Ocasio v. United States: The Supreme Court Confronts the Blurred Line between Bribery and Extortion

May 2, 2016 Update: Today, in a 5-3 decision, the Supreme Court upheld Ocasio’s conviction and the theory of Hobbs Act conspiracy under which he was prosecuted. I’ll have more to say about the opinion in a post next week.

Sometimes the Supreme Court confronts a statutory interpretation question that sounds just a little too strange to be true. Last term, in Yates v. United States, the Justices grappled with whether a fish is a “tangible object.” This year in Ocasio v. United States the issue is: can you agree to extort money from yourself?

Ocasio involves a rather obscure legal debate over the proper interpretation of the Hobbs Act.   But it’s also an interesting study in what can happen when the chickens hatched by a questionable Supreme Court decision come home to roost more than 20 years later.

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Ocasio v. United States

Samuel Ocasio was a Baltimore police officer. For several years Ocasio and a number of other police officers were involved in a corrupt scheme with the owners of a garage called Majestic Auto Repair. When officers arrived on a car accident scene, they would refer the drivers involved to Majestic for any necessary repairs. In return, the owners of the garage would pay the officer $150 to $300 for each referral. Ultimately about sixty officers took part in this scheme, which accounted for the vast majority of Majestic’s business.

When the scheme was discovered Officer Ocasio, a number of other police officers, and the owners of Majestic were all indicted under the Hobbs Act. The owners and most of the other police officers took plea deals; Ocasio went to trial and was convicted on three counts of violating the Hobbs Act and one count of conspiracy to violate the Hobbs Act.

The Hobbs Act, 18 U.S.C. § 1951, prohibits interfering with interstate commerce by extortion, which is defined as the “obtaining of property from another, with his consent, induced by wrongful use of actual or threatened force, violence or fear, or under color of official right.” Hobbs Act extortion is frequently charged in federal prosecutions of state and local corruption. Because the federal bribery statute, 18 U.S.C. § 201, generally applies only to federal public officials, federal prosecutors pursuing bribery on the state and local level must use a different theory. Hobbs Act extortion under color of official right is a common choice.

I wrote about Hobbs Act extortion under color of official right in this earlier post discussing the use of that charge in the prosecution of former Virginia Governor Bob McDonnell. As I noted there, when applied to public corruption the Hobbs Act is a strange statute, thanks largely to a 1992 Supreme Court case called Evans v. United States.

Evans and the Meaning of Extortion

Evans, a county commissioner in Georgia, was convicted of extortion under color of official right for accepting money in exchange for a favorable zoning decision. He argued that he could not be found to have “induced” the payment within the meaning of the Hobbs Act unless he took some affirmative steps to seek out and request that payment. Extortion, he argued, typically connotes some kind of “shakedown” by the public official, and at a minimum requires more than simply the passive acceptance of a payment that he did not request.

The Supreme Court rejected Evans’ arguments and upheld his conviction. The majority reviewed the history of the crime of extortion and concluded that at common law extortion under color of official right was “the rough equivalent of what we would now describe as ‘taking a bribe.’” There was no requirement that the public official actively seek out or demand the payment, as long as he accepted a payment knowing that it was in exchange for some official act.

Justice Thomas dissented, joined by Justice Scalia and Chief Justice Rehnquist.   He disagreed with the majority’s historical analysis and argued that extortion under color of official right occurred only when a public official sought a payment under the pretense that he was entitled to it by virtue of his office. He argued that bribery and extortion had always been distinct crimes and that the majority’s decision effectively obliterated that distinction.

In particular, the dissenters noted, in a bribery case both sides – the bribe payer and the bribe recipient – are guilty parties to a corrupt deal. Bribery laws such as the federal bribery statute accordingly punish both sides of the bribe transaction. But in extortion, typically only the public official is charged. The person who pays the official does so under some kind of duress; they are considered a victim, not a willing participant.

Extortion under color of official right applies only to public officials, and on its face the Hobbs Act does not prohibit the payment of the extortion. What Evans left behind, therefore, was an oddity probably unique in criminal law: a statute that prohibits bribery but only punishes one side of the bribe transaction. More than two decades later, the implications of that decision led to the dispute that landed before the Supreme Court in Ocasio.

For purposes of this discussion it’s useful to distinguish two different kinds of extortion by a public official. In what we could call “classic extortion,” the official demands payment or “shakes down” the payer. The victims pay unwillingly and because they believe that, if they don’t, the official will abuse his or her authority to harm them in some way. An example would be a police officer who demands “protection” payments from the store owners on his beat, or a building inspector who lets contractors know that he will not act on their permits or inspections unless he is paid an “expediting fee.”

On the other end of the spectrum is what we might call “Evans extortion.” This includes cases, like Ocasio, where the conduct appears to be straight-up bribery. The payer is an eager and willing participant in a corrupt deal, enriching the public official in exchange for some exercise of official power that will benefit the payer. Evans held that a public official engaged in such a typical bribery transaction may be charged with extortion under color of official right.

In cases of “classic extortion,” where the public official is shaking down an unwilling payer, charging only the public official side of the transaction is perfectly appropriate. But in “Evans extortion” cases like Ocasio, where the payers are willing participants and are equally culpable, prosecutors face a dilemma: since the Hobbs Act is only a one-sided bribery prohibition, how can the bribe payers be charged?

Once Evans declared extortion under color of official right to be equivalent to bribery, it was inevitable that prosecutors in at least some cases would seek a way to charge the other side of that bribery transaction. And that brings us to the issue before the Court in Ocasio.

The Hobbs Act and the Facts of Ocasio

The owners of Majestic were at least as culpable as the police officers, but as we’ve just seen, prosecutors could not charge them directly with extortion under color of official right. Instead, they indicted the garage owners and Officer Ocasio for conspiracy to violate the Hobbs Act, charging that the owners conspired with Ocasio to extort money under color of official right from the garage owners themselves.

This is, at the very least, a linguistically awkward and rather inelegant theory. How could the garage owners be both victims of extortion and co-conspirators in the commission of that same extortion? Or put another way, how could the garage owners conspire to help extort money from themselves?

Ocasio’s lawyers argue that they couldn’t. The Hobbs Act definition of extortion requires that the public official obtain property of “another.” In the context of a conspiracy, they argue, this must mean that the conspirators agree to obtain property from someone outside of that conspiracy. If the co-conspirators are simply agreeing to exchange property among themselves, as in Ocasio’s case, then they are not obtaining property of “another” within the meaning of the statute.

The government responds that the theory behind Ocasio’s prosecution is simply textbook conspiracy law. It’s settled that someone can be guilty of conspiracy to commit a crime even if they couldn’t actually commit all elements of the underlying crime themselves. In a conspiracy the crime is the agreement to work together to further a criminal goal, and you can do that even if you couldn’t actually commit the crime on your own.

In Ocasio’s case, the government argues, it’s true that the garage owners themselves could not commit the crime of extortion under color of official right. But they could conspire to help Ocasio commit it. Only Officer Ocasio needed to obtain property of “another” – and that simply means someone other than Officer Ocasio. In this case, the “anothers” were his co-conspirators, the garage owners, who agreed to help Ocasio commit the crime.

I don’t know how the Court will come out, but I do think the fact that the government has to go through such linguistic gymnastics to frame a charge against the payers in a bribery case highlights that Evans was a dubious interpretation of the Hobbs Act.

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The Supreme Court Arguments

At the oral argument on October 6, Justice Kagan appeared to be siding with the government, while Justice Scalia (one of the dissenters in Evans) seemed sympathetic to Officer Ocasio’s position. Presumably Justice Thomas, who wrote the Evans dissent, also would agree that a bad decision should not be made even worse and would side with Ocasio. The other Justices were much more difficult to read.

Officer Ocasio has some support from those concerned about over-criminalization and possible overreach by federal prosecutors. For example, a group of former United States Attorneys filed an amicus brief arguing that the conspiracy charge was an unjustified expansion of the Hobbs Act and that the Court should reign in the prosecutors. They argued that upholding the government’s theory would result in a dramatic expansion of federal criminal jurisdiction over state and local bribery (which was, by the way, the same argument made by the Evans dissent). The National Association of Criminal Defense Lawyers filed a brief making similar arguments.

Arguments about over-criminalization and out-of-control prosecutors are popular these days, but I think in this case they have little force. No one suggests that the owners of Majestic were not blameworthy or did not deserve to be prosecuted. And although it’s true that if this prosecution is upheld then any state or local bribery case is a potential federal crime, that’s hardly a new or unprecedented development.

There are many ways for federal prosecutors to charge state and local bribery. Honest services mail and wire fraud apply to bribery and kickback schemes, and that theory almost certainly could have been used in Ocasio to charge both the officers and the garage owners. The Travel Act also applies to state law bribery and would be another potential charge. It’s even likely that prosecutors could have named Majestic as a RICO enterprise and indicted everyone for violating RICO based on a pattern of state-law bribery.

The argument that the government’s Hobbs Act theory in Ocasio would represent some kind of unprecedented expansion of federal criminal jurisdiction doesn’t hold water. If the primary concern is allowing federal prosecution of state or local corruption, that ship sailed long ago. If Ocasio’s conviction is overturned the lesson will be not that federal prosecutors can never pursue state and local bribery, but simply that they should use something other than the Hobbs Act.

Rather than arguments about federalism or overzealous prosecutors, I think Officer Ocasio’s strongest arguments are: 1) Evans should be considered the high-water mark for expansive readings of the Hobbs Act; even if we think Evans was rightly decided – and especially if we don’t – the Court should not make the situation worse by expanding the Hobbs Act even further; and 2) when Congress wants to criminalize state and local bribery, it knows how to do it and does so explicitly in statutes like the Travel Act, RICO, and 18 U.S.C. § 666. There’s no indication that Congress meant to do so with the much more general language of the Hobbs Act. And because this is a criminal case, any doubt or ambiguity should be resolved in Ocasio’s favor.

The strained interpretation of the Hobbs Act in Evans made it inevitable that one day the Court would have to confront the implications of what it had wrought. It will be very interesting to see what the Justices have to say now about the statutory dilemma that Evans created.  The decision is expected no later than next June.

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Rod Blagojevich, Bob McDonnell, and the Nature of Corruption

What’s the line between “politics as usual” and political corruption? Recent cases involving two former state governors provide some interesting insights.

Former Virginia governor Bob McDonnell is currently preparing to ask the U.S. Supreme Court to review and possibly overturn his corruption convictions. Meanwhile another former governor, Rod Blagojevich of Illinois, recently succeeded in having some of his corruption convictions thrown out by the U.S. Court of Appeals for the Seventh Circuit.

Blagojevich was indicted in 2009 on multiple counts including racketeering, conspiracy, honest services fraud, and extortion. As a result of the federal investigation, he was impeached by the Illinois legislature and removed from office. He ultimately was convicted of eighteen felony charges and in March of 2012 began serving a 14-year prison sentence.

Blagojevich’s trial centered on a number of different “pay to play” schemes in which the governor sought to extract “campaign contributions” or other things of value from those seeking action from his office. (The Seventh Circuit put the term “campaign contributions” in quotes because Blagojevich was in his second term and had already decided not to run for re-election; thus the jury was free to accept the government’s theory that the money was really for his personal use.) Much of the evidence came from Blagojevich’s own mouth: the FBI had been wiretapping his phones for months.

In one instance, when hospital lobbyists sought an increase in the reimbursement rates the state paid for Medicaid patients, Blagojevich let the hospital know he would agree to the new rates in exchange for a $50,000 “campaign contribution.” In another incident, after the state legislature approved a program to tax casinos for the benefit of racetracks, Blagojevich sent word to a man with interests in two racetracks that the governor would not sign the bill until the man made a $100,000 “contribution.”

Perhaps the most notorious of Blagojevich’s misdeeds, however, was his attempt to cash in on his power to appoint President Obama’s successor in the U.S. Senate. When then-Illinois Senator Obama was elected President, it left a Senate vacancy that Illinois law gave Blagojevich the power to fill. He clearly relished the potential value of this power; on one memorable bit of tape, the FBI caught him describing his ability to fill the Senate seat by saying “I’ve got this thing, and it’s f**king golden . . . I’m just not giving it up for f**king nothing.”

The evidence at trial established that Blagojevich first sought a favor from President-elect Obama in exchange for appointing Valerie Jarrett, whom Blagojevich believed was Obama’s favored candidate for his former seat. Working through intermediaries, Blagojevich asked to be appointed as an ambassador or to a seat in the President’s cabinet, or for the President-elect to arrange a job for Blagojevich at a private sector foundation or other organization that would receive funds he could control from the federal government or from the President’s supporters.

Obama was not willing to make a deal and, as his quote above made clear, Blagojevich was not about to make the appointment without some kind of compensation. He moved on and offered to appoint U.S. Rep. Jesse Jackson Jr. to the seat in exchange for a $1.5 million “campaign contribution.” Fortunately, he was arrested before this attempt went very far.

The government charged these attempts to get something in exchange for the Senate appointment under various legal theories including attempted extortion and wire fraud. The jury found Blagojevich guilty of those and other charges. On appeal, the Seventh Circuit affirmed the majority of Blagojevich’s convictions, finding the evidence “overwhelming,” but overturned those related to the attempts to sell the Senate seat.

The Court of Appeals noted that the trial court’s instructions would have allowed the jury to convict Blagojevich for agreeing to make the appointment in exchange for a private sector job or funds that he could control, and that would be perfectly valid. Either would establish classic quid-pro-quo bribery, where the public official receives something of value to which he is not entitled in exchange for exercising his official powers.

But the instructions also would have allowed the jury to convict Blagojevich based solely on his offer to trade the Senate appointment for a position for himself in the Obama administration. And that’s where the convictions ran into trouble.

The Court of Appeals concluded that offering to trade one appointment for another was not an act that could support a corruption conviction: “a proposal to trade one public act for another, a form of logrolling, is fundamentally unlike the swap of an official act for a private payment.”

The Court noted that the trading of political favors, or what it called “logrolling,” is a common occurrence. Congressman A might agree to vote for a bill favored by Congresswoman B, and in exchange B agrees to support a program favored by A.   The President appoints C as an ambassador as a favor to Senator D, who agrees in return to vote to confirm another of the President’s appointments.

This type of horse trading is considered politics as usual; part of the give and take and compromise of politics without which little could ever be accomplished. It may appear unseemly at times, but it is not generally considered corrupt.

It’s true that the public job would have benefited Blagojevich, but that’s also true of many other political acts that could be exchanged for making the appointment. For example, if the federal government had agreed to support a major infrastructure project in Illinois, that could inure to Blagojevich’s benefit by bolstering his political standing and reputation. The key is not whether a politician benefits in some way from a deal, but whether the deal involves corrupt intent – and the trading of one political favor or public act for another generally does not.

If the jury had found that Blagojevich agreed to make the appointment in exchange for money or a private sector job, there would be no problem with the verdict. But because the instructions also allowed the jury to convict him even if he was simply engaged in political horse-trading, those convictions could not stand.

(As an aside, Blagojevich appears to have won the battle but lost the war – although he did get five of eighteen counts of conviction tossed out, the sentences on all charges ran concurrently so his overall prison sentence is unlikely to be affected.)

Now let’s turn to former Virginia governor Bob McDonnell. McDonnell, like Blagojevich, rests part of his appeal on the claim that he was improperly convicted for actions that were not corrupt but were simply politics as usual.

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McDonnell and his wife Maureen were found guilty in September 2014 on multiple counts of corruption. Their convictions were based on their relationship with businessman Jonnie Williams. The government charged that Williams gave the McDonnells valuable gifts including a Rolex watch, thousands of dollars in designer clothing, payment of the catering bill for their daughter’s wedding, and $120,000 in no-paperwork, interest-free “loans.” In exchange, the government charged, the McDonnells agreed to use the powers of the Governor’s office to promote Anatabloc, a dietary supplement made by Williams’ company.

Throughout the case, McDonnell has never denied that he and the first lady received the gifts from Williams. Instead, his defense has been a variation of the “politics as usual” argument. He claims that Virginia ethics laws were very lax and that accepting such gifts was simply the “Virginia way.” He also has argued that anything he did for Williams in exchange, such as arranging meetings with or introductions to other state employees, amounted to routine political courtesies for a supporter and could not form the basis of a corruption conviction.

McDonnell has an impressive amount of support from other lawmakers, both in Virginia and nationwide. Many politicians, including several former Virginia Attorneys General, filed briefs arguing that McDonnell’s convictions pose a dire threat to our political system and to politicians everywhere. These supporters claim that if McDonnell’s convictions are allowed to stand, no politician can attend a routine fundraiser or Rotary Club breakfast and later take action supported by those in attendance without fearing that the FBI will come knocking.

I’ve found it surprising – and a little disheartening – to see so many politicians and former Attorneys General essentially arguing that the Republic will fall if politicians aren’t allowed to behave the way McDonnell did. (By the way, it’s worth noting that it has been more than a year since McDonnell was convicted and there is no sign that government in Virginia or elsewhere has ground to a halt.) Despite the political weeping and gnashing of teeth, at bottom the McDonnell case really is a relatively straightforward case of quid-pro-quo corruption.

The intersection of money and politics is always a potentially treacherous one. Politicians do have a legitimate need to raise money for their campaigns. They hold fundraisers and accept support from interested individuals who would like to see them act in a certain way, and they regularly take actions that are favored by those who support them. That is indeed politics as usual, and politicians behaving that way have nothing to fear from the McDonnell case.

The sleight-of-hand in McDonnell’s argument is his attempted lumping of Williams in with ordinary donors and supporters. Attending a fundraiser, hearing from constituents, and later taking steps favored by those constituents and donors is indeed what politicians do. Having someone secretly pay for your daughter’s wedding caterer, give you a Rolex and expensive vacations, or give you secret, no-paperwork “loans” – and agreeing to do political favors in exchange — most decidedly is not.

Legal campaign contributions are within established limits and are reported so the public may see where a politician’s support is coming from. Such contributions generally are not considered corrupt, even when the politician acts in a way favored by those donors. As long as we have privately financed campaigns, these types of relationships between politicians and their supporters are inevitable. Sunlight – in the form of disclosure of the contributions – is supposed to act as the disinfectant to prevent secret and undue influence.

(Of course, the post-Citizens United presence of super-PACs and other organizations that can spend unlimited amounts on behalf of a candidate raises a whole host of other issues, but that’s beyond my scope here.)

It’s possible for campaign contributions alone to form the basis of a bribery charge, but it’s very rare. There must be an explicit deal in which the politician agrees to take a specific action in direct exchange for the contribution. Absent such an agreement, lawful campaign contributions have almost a presumption of legitimacy – despite the reality that we all believe politicians ultimately may be influenced to some degree by those contributions.

But Jonnie Williams was not just another donor or supporter. He was not holding fundraisers for McDonnell or “bundling” publicly reported campaign contributions. He provided the McDonnells with $170,000 in secret, off-the-books gifts. Likening these secret payoffs to routine political support is disingenuous at best.

What’s more, the jury instructions in the McDonnell case required the jury to find quid pro quo corruption. Merely accepting the gifts was not enough; the jury was told they had to find an agreement by McDonnell that his official actions would be influenced in exchange for the gifts.

Despite his protestations, McDonnell was not convicted for extending routine political courtesies to a “supporter.” He was found guilty of agreeing to sell the power and influence of his office in exchange for undisclosed gifts that effectively doubled his annual salary as governor. That is not politics as usual.

Politicians are free to trade political favors but they can’t agree to sell the exercise of their powers to the highest bidder. They are free to take steps to benefit their supporters, but not to enter into secret deals to act in direct exchange for valuable gifts. The line between politics as usual and political corruption may not always be crystal clear, but there’s little doubt that the actions of these former governors fell on the wrong side of that line.

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