In the case of Stewart et al. v. United States, 1941, the Supreme Court ruled on a matter involving conspiracy to defraud the U.S. government by impeding and impairing its lawful functions. The defendants were charged with conspiring to sell distilled spirits without paying taxes or obtaining permits required under federal law, thereby defrauding the government of tax revenue and obstructing its regulatory authority over alcohol production and distribution. The key issue was whether such conduct constituted a "conspiracy to defraud" within the meaning of Section 37 (now Section 371) of the Criminal Code. In their appeal, they argued that this provision only applied when there was an intent to cause financial loss or property damage. However, in a unanimous decision written by Justice Felix Frankfurter, it held that "defraud" in this context had broader implications than just causing pecuniary or property loss—it also encompassed any scheme designed to interfere with or obstruct one of its lawful governmental functions by deceitful means. Therefore, even though no actual financial harm may have been intended or occurred as a result from their actions—their intention alone sufficed for conviction under Section 37.

In the dissenting opinion for Stewart et al. v. United States, Justice Frank Murphy argued that the majority's decision was a departure from established legal principles and an unwarranted expansion of federal power over state affairs. He contended that the defendants' actions did not constitute a conspiracy to defraud the United States because they had no intent to cause financial or property loss to the government; rather, their aim was merely regulatory evasion which should be punished under appropriate state laws instead of being federally prosecuted as frauds against U.S. The justice also expressed concern about potential misuse of such broad interpretation in future cases where individuals might be unfairly charged with conspiracies based on minor violations of administrative regulations or policies without any actual harm done to national interests.