In a 5-4 decision, the court upheld the fraud convictions for three men accused of sneaking thousands of cases of whisky, vodka and rum into Canada from the United States and avoiding millions of dollars in Canadian taxes. Canada did not pursue the trio for tax evasion, but American prosecutors did and the three were sentenced to prison.

The U.S. wire fraud law bars the use of interstate wires, such as phones and computers, to carry out ''any scheme'' to defraud. Justices ruled U.S. prosecutors can use the law to pursue charges when a scheme involves defrauding foreign governments, which are barred from using American courts to collect lost revenues.

''It may seem an odd use of the federal government's resources to prosecute a U.S. citizen for smuggling cheap liquor into Canada,'' Justice Clarence Thomas wrote for the majority. ''But the broad language of the wire fraud statute says so.''

Chief Justice William Rehnquist was the deciding vote in upholding the convictions. He had said he would only vote on cases argued in November - when he was absent from the court while being treated for thyroid cancer - if there was a 4-4 deadlock. He read filings in the case to get caught up on the issues.

Justices John Paul Stevens, Sandra Day O'Connor and Anthony Kennedy also joined the majority opinion.

In a dissent, Justice Ruth Bader Ginsburg argued that U.S. courts have no place enforcing the tax laws of a foreign country, particularly when it chooses not to pursue prosecution.

''Today's novel decision is all the more troubling for its failure to take account of Canada's primary interest in the matter at stake,'' she wrote, noting that U.S. defendants could have been extradited to stand trial in Canada.

''Canadian courts are best positioned to decide whether, and to what extent, the defendants have defrauded the governments of Canada and Ontario out of tax revenues owed pursuant to their own, sovereign, excise laws,'' Ginsburg said.

She was joined in her dissent by Justices Stephen Breyer, Antonin Scalia and David Souter.

The U.S. government contends two brothers headed an operation that shipped about 40,000 cases of liquor from stores in Maryland to the black market in southern Ontario, from 1996 to 2000, avoiding nearly $6 million in taxes.

A third man was accused of being a carrier.