[1] In order to avoid paying Canadian excise tax on imported alcohol, they hired individuals to smuggle the liquor over the border by automobile.

[1][4] The Federal Bureau of Alcohol, Tobacco, Firearms, and Explosives learned about the smuggling operation and investigated,[5] leading to the arrest of the Pasquantinos and their associates.

[1][3] The statute prohibits using wires, radio, or television to conduct "any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises.

[8] The Fourth Circuit initially vacated the convictions[8] in a 2-1 panel decision, deciding that the prosecutions violated the common law revenue rule.

[10] According to the Restatement (Third) of Foreign Relations Law of the United States, the "revenue rule" means that “[c]ourts in the United States are not required to recognize or to enforce judgments for the collection of taxes, fines, or penalties rendered by the courts of other states.”[11] The panel reasoned that the prosecutions violated the rule because they required U.S. courts to interpret and enforce foreign revenue law.

[13] The Second Circuit had held the revenue rule inapplicable, and that prosecutions for operations to defraud foreign government are not barred by the federal wire fraud statute; the First Circuit had vacated such convictions, reasoning that the convictions were penal enforcement of foreign laws and ran afoul of underlying purposes of the common law revenue rule.