Supreme Court Rejects Rod Blagojevich’s Appeal: Monty Python and Public Corruption

And now for something completely different . . . .

Last week the U.S. Supreme Court declined to hear an appeal from former Illinois Governor Rod Blagojevich. Blagojevich (also known as “Blago”) was convicted on multiple counts of corruption in 2011 and was sentenced to fourteen years in prison.

While Blagojevich’s petition for certiorari was pending, the Supreme Court agreed to hear the corruption case of another former governor, Bob McDonnell of Virginia. McDonnell’s case is set to be argued on April 27 and should be decided by the end of this term.

When the Court agreed to take McDonnell’s case, some thought it might be a good omen for other public corruption defendants. Was the Court about to undertake a wholesale re-examination of corruption law in a way that would benefit Blagojevich, New Jersey Senator Bob Menendez, and other officials with pending cases? But the refusal to hear Blago’s appeal puts at least a temporary damper on any such hopes.

And how does Monty Python figure into all this? Read on.

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Governor Blagojevich’s Case: Pay to Play

Blagojevich’s convictions resulted from a series of incidents in which he demanded cash or other things of value in exchange for various exercises of his power as governor. The most infamous example arose after Barack Obama was elected President. Obama had been a U.S. Senator from Illinois, and his election left a vacant Senate seat that Illinois law gave the governor the power to fill.

The FBI was already tapping Blago’s phones as part of an ongoing corruption probe, and it quickly became clear that the governor viewed his power to appoint Obama’s successor as a potential bonanza. In one memorable conversation, he was recorded telling his associate: “I’ve got this thing [the power to appoint a new Senator] and it’s f**king golden. I’m just not giving it up for f**cking nothing!”

Blagojevich believed that Obama’s preferred choice to take his seat was Valerie Jarrett. Accordingly, he tried to make a deal where he would appoint Jarrett in exchange for a spot in Obama’s cabinet or for a high-paying position in the private sector arranged by the President. When the Obama administration refused to make a deal, Blagojevich’s response was, “They’re not willing to give me anything except appreciation. F**k them.”

The governor then tried to make a deal with supporters of Rep. Jesse Jackson Jr. to appoint Jackson to the Senate seat in exchange for a $1.5 million “campaign contribution,” but he was arrested before this proposal had a chance to play itself out.

The evidence at trial also included other examples of a “pay to play” culture in the governor’s office. For example, when hospital lobbyists sought an increase in reimbursement rates for Medicaid patients, Blagojevich let it be known he would approve the increase only in exchange for a “campaign contribution” of $50,000. In another incident, when the state legislature approved a program that taxed casinos for the benefit of racetracks, Blagojevich had intermediaries inform a racetrack owner that the governor would not sign the bill until the owner fulfilled a $100,000 “campaign pledge.”

Although the defense characterized the money involved in these incidents as campaign contributions, the government maintained this was a sham and that the money was really for Blagojevich’s personal benefit. The governor was serving his second term and had already decided not to run for re-election, and so had no apparent reason to raise campaign funds.

In July 2015 the U.S. Court of Appeals for the Seventh Circuit, in a decision I discussed here, reversed five of Blagojevich’s convictions. The Court held that those counts rested in part on an improper legal theory: that the trading of political favors (such as trading one appointment for another), without more, could constitute extortion or bribery. However, that left thirteen counts of conviction intact, and those convictions formed the basis of Blagojevich’s petition to the Supreme Court.

Campaign Contributions and Corruption

The key statutes Blagojevich was convicted of violating are Hobbs Act extortion under color of official right and honest services mail and wire fraud. These are two popular statutory vehicles for the federal prosecution of state and local corruption. Both essentially operate as bribery by another name: they prohibit public officials from agreeing to exercise the power of their office in exchange for something of value.

More straightforward cases of bribery involve secret gifts to a politician that have nothing to do with campaign fundraising. In Bob McDonnell’s case, for example, such gifts included a Rolex watch, designer gowns for his wife, and paying for the caterer at his daughter’s wedding. Because the politician has no apparent legitimate reason to be accepting such gifts, a corrupt agreement may more readily be inferred when the politician then acts in favor of the donor.

Where campaign contributions are concerned, however, the analysis becomes trickier. Politicians do have a right to solicit campaign funds, and donors have a right to support politicians whose policies they favor. A campaign contribution may still be extortion or a bribe, but the evidence of a corrupt link will need to be very strong. It is not enough that a politician solicits a campaign contribution and later takes an action that the donor desired – that happens every day. To prove corruption, the government must establish that a particular contribution was given or demanded in exchange for an agreement to take a specific action in return – a clear deal, or quid pro quo.

Of course, it isn’t enough for a politician simply to claim that money he received was a legitimate campaign contribution. If that is the claim, then evidence concerning the nature of the donation and how it was handled becomes important. For example, one way to distinguish legitimate campaign contributions from corrupt gifts is to see whether the “donation” is within relevant legal limits and whether it shows up on required public campaign finance reports. If not, the circumstantial evidence is much stronger that the purported “campaign contribution” was actually a bribe.

The two leading Supreme Court cases involving bribery and campaign contributions are McCormick v. United States (1991) and Evans v. United States (1992). Both involved charges of Hobbs Act extortion under color of official right. And in both cases, the defendants claimed the money they received was actually a campaign contribution (even though, in both cases, they had failed to include the money on their campaign finance reports).

In McCormick the Court made it clear that, when it comes to campaign contributions, it’s not enough for the government to show simply that a donation was made with the expectation that the official would take an action that he in fact later did take. As long as we have privately financed campaigns, that is simply the nature of our politics. The Court held that Congress could not have intended to criminalize conduct that is essentially unavoidable in our political system. For a campaign contribution to be corrupt, therefore, it must be accepted “in return for an explicit promise or undertaking by the official to perform or not to perform an official act.”

But the following year in Evans, the Court seemed to soften this “explicit promise” standard. It held that extortion under color of official right requires only that the public official accept the thing of value knowing that it was given in exchange for a particular official act. There is no requirement that the official verbally demand the payment or “shake down” the payer.

In an important concurrence, Justice Kennedy noted this was essentially the quid pro quo requirement inherent in any bribery prosecution. There cannot just be a coincidence of timing between support and official action; the parties must make a specific deal. But, he noted, the parties “need not state the quid pro quo in express terms, for otherwise the law’s effect could be frustrated by knowing winks and nods.” It is enough if the quid pro quo can be implied from words or actions and the totality of the evidence surrounding the transaction.

The standard that emerges from McCormick and Evans, therefore, is that Hobbs Act extortion under color of official right in a campaign contribution case requires an explicit quid pro quo — but “explicit” does not always mean “express.” The key is whether there is a corrupt link between payment and official action, and that link may be proven by circumstantial evidence in the absence of an express verbal or written agreement.

Blago’s Supreme Court Petition and Implications for McDonnell

Blago’s principal argument to the Supreme Court was that it needs to clarify the McCormick/Evans standard and what it takes to prove a quid pro quo in a campaign contribution case. He claimed his conviction wrongfully failed to distinguish criminal conduct from a legitimate request for political support. He urged the Court to use his case to hold that, where campaign contributions are concerned, a higher degree of proof of an explicit corrupt agreement should be required. The Court apparently was not persuaded.

Blagojevich had made this same argument in the Seventh Circuit, which also rejected it. Judge Easterbrook’s opinion noted that Blago “assumes that extortion can violate the Hobbs Act only if a quid pro quo is demanded explicitly, but the statute does not have a magic-words requirement. Few politicians will say, on or off the record, ‘I will exchange official act X for payment Y.’”

And, in a reference that may have made Easterbrook my new favorite judge, he observed: “‘Nudge nudge, wink, wink, you know what I mean’ can amount to extortion under the Hobbs act, just as it can furnish the gist of a Monty Python sketch.”

(This Monty Python reference apparently impressed the Solicitor General’s office as well; they quoted it in their brief opposing Blagojevich’s petition for certiorari. I’m guessing this may be the first time Monty Python has made its way into Supreme Court advocacy – although I’d love to be proven wrong about that.)

In other words, as Justice Kennedy observed in Evans, the law cannot be defeated by knowing winks and nods. The jury in Blagojevich’s case was free to find the existence of the quid pro quo based on the overall facts and circumstances — including the fact that Blago’s characterization of the money as campaign contributions seemed implausible.

Does the Court’s refusal to hear Blagojevich’s case have any implications for McDonnell’s appeal? In one sense their arguments are similar: McDonnell, too, is claiming the government has wrongfully criminalized routine interactions between a politician and his supporters, and has urged the Court to clarify the line between corruption and “politics as usual.” If the Court were concerned about where that line is being drawn and thought it needed to re-examine public corruption law, one might have expected them to take Blago’s case as well.

But it’s probably a mistake to read too much into this decision where McDonnell is concerned. The facts of the two cases are very different, and the Seventh Circuit accurately characterized the evidence against Blagojevich as overwhelming. His blatant actions did not present a very sympathetic vehicle for probing the outer limits of federal corruption law.

Legally, McDonnell’s claim is different as well. He is not directly challenging the existence of a quid pro quo; rather, he is claiming that even if there was a deal, the quo promised by McDonnell is legally insufficient because it was not an “official act” within the meaning of federal corruption law. This was not an issue presented in the Blagojevich case; he clearly undertook official actions, the question was simply whether he acted pursuant to a corrupt deal.

It’s also possible this is just a question of timing. One of the government’s arguments opposing Blago’s petition was that the Supreme Court should not consider any of his claims until the government decides whether to retry him on the dismissed counts and he is resentenced. The prosecutors have already announced they will not retry him, and he is scheduled for resentencing on June 30. Once that happens, Blago’s lawyers have said they will petition the Supreme Court again to review his legal claims.

So it appears Blago will get one more bite at the Supreme Court apple. As for McDonnell’s fate, we should have the answer sometime in June. Rest assured, Sidebars will keep you posted.  Say no more.

Update May 23, 2016: Today the Supreme Court rejected Blago’s petition to consider his appeal following his resentencing, so the Court will definitely not be hearing the case. His resentencing is now set for Aug. 6.

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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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Bob and Maureen McDonnell: Running Out of Legal Options

Update 8/31/15:  The Supreme Court today granted McDonnell’s request to remain free on bond while the Court considers his petition for certiorari.  I think this is surprising, and has to be considered a very good sign for McDonell.  It suggests there is some level of interest at the high court in reviewing the case, even though not a single judge so far in the lower courts has agreed with McDonnell’s arguments.  Stay tuned.

The former Governor and First Lady of Virginia are rapidly running out of both time and options to avoid going to prison.

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Bob McDonnell and his wife Maureen were convicted last September on multiple counts of corruption.  The jury found that they conspired together over a two-year period to use the powers of the Governor’s office to help a businessman, Jonnie Williams, who was trying to promote his dietary supplement Anatabloc within the state government.  In exchange, Williams gave the McDonnells $120,000 in interest-free, no-paperwork “loans,” along with gifts including a Rolex watch, designer dresses, golf outings and luxury vacations, and payment of the catering bill for their daughter’s wedding.  Following their convictions, Bob McDonnell was sentenced to two years in prison and Maureen was sentenced to one year and one day.

Although the McDonnells were tried together, their appeals have proceeded on separate tracks.  Maureen’s appeal to the U.S. Court of Appeals for the Fourth Circuit has not even been argued yet, and is currently scheduled for a hearing on October 29.  Bob’s appeal was argued last May, and a three-judge panel of the Fourth Circuit unanimously affirmed his conviction on July 10.

The former Governor asked the Fourth Circuit for a rehearing by the same judges or for an en banc rehearing by the entire court.  The court denied both requests on August 11, with not a single judge voting to re-hear McDonnell’s case.

McDonnell has been free on bond during his appeal, but the Fourth Circuit has now rejected his request to remain in that status while he petitions the U.S. Supreme Court to hear his case.  The Fourth Circuit ruled that the mandate  — the order from the trial judge enforcing the verdict and sentence – will issue this Thursday, August 27.  Once the mandate issues, the U.S. Bureau of Prisons will designate a facility where McDonnell will serve his sentence and he will be given a date to report to prison.  This could happen in a matter of only a few weeks.

McDonnell’s lawyers have filed a last-ditch appeal with the U.S. Supreme Court, asking that he remain free while he files a petition for certiorari asking the Court to review the Fourth Circuit’s decision.  To succeed, they have to persuade the Supreme Court that there is a reasonable likelihood not only that four Justices will vote to take the case but also that McDonnell will ultimately prevail.  That’s a real uphill battle.

McDonnell’s principal argument on appeal is that his conviction represents a dangerous and unprecedented expansion of federal corruption law because he did not perform any “official acts” in exchange for the gifts that he unquestionably received from Williams.  But McDonnell’s lawyers have been making that same argument since before he was indicted, and so far not a single judge (not to mention a single juror) has agreed.

When all prior judges to consider an argument have unanimously rejected it, it’s pretty hard to see five Justices of the Supreme Court buying in.  When you couple that with the fact that the Supreme Court agrees to review fewer than 1% of the petitions it receives, it looks pretty unlikely that the Court will disturb the Fourth Circuit’s decision that McDonnell should begin serving his sentence.

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Bob McDonnell’s Arguments on Appeal

Bob McDonnell made a number of arguments in his appeal to the Fourth Circuit, including that the judge did not adequately question potential jurors, that he and Maureen should have been tried separately, and that the judge made a number of errors when ruling on evidence during the trial.  (You can find my detailed discussion of these appellate issues here.)  As I expected, none of these gained much traction in the Court of Appeals.  The only substantial issue – which the Fourth Circuit referred to as “the core of this appeal” — was McDonnell’s claim that he could not be convicted of corruption because he never performed any “official acts” within the meaning of federal corruption laws.

McDonnell had an extraordinary amount of support, including briefs filed by politicians from across the county and a number of former Virginia Attorneys General arguing that his conviction was unwarranted and could spell the end of politics as we know it.  But the Court of Appeals had no trouble finding that McDonnell had acted corruptly and that these claims were overblown.

The Court of Appeals noted that both sides in the case, as well as the district court judge, had proceeded on the theory that the relevant definition of “official acts” is the one found in the federal bribery statute, 18 U.S.C. § 201 – a statute that was not part of McDonnell’s case. As I’ve argued elsewhere, this is a dubious proposition — but since all sides agreed the Fourth Circuit chose to accept it, at least for the purposes of McDonnell’s appeal.

Even using this defense-friendly definition, the court had no trouble finding that McDonnell had agreed to engage in a number of official acts in exchange for the gifts from Williams. These included acting on questions concerning whether Virginia universities would fund research studies of Anatabloc, whether a state-created tobacco commission would allocate grant money to study it, and whether Anatabloc would become a covered drug under the health plan for Virginia employees.

These were all matters over which McDonnell, as the state’s chief executive, had substantial influence. The court concluded that the evidence at trial demonstrated he had taken steps to try to influence those matters for Williams’ benefit. As the court noted, it was not necessary for the government to prove that McDonnell actually succeeded, or that Williams actually received a state grant or a research study. Corruption is established by the deal, where the public official agrees to exercise influence in exchange for things of value. It doesn’t matter if the official ultimately succeeds or even if he actually has the power to do what he promised, so long as he makes a corrupt bargain to sell the power and influence of his office.

The court concluded that the evidence showed McDonnell did not merely agree but actually took some concrete steps to try to fulfill his end of the deal. Those steps included directing staff to meet with Williams and to look into conducting the Anatabloc research studies, and holding a “product launch” event for Anatabloc at the Governor’s mansion.

In the end, the Court of Appeals unanimously concluded that, despite the protestations of McDonnell and his allies, this case was really not all that remarkable. In exchange for a string of gifts, McDonnell used the power and prestige of his office to try to further Williams’ business interests. The only thing unusual about the case was that, in the end, Williams did not in fact get much in exchange for his efforts – but as the government has pointed out, that McDonnell was not successful in fulfilling his end of the bargain does not change the fact that the bargain itself was corrupt. As a legal matter, McDonnell does not benefit simply because his efforts to help Williams were ultimately unsuccessful.

Maureen McDonnell’s Arguments on Appeal

Maureen McDonnell’s lawyers are in an unenviable position. The Court of Appeals has already rejected all of Bob’s arguments, and her arguments are virtually the same.  Her lawyers have acknowledged, as they must, that there is “substantial overlap” between the issues in her appeal and the issues already decided in the government’s favor in her husband’s case.

So in preparing for the October 29 argument, Maureen’s lawyers are left trying to find some way to convince the Court that her case and her legal issues are actually different. This is basically like trying to find a good-looking deck chair on the Titanic.

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Maureen’s primary argument is that she is not a public official, and so she should be held to a more lenient standard. Her lawyers claim that as a “high-school educated spouse of a politician,” she could not possibly have known it was improper for her and the Governor to try to help Williams in exchange for all of his largesse.

I think this argument is extremely unlikely to fly. Maureen was charged with conspiring with her husband to sell his influence as a public official, so there was no requirement that she be a public official herself. It is common for those who are not public officials to be charged with corruption, either through a conspiracy charge as in this case or because they are the ones paying the bribes.

As for her state of mind, prosecutors did not need to show that Maureen was some kind of legal expert thoroughly familiar with the ins and outs of federal bribery law and the nuances of the “official act” definition. They only needed to show that she agreed to act corruptly, meaning that she agreed with Bob to exercise the powers of his office in exchange for Williams’ gifts. There was ample evidence of this during the trial.

The other problem with this defense is that there was evidence at trial demonstrating that Maureen knew the relationship with Williams was improper. The most significant was testimony concerning how she sold her stock in Williams’ company just before she had to file a government financial disclosure report, only to buy it right back after the report was filed. She also attempted to transfer ownership of that stock to her children, so it would not be reported and would remain concealed from the public.

There also was evidence that Maureen was told by the Governor’s staff that she could not allow Williams to buy her inaugural gown, as he had offered to do. (He later made up for it, though, by taking her on a shopping spree in New York and buying her several designer dresses.) In short, the suggestion that Maureen was blissfully unaware that there might be anything at all improper about the relationship with Williams simply does not withstand scrutiny.

Finally, questions about a defendant’s state of mind and intent are classic jury questions. These factual issues were fully argued at trial and the jury unanimously found against her. There is no real legal basis here for an appellate court to disturb that finding.

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I think it’s extremely unlikely that Maureen will succeed on appeal where Bob did not, and also unlikely that the Supreme Court will allow Bob to remain on bond or agree to review the Fourth Circuit’s decision. That means Virginia’s former Governor will probably be behind bars before the end of the year, with his wife following shortly thereafter.

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The Key Issues in Bob McDonnell’s Appeal

Update:  On August 11, the Fourth Circuit denied McDonnell’s motion for rehearing and rehearing en banc.  McDonnell will now seek review by the U.S. Supreme Court.

Update:  On July 10, the three-judge panel of the Fourth Circuit unanimously affirmed McDonnell’s convictions.  He is now seeking en banc review by the entire court.  The panel opinion is here

Former Virginia Governor Bob McDonnell’s appeal will be argued tomorrow, May 12, before the U.S. Court of Appeals for the Fourth Circuit in Richmond, VA. McDonnell and his wife Maureen were convicted of multiple counts of corruption for accepting a series of extravagant gifts and sweetheart loans from businessman Jonnie Williams in exchange for using the power of the Governor’s office to promote Williams’ product, Anatabloc.

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The key legal issues in the appeal can be broken down into four categories:

1) Were the things McDonnell did in exchange for the gifts from Williams “official acts” for purposes of federal bribery law?

2) Did the trial judge err by refusing the McDonnells’ request that they be tried separately?

3) Did the trial judge err during jury selection by not probing more thoroughly whether pre-trial publicity had prejudiced any of the potential jurors against the McDonnells?

4) Did the trial judge err in several evidentiary rulings against the defendants?

McDonnell has an impressive array of supporters before the Fourth Circuit. Nearly a dozen amicus briefs were filed on his behalf by groups including the National Association of Criminal Defense Lawyers; six former Virginia Attorneys General; forty-four non-Virginia state Attorneys General; several Virginia law professors; and members of the Virginia General Assembly. To one degree or another, most of these supporters claim that political life in Virginia – if not American democracy itself – will be irreparably harmed if McDonnell’s conviction is not overturned.

I believe these concerns are misplaced. As an example of quid pro quo corruption, the McDonnell case is really not that remarkable. In fact, the most remarkable thing about it is that the central legal argument throughout the case has been about the language of a statute that is not even part of the indictment. How the Fourth Circuit deals with that issue in particular may end up being the key to McDonnell’s fate.

The Definition of “Official Acts” – A Focus On the Wrong Question

By far the most significant issue on appeal, and the one likely to consume most of the court’s attention, is the first: the question of “official acts.” Since before the case was even indicted, the backbone of McDonnell’s defense has been that whatever he may have done for Williams in exchange for the gifts, his actions were merely political courtesies and did not violate federal bribery law because they were not “official acts.” Arguments about this point consume the bulk of the briefs on both sides, as well as most of the amicus briefs.

The term “official acts” comes from the federal bribery statute,18 U.S.C. § 201, which defines it as “any decision or action on any question, matter, cause, suit, proceeding, or controversy” brought before a public official in their official capacity. 18 U.S.C. § 201(a)(3).  Section 201, however, applies only to federal public officials and was not part of the McDonnell indictment. The corruption charges they were convicted of fall under two other federal statutes: honest services fraud and Hobbs Act extortion under color of official right. Both of these statutes operate as bribery by another name and provide a vehicle for federal prosecution of state, local, and even private sector bribery.

As I have argued in an earlier post, however, bribery for purposes of honest services fraud and the Hobbs Act is not limited to the definition contained in 18 U.S.C. § 201. Those statutes apply more broadly to general common law bribery, not to a specific statutory definition. Indeed, not a single case cited in any of the appellate briefs stands for the proposition that bribery under honest services fraud or the Hobbs Act is defined by the language of 18 U.S.C. § 201.

Nevertheless, throughout this case, both sides have taken the position that the government is required to prove McDonnell performed “official acts” as defined in Section 201. It’s not completely clear how the case arrived at this posture, but it is clear that the emphasis on this particular language favors the defense. Had the parties and the court focused on a more generic definition of bribery, the case would have looked quite different.

For example, Virginia state law and the Model Penal Code both define bribery as a public official accepting a pecuniary benefit in exchange for being influenced in a “decision, opinion, recommendation, vote or other exercise of discretion as a public servant.” VA Code §18.2-447(2). There is no requirement of an “official act” as defined in Section 201, and the broad application to “recommendations” and “exercises of discretion” certainly seems to cover much of McDonnell’s conduct.

There are scattered references throughout the appellate briefs and amicus briefs to the idea that the definition of bribery in Section 201 may not in fact be the correct standard, with the defense continuing to insist that it is.  In the end, though, for the most part everyone proceeds on the assumption that the language of Section 201 applies, as the parties did during the trial. As a result, much of the legal argument is devoted to whether McDonnell’s conduct amounted to a “decision” or an “action” “on” a “matter, cause, suit, proceeding, or controversy” within the meaning of Section 201’s definition. Rarely has so much appellate ink been spilled over the language of a statute that no defendant in the case was charged with violating.

The Effect of the Focus on “Official Acts”

This obsession with the nature of McDonnell’s actions has caused the real issue to be obscured. In a bribery case the focus is less on the nature of the act itself and more on the corrupt deal: the agreement of the public official to be influenced in the exercise of his or her official powers in exchange for the bribe. In fact, although you’d never know it from the pleadings in this case, even federal bribery under Section 201 does not require an “official act” – that is only one of three alternative ways to violate the statute. The definition of “official act” is actually much more important to the lesser crime of gratuities (also in Section 201) than it is to bribery, and indeed many of the main cases relied upon by McDonnell are gratuities cases, not bribery cases. The implication of many of the arguments that federal bribery law always requires “official acts” is simply incorrect.  What bribery does always require is the element of influence.

Bribery is considered corruption because it alters the behavior of a public official, who acts not for the good of all as he or she is sworn to do but in response to an improper benefit received from a particular individual. This corrupt exchange in a bribery case is often referred to as the quid pro quo. In McDonnell’s case, the excessive focus only on the “quo” – McDonnell’s actions — is what leads to the fears expressed by the defense and many of the amicus briefs about the implications of McDonnell’s conviction. They argue that if the types of things McDonnell did for Williams are criminalized, it will “wreak havoc” on the political life of Virginia, “criminalize wide swaths of political life,” and make “virtually every elected official in the Fourth Circuit a criminal.”

What these arguments fail to grasp is that it is not the nature of McDonnell’s actions that’s the problem: it’s the corrupt deal that led to them. Routine political acts and favors done for supporters are generally not bribery not because they are not “official acts,” but because they are not done as part of a corrupt quid pro quo.  Law abiding politicians who are simply serving their constituents and not making corrupt deals have nothing to fear from McDonnell’s conviction.

The defense and various amici further obscure this point by noting that it’s possible for a campaign contribution to be a bribe. As a result, they claim, if the McDonnell conviction is upheld then any politician who takes any kind of routine action for someone who has donated to their campaign would risk being branded a felon.

Again, the flaw in this argument is that it focuses on only one side of the equation – in this case, the quid – instead of focusing on the corrupt agreement itself. Legal campaign contributions generally do not support criminal charges simply because they are not considered part of a corrupt bargain. For better or worse we have a system of privately financed campaigns in this country, where it is legal and appropriate for supporters to contribute to politicians in the hope that they will act in certain ways and for politicians to respond to the concerns of their lawful supporters. Properly reported campaign contributions within legal limits, without more, are not corrupt.

Gifts like those in the McDonnell case are another matter. Secret sweetheart loans, payments for a daughter’s wedding, expensive golf outings, Rolex watches, and steps taken to hide all of the above from the public – these are all things that, unlike legal campaign contributions, have the whiff of corruption about them. Contrary to the defense’s implication, not all quids are created equal.

A campaign contribution can be a bribe – in rare cases – but the other indicia of corruption must be much greater, including an explicit agreement by the politician to take a particular action in direct exchange for the contribution.  The point is that in a bribery case it is the overall corrupt deal and the question of influence that has to be examined, not just the quid, and not just the quo.

The focus on “official acts” has been largely a diversionary tactic that allows the defense to deflect attention away from the corrupt deal that the jury, by its verdict, necessarily found existed between Williams and the McDonnells. But the logical implication of the defense argument is that a businessman could secretly give the Governor tens of millions of dollars in exchange for an agreement to host an event at the Governor’s mansion and that deal would not be illegal because it did not involve an “official act.” That is definitely not the law – not even in Virginia. The powers and resources of the Governor’s office are not up for sale to the highest bidder.

The real issue is not whether the actions McDonnell took to help Williams met some precise statutory definition. The crux of the case is that he exercised his discretion and the powers of his office to benefit Williams in exchange for a two-year pattern of secret gifts and loans. That is classic quid pro quo corruption. The interesting question on appeal will be whether the Fourth Circuit focuses on that fact or gets sidetracked into debates about the meaning of a statute that is not even part of the case.

The Other Three Issues: Not Likely to Be a Major Factor

Voir Dire:  The defense also is challenging the process by which the jury was selected, known as voir dire. Their claim is that the judge failed to probe sufficiently whether negative pretrial publicity about the case might have prejudiced potential jurors against the McDonnells.

The process of jury selection is firmly committed to the discretion of the trial judge and it’s very rare for cases to be overturned on this basis. Appellate courts recognize that, particularly when it comes to pre-trial publicity, the trial judge is in the best position to evaluate what the nature of that publicity has been and how best to deal with it, because the judge also lives in the same community. The judge is also in the best position to judge the demeanor and credibility of the potential jurors standing in the courtroom and responding to questions about their ability to be fair and impartial.

Another important factor is that the jury acquitted the McDonnells on several counts of the indictment. This suggests a jury that did its job and considered each charge individually on its merits, not one that was biased and predisposed to convict regardless of the evidence.

Although there was a lot of pretrail publicity, this is not a gruesome murder, racially-charged case, or other case where there might be heightened concern about the passions of the community being inflamed. It’s possible this could be a sleeper issue, with some of the appellate judges concerned that the voir dire was a bit too perfunctory. In the end, though, I doubt this argument will gain much traction in the Court of Appeals.

Severance: McDonnell also argues that it was error for the trial judge to refuse to try the Governor and his wife separately. He claims that if had been tried alone his wife would have testified at his trial and provided helpful evidence.

There is a presumption that co-defendants will be tried together, particularly in a conspiracy case, and severance is rarely granted. It may be true that Mrs. McDonnell’s testimony would have been useful to the Governor, but that’s not the standard. Separate trials are only required if the failure to sever the defendants would deprive the defendant of a fair trial and result in a miscarriage of justice.

As the government has pointed out, much of the proffered testimony from Mrs. McDonnell ended up being presented to the jury through other witnesses. Although she may have denied that the Governor knew about some of the gifts, she could not deny that he knew about many of the others, including the expensive golf outings and the loans from Williams that he personally requested. Much of her testimony would have been vigorously challenged and impeached by the government. And of course her effectiveness as a witness would have been limited by her obvious bias and motivation to exonerate both her husband and herself. The appellate court is extremely unlikely to second-guess the trial judge’s refusal to sever the trials.

Evidentiary Rulings:  Finally, the defense argues that the judge erred in a number of the evidentiary rulings throughout the case. These include the judge’s refusal to allow defense expert testimony about Virginia’s financial disclosure forms and to admit evidence about McDonnell’s completion of those forms; the decision to admit evidence suggesting that the Governor was actively looking for places where he could play golf for free; the decision to allow evidence about another $23,000 golf vacation paid for by another supporter of McDonnell’s that the Governor failed to report; the refusal to allow additional evidence and defense expert testimony about the immunity agreement granted to Jonnie Williams; and the failure to allow the defense access to the contents of William’s iPhone.

A judge is called upon to make dozens, if not hundreds, of such rulings during a lengthy trial like this one, and those rulings will not be disturbed unless the judge abuses his or her discretion. The government argues that each of these rulings was correct. Even if any of them was an error, however, it’s extremely unlikely that the error would be significant enough to justify a new trial.

The Bottom Line

The “official acts” question has been the central issue throughout this case and will likely determine the outcome of the appeal.  A good result would be for the Fourth Circuit to write an opinion recognizing that, even though the government was not required to prove the exact elements of Section 201, the evidence at trial was more than sufficient to establish common law, quid pro quo bribery.  McDonnell’s best hope is that the Court of Appeals gets bogged down in all the debate about “official acts” and loses sight of what the case is really about: a corrupt arrangement where he and his wife put the powers of the Governor’s office up for sale.

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Oregon’s First Lady Cylvia Hayes and the Law of Honest Services Fraud

The U.S. Attorney in Oregon is conducting a grand jury investigation of former Governor John Kitzhaber and his fiancé and honorary first lady, Cylvia Hayes. Hayes runs a company that focuses on clean energy and economic development issues. The investigation is focused on allegations that Hayes may have traded on her position as first lady to obtain lucrative contracts from various clean energy groups and then worked with Kitzhaber to further the interests of those groups within the state government. Kitzhaber resigned in February, on the same day that news of the federal grand jury investigation was announced.

Acceptance speech for Oregon's new Governor, John Kitzhaber

The investigation, and questions about Hayes’ role in particular, bring to mind the recently concluded corruption case involving former Virginia Governor Bob McDonnell and first lady Maureen McDonnell. The McDonnells were found guilty of accepting gifts and sweetheart loan deals from businessman Jonnie Williams in exchange for agreeing to promote his products within the state government. And as with the Oregon case, in Virginia many painted the first lady as the principal bad actor in the scheme.

A key charge in the McDonnell case was honest services fraud, a theory commonly used to prosecute bribery. The McDonnells were convicted of acting together to deprive the citizens of Virginia of their right to Bob McDonnell’s honest services by accepting bribes from Williams.

As Governor, there’s no question that McDonnell did owe a duty of honest services to the people of his state. But there was no allegation in the McDonnell indictment that the first lady, Maureen McDonnell, owed her own duty of honest services to Virginians. As far as I’m aware, throughout that case all parties took the position that Maureen McDonnell was not a public official and that her criminal liability was entirely derivative of her husband’s, based on the duty of honest services that only he owed and that she helped him violate. The implication was that if Bob were not involved, Maureen could not have been charged.

That theory worked fine for the Virginia case. The government’s argument was that the McDonnells did conspire together in the bribery scheme, so there was probably no need to consider whether there would be an independent basis for charges against the first lady alone. But now, looking at the facts in the Oregon investigation, that question is worth considering.

Suppose the Oregon investigation revealed that Hayes had secretly agreed to accept money from outside organizations in exchange for personally working within the Oregon government to further their interests – but Kitzhaber knew nothing about it and was not involved in any such deal. Would there be a basis on which to charge Hayes alone with honest services fraud?

I think the answer is yes. Before moving on, though, let me stress that this is a purely hypothetical legal analysis. We don’t know what the grand jury investigation will reveal and I’m in no way suggesting that I think any of the charges discussed below would be appropriate as a factual matter. I’m only interested in whether they would be legally sound.

The Law of Honest Services Fraud 

Honest services fraud is a popular — and controversial — white collar crime. The federal mail and wire fraud statutes prohibit using the mail or any telephone or wireless transmission in furtherance of a “scheme or artifice to defraud.” In a traditional fraud case, such as a Ponzi scheme, the object of the scheme to defraud is to deprive the victims of their money or property. But for decades, federal prosecutors also have utilized another theory of mail and wire fraud, charging defendants with schemes to defraud victims of their intangible right to the fair and honest services of a particular individual.

In an honest services fraud case there is no need to show that the victims suffered any monetary loss. The injury is simply the breach of a duty of honest services. That duty requires people in certain kinds of relationships to act with with honesty and loyalty, free from corruption, deception, and self-interest. A prerequisite for any honest services fraud case, therefore, is a finding that a duty of honest services existed in the relationship in question.

The most common type of honest services fraud case involves political corruption. Public officials are universally considered to owe a duty of honest services to their constituents and the public to exercise the powers of their office honestly and for the benefit of all, and not to use their position to line their own pockets or otherwise engage in corrupt behavior. Honest services fraud is a mainstay charge in cases involving local, state, and federal public corruption.

But the theory is not limited to public officials. Courts have also found a duty of honest services in various private sector relationships that involve fiduciary duties or other special obligations of good faith, honesty and trust. The most common private sector theory has been based on the duty that an employee owes to his or her employer to act in that employer’s best interests. For example, if an employee secretly took bribes from a contractor to steer business to that contractor, the employee could be charged with violating his duty of honest services to his employer. Other private sector relationships that involve a similar relationship of trust and loyalty may also give rise to honest services charges.

Because of its potential breadth and uncertain parameters, the doctrine of honest services fraud has had a tumultuous history. In 1987 the Supreme Court struck down the theory as too vague and amorphous, only to have Congress reinstate it by statute the following year. Finally, in 2010 the Supreme Court ruled in Skilling v. United States that only the core corrupt conduct of bribery and kickbacks amounts to honest services fraud. The Court made it clear, though, that the theory still applies to both the public and private sector (see footnote 45, for example); in fact, Skilling itself was a private sector case involving former Enron executive Jeff Skilling.

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 Hayes’ Duty of Honest Services to the People of Oregon

There’s no question that Kitzhaber, as the elected governor, owed a duty of honest services to the people of Oregon, just as Bob McDonnell did to the people of Virginia. If Kitzhaber were found to have engaged in bribery or kickbacks, he could be prosecuted on an honest services fraud theory.

Similarly, if Hayes were conspiring with Kitzhaber in a bribery or kickback scheme, she could be liable for taking part in the scheme to deprive the public of Kitzhaber’s honest services. In that case, her liability would depend on Kitzhaber’s duty. This is the theory under which Maureen McDonnell was prosecuted along with her husband.

But what if Kitzhaber was not involved? Then the question would be whether Hayes owed her own duty of honest services to the people of Oregon.

There is no uniform definition of who qualifies as a state or local “public official” for purposes of honest services fraud. Those who are elected to office or are employed and paid by the government certainly qualify. But the definition likely is not limited to those who are on the government payroll.

If we look to the federal bribery statute for guidance, “public official” is defined to include not only federal government employees and elected officials but also any individual acting “for or on behalf of the United States.” 18 U.S.C. § 201(a)(1). The Supreme Court has held that this encompasses anyone exercising a position of public trust with official federal responsibilities. For example, a private contractor responsible for awarding federal housing grants or a guard at a private correctional facility that contracts to house federal prisoners may be considered a public official under the bribery statute due to the nature of their responsibilities. The same principle should apply at the state level.

The facts suggest that Ms. Hayes should be considered a public official, as one who acted for and on behalf of the state of Oregon. When he was first elected in 2011, Kitzhaber announced that Hayes would serve not only in the role of first lady but also as an advisor to the governor on clean energy and development issues. By all accounts, Hayes played a significant policy role in Kitzhaber’s administration.

The Oregonian newspaper has been reviewing some 94,000 of Hayes’ e-mails that were recently released as part of a public records request. They reveal that Hayes was an active participant in the administration, attending top-level meetings, directing the activities of aides, making use of the governor’s staff, and participating in various state government programs and initiatives. She traveled on state business, and at state expense, to various events where she appeared in an official capacity as first lady.

Significantly, the Oregon Attorney General herself recently determined that Hayes was a public official for purposes of the state’s public records law. That ruling came when the Oregonian requested copies of Hayes’ aforementioned e-mails. Hayes and Kitzhaber resisted that request, arguing that she was a private citizen not covered by the law. The Attorney General disagreed, finding Hayes had “extensive, high-level involvement in the executive branch,” and that she had “a significant amount of authority over government employees.”

Hayes and Kitzhaber themselves have taken somewhat conflicting positions on the question of Hayes’ status. Last summer the governor’s counsel announced that they considered Hayes to be a public official for purposes of the state’s ethics rules, and Hayes apparently has in the past filed financial disclosure paperwork that is required of state officials. On the other hand, when resisting the order to turn over her e-mails and the power of the state ethics commission to investigate her, Hayes and the governor claimed she was a private citizen, not a public official. More recently, though, she argued (unsuccessfully) that the state should pay her attorney’s fees, citing the Attorney General’s finding that she is a public official.

Putting all these facts together, there’s a compelling argument that Hayes should be considered a state public official for purposes of honest services law. She certainly was acting “for or on behalf of” the state in a number of ways. And the finding of the state’s own highest legal official, while not binding for purposes of interpreting a federal law, is certainly entitled to some deference.

This is not to say the same would necessarily be true for every first lady in every case. As my students are tired of hearing me say, everything depends on your facts. It’s possible that a first lady who played a much less active policy role in the administration and performed only ceremonial functions would not be considered a public official. But Hayes, who was so involved that the Oregonian has dubbed her a “deputy governor,” seems to qualify.

But in the end, I don’t think it really matters whether or not Hayes is formally deemed to be a public official. As noted above, honest services fraud can also apply to private sector individuals. The key is the presence of a duty of special trust and confidence that arises from the nature of the relationship between the parties.

All of the same factors described above suggest that Hayes had a duty of honest services to the people of Oregon, even if she is considered a private citizen. Hayes was acting on behalf of the state, speaking in the name of the state, directing the activities of state employees, and working on policy initiatives within the state government. The taxpayers were not paying her a salary, but were supporting her in a number of ways including providing travel, security, staff, and living quarters. It would be strange indeed if the law held that someone who plays such a role within the government assumes no duty to the public to act with honesty and loyalty and free from corruption.

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I believe a court would conclude that Cylvia Hayes owed a duty of honest services to the people of Oregon while she was acting as first lady. As a result, if the investigation revealed that she received bribes in connection with her state work, there would be a basis for honest services fraud charges regardless of whether Governor Kitzhaber was involved. This would require evidence of a corrupt deal, or quid pro quo, where Hayes agreed to take particular actions in exchange for contracts or other things of value.  A mere conflict of interest, or appearance of one, would not be enough.

Again, I have no idea whether Hayes committed any crimes and am not suggesting that she did. But anyone who believes that any potential criminal liability for Hayes depends on whether the governor was involved in the scheme is probably mistaken.

Update: On June 16, 2017 federal authorities announced they would be filing no criminal charges against Kitzhaber or Hayes. The investigation is now closed.

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Federal Prosecution of State and Local Corruption: From Sea to Shining Sea

This has been a busy time for the federal prosecution of state and local corruption. In Virginia, federal prosecutors recently convicted former Governor Robert McDonnell and his wife Maureen on multiple felony counts for accepting a series of extravagant gifts from businessman Jonnie Williams in exchange for using the power of the Governor’s office to help promote his company’s products.

In New York, U.S. Attorney Preet Bharara has been on something of a crusade to clean up political corruption in the state legislature in Albany and has brought charges against more than a dozen legislators. This past February Sheldon Silver, the former New York State Assembly Speaker and one of the most powerful politicians in the state, was indicted for taking several million dollars in bribes and kickbacks.

On the opposite coast, Oregon’s governor John Kitzhaber recently resigned amid allegations of a scandal involving his fiancé Cylvia Hayes, who served as Oregon’s honorary first lady. The U.S. Attorney in Oregon is now investigating whether Hayes and Kitzhaber accepted money from companies who hired Hayes in exchange for agreeing to promote the interests of those companies within the state.

And of course the nation’s heartland is not immune. In Illinois, for example, four of the last seven governors have ended up in prison. The latest, former Governor Rod Blagojevich, was convicted in federal court in 2011 for, among other things, trying to cash in on his power to appoint the successor to former U.S. Senator Barack Obama.

Federal prosecution of state and local corruption really took off in the 1970s after Watergate, and raises some interesting issues. When is it appropriate for the federal government to go after state or local government officials, rather than leaving the state to handle its own affairs? After all, the vast majority of criminal prosecutions take place at the state level in the state criminal justice systems, and each state has its own laws against bribery and other corruption. The federal government generally doesn’t prosecute a state’s typical homicides, sex crimes or burglaries – why should corruption be treated differently?

There’s actually a constitutional basis to argue that the federal government should pursue these cases. The Guarantee Clause of the U.S. Constitution, Article 4, Section 4, provides that the “United States shall guarantee to every state in this union a republican form of government.” If “republican form of government” is understood to mean a representative democracy with power derived from the consent of the governed, then federal prosecution of state corruption may fulfill this mandate by removing corrupt state officials who either rose to power illegitimately or are using their powers to the detriment of their citizens. The normal political and legal structures within a state may be fine for handling most crimes, but when it comes to political corruption those structures themselves may be impaired. When that’s the case, there may be a role for the federal government.

Nevertheless, federal prosecutions of state officials can be controversial, particularly when there is a suggestion that the conduct in question was not illegal under their own state law and was simply standard practice or part of their local political culture. In a 1987 case striking down the use of honest services fraud to prosecute state corruption, McNally v. United States, the Supreme Court noted its concern about allowing federal prosecutors to use sweeping white collar statutes to “involve[] the federal government in setting standards of disclosure and good government for local and state officials.” (Congress, apparently not sharing the Court’s concern, reinstated the honest services fraud theory the following year by passing 18 U.S.C. § 1346, and it is still a workhorse in federal prosecutions of state and local corruption – see below.)

This was a common theme in the federal prosecution of former governor McDonnell in Virginia. McDonnell’s defenders protested that under Virginia law it was legal for him to accept many of the gifts that formed the basis of the charges. Virginia is notorious for its lax ethics laws governing public officials, and many believed that McDonnell was unfairly singled out for behavior that was simply “the Virginia way.” Indeed, several former Virginia Attorneys General have filed briefs on McDonnell’s behalf, arguing they would have advised him his conduct was legal and that his federal prosecution is threatening to upend Virginia’s entire political culture.

So when is it appropriate for the federal government to prosecute state or local corruption, and when should the matter be left to the states to handle on their own?

fbi seal

When Should the Feds Step In?

One reason federal intervention in a state corruption case might be appropriate and even welcome is the presence of a real or perceived conflict of interest among state officials. If corruption exists at a high level in the state government, those who would be charged with investigating and prosecuting it – the state attorney general, for example – may be political allies and close friends of the potential targets. If a city or state is run by a well-entrenched corrupt political “machine” (I’m lookin’ at you, Chicago) it may be unrealistic to expect the local authorities to tackle the corruption among their friends and colleagues. Indeed, the prosecuting authorities in the state may themselves be involved in the corruption.

In Virginia, for example, the state Attorney General Ken Cuccinelli was McDonnell’s running mate and close political ally, and ran to succeed him as governor in 2013. It’s asking a lot to expect a politician in that position to take a dispassionate look at possible corruption and bring a case that would not only bring down his political partner but also likely damage his own chances at winning the governor’s office. Particularly given the widespread attitude in Richmond that McDonnell’s conduct was simply the “Virginia way,” there was little reason to expect that the state would prosecute.

In Oregon, the state attorney general had already opened up a criminal investigation of the governor before the federal investigation began. When the U.S. Attorney in Oregon began a federal inquiry, she asked the state attorney general to put her investigation on hold. Once again, the Oregon attorney general is a political ally of the former governor and had routinely advised the governor on legal issues. Even after she opened her investigation there were some voices suggesting it would be difficult for her to investigate Kitzhaber and that an independent prosecutor should be appointed.

Even where state officials might in fact be able to investigate and prosecute impartially, there is still an issue of a perceived conflict of interest. It’s important that the public have confidence that any potential corruption was investigated thoroughly and appropriately. No matter how fair the Oregon attorney general was, for example, if she were to exonerate Kitzhaber there would always be lingering questions based on the appearance of a potential conflict of interest. A federal investigation removes those concerns.

Another factor in favor of federal prosecution can be the resources available to the federal government. A large-scale public corruption investigation demands a great deal of prosecutorial and investigative time and money. Many state prosecutor’s offices could quickly be overwhelmed by the demands of such a case, particularly considering all of the other state matters they are tasked with handling. Federal prosecutors, with the vast investigative and prosecutorial power of the federal government behind them, are simply better equipped to tackle such a large-scale investigation than their state counterparts.

Particular investigative techniques, such as wiretaps or undercover operations, may be especially useful in corruption investigations. Getting the subjects to discuss their plans on tape can be critical to proving criminal intent  – just ask former Illinois Governor (and current inmate) Blagojevich. Again, these types of undercover investigations and surveillance techniques are extremely time and labor intensive and may be beyond the capabilities of state authorities. But for the FBI it’s right in their wheelhouse, and they have the money and personnel to do it.

Prosecutorial resources and expertise are also an issue. Many state and local prosecutors accustomed to dealing with street crimes may have never handled a major public corruption case. Such cases raise complex legal and factual issues concerning things like proof of corrupt intent, not found in more typical state criminal law fare. The U.S. Department of Justice recognized the special nature of political corruption investigations by establishing the Public Integrity Section in 1976, with a staff of attorneys who specialize in such cases and travel the country assisting other federal prosecutors who are handling them. DOJ can bring a degree of prosecutorial firepower and experience to such investigations that is beyond the reach of most states.

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The Laws Used to Prosecute State and Local Corruption

Somewhat surprisingly, there are not a lot of federal laws aimed directly at state and local corruption. The principal federal statute covering bribery and gratuities, 18 U.S.C. § 201, applies only to federal public officials. But federal prosecutors have been creative when it comes to putting other federal statutes to work in these cases.

Honest services fraud – perhaps the most popular theory used to prosecute state and local corruption is honest services mail and wire fraud. The mail and wire fraud statutes (18 U.S.C. §§ 1341 and 1343) apply to use of the mail, phone lines, or wireless transmissions in furtherance of any “scheme or artifice to defraud.” The statutes are routinely applied to the more typical schemes to defraud victims of money or property, such as a Ponzi scheme. But prosecutors also use mail and wire fraud to prosecute state and local officials for corruption, on the theory that the corrupt acts defrauded the public of its intangible right to the fair and honest services of their public officials.

Honest services fraud has been used to prosecute many state and local officials over the past few decades. At times it has been applied to schemes that appeared more politically sleazy or unethical than criminally corrupt, which led to controversy about the potential breadth of the theory. But in 2010 in Skilling v. United States the Supreme Court limited the statute, ruling that it only applies to conduct that amounts to bribery or kickbacks. Even with this limitation, though, it remains an important weapon for federal prosecutors attacking state or local corruption. Honest services fraud was one of the primary statutes used in the McDonnell prosecution, as well as in the prosecutions of New York state legislators.

Hobbs Act Extortion – another common theory is extortion under color of official right under the Hobbs Act, 18 U.S.C. § 1951. As I have discussed elsewhere, extortion “under color of official right” has been interpreted by the Supreme Court essentially to be the equivalent of bribery. In the absence of a general federal bribery statute that applies to state and local officials, Hobbs Act extortion is a favorite of federal prosecutors looking at state and local corruption. Along with honest services fraud, Hobbs Act extortion formed the core of the indictment against the McDonnells in Virginia, and the same two statutes also were used in the recent indictment of former New York state Assembly Speaker Sheldon Silver.

Federal Program Bribery – a less commonly used but very powerful law is the federal program bribery statute, 18 U.S.C. § 666. It prohibits theft or bribery by an agent of any organization or state or local government in connection with programs or agencies receiving federal funds. There are certain (and quite modest) minimum dollar requirements involved, but once those are met this statute is a potent anti-bribery tool that can apply not only to state or local government officials but to private individuals as well.

RICO – the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961-1964, is a statutory behemoth primarily aimed at organized crime. Given the breadth of the statute, however, it is possible to apply it to entities such as a governor’s office, charging that state officials or others conducted the affairs of that office through a “pattern of racketeering activity.” Racketeering activity is defined to include a number of state law crimes, including bribery and extortion. Accordingly, a state law bribery scheme affecting a state or local government, while not violating the federal bribery statute, may be brought as a federal prosecution through the vehicle of RICO.

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Debate over federal prosecution of state and local officials reflects fundamental tensions about the proper balance of state and federal power that have existed since the founding of the nation. There will always be some, such as Governor McDonnell’s defenders in Virginia, who will argue that the federal government should butt out and allow the states to handle their own affairs. But as discussed above, there are many reasons why federal intervention may be necessary and appropriate — and if recent developments are any indication, federal prosecutors are not hesitating to jump in.