Prosecutors gone wild
About the only thing more dangerous in criminal law than an imaginative prosecutor is a lazy Congress.
In 1987, the Supreme Court dealt with a case involving a law dating back to 1872, making it a crime to use the mails to carry out a fraud. A Kentucky official, James Gray, and a private individual, Charles McNally, had combined to channel state workers compensation insurance commissions to a company controlled by McNally and owned by Gray. The prosecutors couldn't show that the state had lost any money as a result of this, and instead argued that it deprived the citizens of Kentucky of their right to honest government. The Supreme Court tossed the conviction, holding that the statute "does not refer to the intangible right of the citizenry to good government." A year later, Congress effectively overruled the decision by passing Section 1346 of the criminal code, defining "scheme or artifice to defraud" to include "a scheme or artifice to deprive another of the intangible right of honest services."
There's no end to the mischief that has resulted from that. Congress spent little time debating the law, and less defining its terms. As a result, the circuit courts have spent the last two decades filling in the blanks in the law, with varying results. The 5th Circuit says that the statute criminalizes only a deprivation of services that's unlawful under state law, but most of the other circuits have disagreed. In the 7th Circuit, the prosecutor has to show that the defendant obtained some "private gain" from his conduct; other circuits have held that's not an element. Some courts have held that a breach of fiduciary duty is required; others have held the contrary. The statute pertains not only to public officials, but to private conduct as well.
The result is a carte blanche for creative prosecutor. You might be committing a federal crime if you tell your employer you're sick so you can play hookey and go to a ballgame. That's not as outlandish an example as it might appear. Two years ago a Wisconsin official was convicted under the statute for recommending a travel agency for a state contract because she believed it would benefit the governor's campaign for re-election. The court of appeals was so astounded by the result that it reversed the conviction and ordered the woman released twenty minutes after it heard oral argument in the case.
This year, the Court is confronting no fewer than three cases involving the honest services statute. Two were argued last week. Black v. US involves Conrad Black's conviction for some finagling with his financial compensation package at a company he owned. Weyhrauch v. US is an offshoot of Alaskan Sen. Ted Stevens' corruption trial; Weyhrauch is alleged to have traded his vote in the Alaskan House for a future job with an oil services company.
Much of the argument focused on the intricacies of the statute: Black's lawyer argued that the law should require some proof of economic harm, while Weyhrauch's attorney contended that the fact his client didn't violate any state disclosure laws should have precluded conviction. But foremost on the justices' minds seemed to be the constitutional issue: that the law was so vague it could comprehend virtually any activity. Justice Breyer probably focused on the issue most directly:
Every agent has a duty of loyalty to provide loyal and honest services to the master. . . Every worker is an agent of his master, the employer. So every instance in which a worker does not provide honest services to the employer, he has met your test [for prosecution]. I think there are 300 -- perhaps there are 150 million workers in the United States. I think possibly 140 of them would flunk your test.
Interestingly, the constitutional issue wasn't squarely presented in the two cases last week, but it is the centerpiece of the briefs that were filed last week in the third case, involving Jeff Skilling, the prize catch in the Enron prosecutions. Oral argument isn't scheduled for that case until March, though, and so there's some question as to how the Court might want to handle that: call for rebriefing on Black and Weyhrauch? Wait to issue a decision in those cases until after Skilling is argued?
Whatever course the Court takes, it's likely that the "honest services" statute will get a major makeover, if not a complete gutting. That's all to the good. As we residents of Cuyahoga County have learned over the past year or so, there's certainly no dearth of public corruption, and there would be no small measure of satisfaction among us if those who supped overlong at the public teat got their comeuppance.
But it appears that there's a price to be paid for that, and the price is rampantly overzealous prosecutions, and downright dishonest ones. The prosecution and conviction of former Alabama Governor Donald Siegelman has since raised so many questions that more than fifty state attorneys general, many of them Republicans, signed a petition asking that Congress investigate the prosecution and trial. The topper was when the federal judge who had presided over Sen. Stevens trial not only dismissed the charges because of prosecutorial misconduct, but ordered an investigation of the prosecutors to determine whether they themselves should face charges.
Although it appears that the window for charging them with honest services fraud is rapidly closing.