Mimesis Law
17 October 2017

Fed Prosecutor’s Peculiar Concern Over Virginia’s Robert McDonnell’s Honest Services

Apr. 26, 2016 (Mimesis Law) — Politics is drama. Like any good drama, we create characters we can root for and against. We want good guys and villains, and the media finds ways to oblige us. Political scandals are opportunities to unmask old characters as villains, while building up some new good guys at heroes, to then later bring down with yet newer good guys and so on, ensuring that the news cycle never stops.

But there are gradations of political scandals. Ones that involve incompetence, sexual affairs, and the cover-up of affairs are generally forgivable. Yet, a politician having a love child can break either way. Keeping a cellar wife was acceptable once but would be unacceptable now. (Right?) Nepotism is so common that we barely hear about it, unless attached to something much bigger. Solicitation for gay sex is a career-ender, but heterosexual prostitution mostly gets a pass.

But the one sure fire way to end a political career in a blaze of glory is through bribery and kickbacks. Of course, the government accusing a politician of taking kickbacks and bribes is almost as good as proving it—no matter how legally plausible those accusations may be in truth.

Former Virginia Governor Robert McDonnell discovered that the feds take an expansive view of bribery and kickbacks, particularly when state elected officials are involved. McDonnell was convicted on federal fraud and theft charges arising out of his relationship with a business owner. Besides the obvious drama flowing from the take down of a major political figure and a pending Supreme Court case, this case brought the NACDL, Republican Governors Policy Committee, and 77 state attorney generals together on the same side of the case. That’s something you don’t see every day.

According to the Government, when McDonnell became governor, he and his wife had $75,000 in credit card debt, which kept growing. That, along with his bad business debt, forced McDonnell to borrow $160,000 to stay afloat. Without the benefit of reading any trial transcripts, it’s a fair guess that this was the motive provided for why McDonnell would accept so-called bribes from Jonnie Williams.

Williams had a new drug for which he wanted FDA approval, but because of the great expense in getting FDA approval, Williams came up with the idea of having Virginia medical schools do the studies on the cheap. And Williams apparently thought having a supportive governor couldn’t hurt him. So, Williams showered cash and prizes on McDonnell and his wife to the tune of $175,000, including designer clothes and the use of a private jet.

Although the McDonnells apparently feathered their nest by benefit of their public office, which obviously looks quite bad, none of these gifts appeared to run afoul of state law. The fact that all the received gifts were likely lawful under state law alone makes federal prosecution curious. After all, the citizens of Virginia are the ones most likely to be harmed through improper influencing of their public officials. Unpersuaded that the citizens of Virginia know how to run their own state, the feds charged McDonnell with 11 counts of honest-services wire fraud and Hobbs Act violations.

If the term honest-services fraud sounds familiar, then you might be thinking of Jeffery Skilling and Conrad Black, who won a couple cases at the Supreme Court a few years ago. At issue in Skilling’s case was that the honest-services wire fraud statute was unconstitutionality vague. At issue was a very short statute that says “For the purposes of this chapter, the term “scheme or artifice to defraud” includes a scheme or artifice to deprive another of the intangible right of honest services.” If you’re asking yourself, “what does intangible right of honest services mean,” then congratulations! You’re as qualified as anyone in Congress to write federal criminal law, because no one can really say.

The theory behind this statute is that in regular sorts of frauds, like where grandma transfers increasingly large sums to a fraudster who convinced her it was necessary, is that there is symmetrical gain and loss. The criminal gains in roughly the same amount as grandma loses. The theory behind honest services fraud, that public officials can take actions that inure to both their own personal benefit and the general public benefit but without a pure heart of pursuing virtue for its own sake. So, the public still gets as good of a contract as they would have otherwise received, but the mayor received a bribe to make it happen.

But Congress did not write a bribery statute that only applied to public officials; they wrote an honest-services statute that could snag anybody. And the statute was not written narrowly to cover only bribery and kickbacks. So, without the additional judicial gloss, it’s is really impossible to know what “honest services” means, or the limits of the statute. Though, in true Roberts Court fashion, the Court avoided ruling the statute unconstitutional by limiting its application to bribery and kickback cases.

Justice Scalia, God rest his soul, writes that this judicial re-write of the statute was wrong:

Thus, the Court’s claim to “respec[t] the legislature,” ante, at 45, n. 44 (emphasis deleted), is false. It is entirely clear (as the Court and I agree) that Congress meant to reinstate the body of pre-McNally honest-services law; and entirely clear that that prohibited much more (though precisely what more is uncertain) than bribery and kickbacks. Perhaps it is true that “Congress intended § 1346 to reach at least bribes and kickbacks,” ante, at 44. That simply does not mean, as the Court now holds, that “§ 1346 criminalizes only” bribery and kickbacks, ante, at 45.

Arriving at that conclusion requires not interpretation but invention. The Court replaces a vague criminal standard that Congress adopted with a more narrow one (included within the vague one) that can pass constitutional muster. I know of no precedent for such “paring down,”[fn3] and it seems to me clearly beyond judicial power. * * *

I certainly agree with the Court that we must, “if we can,” uphold, rather than “condemn,” Congress’s enactments, ante, at 38. But I do not believe we have the power, in order to uphold an enactment, to rewrite it. Congress enacted the entirety of the pre-McNally honest-services law, the content of which is (to put it mildly) unclear.

This was the legal landscape that existed when the feds began their prosecution of McDonnell. Because now the honest-service fraud statutes were limited to bribery and kickbacks, the feds imported the bare essentials of the federal bribery statute, which ordinarily only applies to federal officials. This meant they could win if they showed McDonnell received something in exchange for an official act. Although they had no trouble figuring out the things that both McDonnells received from Williams, the official acts aspect of the case required more, um, creative thinking.

The federal prosecutors argued that there were five instances of official conduct. This conduct was arranging meetings, asking questions, and attending events. That’s some really light work for $175,000, but that was the prosecution’s case.

In essence, the honest services fraud here was the former Governor did the types of symbolic and political things he ordinarily does, but he would not have otherwise have done those innocuous things for Williams but for the gifts Williams gave. While that’s probably true, the larger question of whether those small deeds should be considered official acts, particularly in the honest services context.

Putting aside the obvious federalism question that the Supreme will probably drive over like a pathetic speed bump, there is a real question about whether receiving gifts that caused a politician to give special access to and social favors should be criminal. After all, if you have a political system, then you have to accept politics will necessarily happen. As one amici writes, these actions are extremely common and without greater statutory guidance there is almost limitless discretion to prosecute any politician.

In that regard, the state AGs argue further that an ‘official act’ must require official action on a particular matter.  And that some level of formality is required rather than merely attending a meeting. Plus, presumably it would need to be a meaningful action. Another example that comes to mind are politicians giving honorary titles and appointments, such as a Nebraska Navy Admiral or meaningless proclamations to donors.  Under the federal prosecutor’s theory such an act could be honest-services fraud.

Moreover, as McDonnell points out, the honest services statute does not, itself, define or require official acts, which come from a statute that does not apply to state actors. So, to prosecute this conduct, the federal prosecutors borrow a vague term from an inapplicable statute to satisfy the Supreme Court’s judicial re-write of a different, otherwise unconstitutionally vague statute. All to protect the people of Virginia from the harm they themselves do not believe they suffered. America, what a country!

Bribery of state officials is usually a state matter. While it’s entirely understandable that the federal government would want to prosecute corrupt officials in addition to the state, it’s much more difficult to understand federal prosecutions in spite of the state. This is especially so if there is no harm to the federal government, e.g. the misuse of federal funds. Sometimes the states make policy decisions with which the feds or other states do not agree, and the offended governments are powerless to do anything about it. But that’s not a bug of the federal system; it’s a feature.

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