Corruption of Ethics: Domestic Bribery of Public Officials: Honest Services Fraud

Article excerpt


There is a broad general consensus that governmental ethics are viewed as a pillar of democracy, and corrupt behavior can threaten democratic institutions.^sup1^

This article picks up where an excellent article titled Can You Put a Price on Corruption? The Future of Honest Services Fraud, co-authored by Lara L. Kessler, Ryan J. Hunt, and William Mawer, and published in this publication in 2012,^sup2^ left off. The authors addressed the honest services mail fraud statute^sup3^ and the United States Supreme Court's ruling in Skilling v. United States^sup4^ in which the United States Supreme Court held that the honest services fraud statute would only apply where there had been actual bribery or a kickback. That ruling effectively put a stop to the efforts of U.S. Attorneys to utilize the honest services fraud statute to criminally prosecute traditional breaches of fiduciary duties in non-governmental, private business situations where the conduct involved undisclosed conflicts of interest.^sup5^ Where the statute was the DOJ's primary weapon used to address both public corruption and private breaches of fiduciary duties in business settings,^sup6^ with the Skilling ruling, its use in private fiduciary duty settings, absent traditional schemes to defraud, bribery, or kickbacks, was effectively diminished.^sup7^

Therefore, absent any corrective legislation by Congress,^sup8^ for now, the focus under the honest services fraud statute must be on the types of questions traditionally raised in fraud cases, but with a specific focus on bribery and kickbacks in the public corruption context, both state and federal.^sup9^ A primary question is how the courts will develop the concept of bribery and kickbacks in the context of the honest services fraud statute.^sup10^

The focus of the authors' article was on the effect of the Skilling ruling and how, and in what circumstances, the statute would be applied after that ruling. What the authors did not have an opportunity to address was the subsequent focus by the courts on the definition of bribery in public corruption settings, what that concept would mean in the new post-Skilling world, and how that concept would be adapted to the honest services fraud concept.^sup11^ This article, therefore, builds on their excellent work and addresses those issues

At the end of their analyses, the authors in the above article asked: " What Does the Ruling in Skilling Mean for the Future?"^sup12^ Two recent decisions that have provided a partial answer by addressing bribery under the honest services fraud statute^sup13^ in public corruption situations when First Amendment values are at stake, are the recent Sixth Circuit's decision in United States v. Terry,^sup14^ and the District of Columbia Circuit's decision in United States v. Ring.^sup15^ Terry Involved bribery in connection with campaign contributions. Ring involved bribery in connection with lobbying activities.^sup16^ An earlier opinion involving the convictions of former Alabama Governor Don Siegelman and Richard Scrushy,^sup17^ and a 2012 opinion from the United States District Court for the Middle District of Alabama, United States v. McGregor,^sup18^ also provide the present context to help answer the authors' question. The Siegelman case involved bribery in a political issue campaign. The McGregor case involved bribery of public officials to get certain legislation passed. In the McGregor case, the thoughtful writing of Judge Myron Thompson on the issue of the meaning of bribery and the concept of a quid-pro-quo in the campaign contribution setting is extremely instructive.

While there were multiple issues in all of these cases, the issue with which this article deals is the courts' definition of bribery under the honest services fraud statute in a public corruption setting where First Amendment issues are at stake, the question of the whether there must be a quid-pro-quo proven under that statute and, if so, whether it must be stated or whether it is sufficient under if the quid-pro-quo is implicit. …


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