Academic journal article St. Thomas Law Review

How Consolidating the Circuits Would Have Defined the Borders of Honest Services Fraud

Academic journal article St. Thomas Law Review

How Consolidating the Circuits Would Have Defined the Borders of Honest Services Fraud

Article excerpt



Between 1990 and 1997, the Mayor of Chicago's Office of Intergovernmental Affairs ("IGA") ferreted out over 5,000 patronage civil service jobs to many of the mayor's cronies. (2) The IGA served as a liaison between the city of Chicago and the state and federal governments, and was not meant to serve any role in the hiring of the city's 37,000 jobs. (3) Robert Sorich, the Assistant to the Director of the IGA, relayed certain names received from campaign coordinators to various governmental department heads. (4) The heads then conducted mock interviews and filled out false forms, hiring the persons submitted regardless of merit. (5) Sorich, among others, was charged and convicted of several counts of mail and wire fraud under [section][section] 1341, (6) 1343, (7) and 1346 (8) of the United States Code.

By way of introduction, the government must prove several elements to sustain a conviction of mail and wire fraud: (1) a scheme or artifice to defraud, (2) intent to defraud by the defendant, and (3) use of the mails in furtherance of the scheme. (9) A scheme or artifice to defraud could encompass two different theories, both of which the government used to convict Sorich. The first, or traditional theory, is when the defendant perpetrates a fraud intended to deprive a person of money or property. (10) The second theory is when a defendant perpetrates a fraud intended to deprive a person of the intangible right of the defendant's honest services as a public official, also termed "honest services fraud." (11) By its terms, honest services fraud requires a breach of fiduciary duty between the public official and the person or persons deprived of honest services. (12)

During Sorich's trial, the court instructed the jury that it could find honest services fraud where there is "an intent 'to deprive a governmental entity of the honest services of its employees for personal gain to a member of the scheme or another.'" (13) On appeal to the Seventh Circuit, Sorich's two-fold argument centered on this instruction. First, he argued that his conduct did not amount to honest services fraud because (1) the "private gain" requirement of the Seventh Circuit (14) required that "another" be a co-schemer, and (2) he did not misuse his office for any private gain since the jobs were ill gotten by others. (15) Alternatively, Sorich argued that if a non-schemer could satisfy the private gain requirement then [section] 1346 lacked any notice of what activity was criminal and was therefore void for vagueness. (16) Additionally, Sorich argued that the government had failed to show that any fiduciary duty between him and the people of Chicago and that only state law could provide such a duty. (17)

The Seventh Circuit rejected all of Sorich's arguments and held that "'private gain' ... simply mean[s] illegitimate gain, which usually will go to the defendant, but need not." (18) In its reasoning, the court pointed to several past examples of mail fraud convictions where defendants did not receive private gains. (19) Surprisingly, the court upheld these examples as legitimate exercises of [section] 1346 because of their rarity, reasoning that, because most schemes to defraud directly benefit the schemers, honest services fraud would not become unlimited and consequently unduly vague. (20) Furthermore, the court reasoned that the focus of the private gain requirement was not on who received the spoils of the fraud, but in parsing out those actionable breaches of a fiduciary duty that come from misuse of a public office or position. (21) To the court, that focus clearly defined the boundaries of [section] 1346, which should have put Sorich on notice that his job scheme was a clear abuse of his office and probably illegal. In addition, concerning the state-law limiting principle, the court held that no state law was required in creating a fiduciary duty because "merely by virtue of being public officials the defendants inherently owed the public a fiduciary duty to discharge their offices in the public's best interest. …

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