constitute theft under federal tax law. Therefore, if Hartman could prove he was defrauded - which would count as 'theft' - then he should be allowed his claimed deductions.

In the dissenting opinion for Hartman v. United States, Justice Hugo Black argued that the majority's decision to uphold Hartman's conviction was a violation of his Fifth Amendment rights. He contended that the government had used illegally seized evidence against him and thus, it should have been excluded from trial under the exclusionary rule established in Weeks v. United States (1914). Furthermore, he criticized the majority for creating an exception to this rule by allowing such evidence when it is not directly but indirectly obtained as a result of illegal actions by law enforcement officials. In his view, this would only encourage more violations of constitutional rights by police officers who could now bypass legal procedures with impunity knowing that any indirect evidence they obtain can still be used in court despite being initially procured unlawfully.