Charging Foreign Officials Who Take Bribes with Conspiracy to Violate the FCPA

The Foreign Corrupt Practices Act prohibits U.S. persons and companies from paying bribes to foreign officials to obtain or retain business. The statute applies only to those who pay the bribes, not to foreign officials who receive them. But a recent Supreme Court decision may revive a long-dormant legal theory: charging foreign officials with conspiracy to violate the FCPA.

Congress passed the FCPA in 1977 to combat U.S. companies participating in foreign corruption. In recent years FCPA enforcement has become a major priority for the Department of Justice and the SEC. FCPA cases have resulted in some of the largest criminal and civil fines in history. And although private citizen Donald Trump criticized the law in the past, Attorney General Sessions recently affirmed the Trump administration remains committed to its enforcement.

The FCPA is an unusual corruption statute in at least one respect. Bribery laws generally apply to both sides of a corrupt transaction, prohibiting the receipt of bribes by a public official as well as the payment of those bribes. The FCPA, by contrast, applies only to the bribe payer. Foreign officials who receive bribes may be subject to prosecution in their own country, but the language of the FCPA does not prohibit their actions.

Forty years after the FCPA’s passage, the economy is more global and interconnected than ever. DOJ is much more aggressive about asserting criminal jurisdiction over events that take place primarily in other countries. There are cases where DOJ may want to charge the foreign official accepting FCPA bribes. This may be particularly true when the official has extensive ties to and activities within the United States, or when prosecution in the official’s own country seems unlikely.

Because the FCPA does not apply to the bribe recipients, DOJ must look to other theories to hold them accountable. For example, in some recent cases DOJ has charged foreign officials with money laundering of funds received as part of an FCPA scheme.

But DOJ may have a more direct option: charging foreign officials who receive bribes with conspiracy to violate the FCPA. Conventional wisdom has been that such conspiracy charges are improper. This is based in large part on a single 1991 Court of Appeals case, United States v. Castle. But a recent Supreme Court decision casts doubt on Castle and may breathe new life into the conspiracy theory.

Bribery usually punishes both sides of the corrupt transaction

The Conspiracy Precedent: United States v. Castle

There was a time when DOJ believed it could charge foreign officials with conspiracy to violate the FCPA. In Castle the government used that theory to prosecute four individuals – two U.S. citizens and two Canadian officials. The Americans had allegedly paid the Canadians a $50,000 bribe to secure a contract to provide buses to the Saskatchewan government.

The conduct of the Americans plainly fell within the statute. But the Canadian defendants claimed they could not be charged with conspiracy to violate the FCPA. They argued the conspiracy charge was an improper attempt to circumvent Congress’s decision not to criminalize the foreign officials’s conduct.

The U.S. Court of Appeals for the Fifth Circuit agreed. The court said Congress knew any FCPA bribery transaction would necessarily involve a foreign official. But Congress chose not to criminalize the receipt of the bribe. Prosecuting foreign officials for conspiracy, the court held, would amount to an improper end run around this Congressional policy decision.

The Mann Act and Gebardi v. United States

The Castle court relied primarily on a 1932 Supreme Court case, Gebardi v. United States. Gebardi involved a prosecution under the Mann Act, which prohibited the transportation of women across state lines for “immoral purposes.” The Mann Act punished those doing the transporting but did not criminalize the actions of the woman being transported.

In Gebardi a woman agreed to cross state lines with her lover to have sex. When they were charged with conspiracy to violate the Mann Act, she argued the charge was improper. She noted that Congress deliberately chose not to criminalize her conduct in the Mann Act itself. To allow a conspiracy charge, she claimed, would subvert this Congressional decision. The Supreme Court agreed and dismissed the conspiracy case.

The Castle court held that the reasoning of Gebardi squarely applied to the FCPA. Failing to criminalize the receipt of bribes by foreign officials, the court said, represented “an affirmative legislative policy to leave unpunished a well-defined group of persons who were necessary parties to the acts constituting a violation of the substantive law.” Given that legislative decision, it was improper for prosecutors to use conspiracy to charge the foreign officials that the FCPA left unpunished.

Baltimore police were charged with extortion in Ocasio

Conspiracy and Ocasio v. United States

Since 1991 Castle has been widely cited for the proposition that it’s improper to charge foreign officials with conspiracy to violate the FCPA. But the Supreme Court’s decision last term in Ocasio v. United States suggests the high court would not agree.

In Ocasio the defendant was a Baltimore police officer. He, some fellow officers, and the owners of an auto garage took part in a scheme in which the garage owners paid the officers to refer car accident victims to the garage for repairs.

Officer Ocasio and the garage owners were charged with conspiracy to violate the Hobbs Act. That act prohibits extortion “under color of official right” by a public official. This is a common federal corruption charge, particularly in cases involving state or local officials.

In Evans v. United States the Supreme Court held that extortion under color of official right is basically equivalent to the receipt of a bribe. But the Hobbs Act applies only to the public official, not to the person who pays. So as interpreted by Evans the Hobbs Act, like the FCPA, is an odd bribery statute: it prohibits only one side of a two-sided corrupt transaction.

In Officer Ocasio’s case, that meant prosecutors couldn’t charge the garage owners with violating the Hobbs Act directly. So they charged the garage owners and the officers with conspiracy to violate the Hobbs Act. The government’s theory was that although the garage owners could not violate the Hobbs Act, they were still capable of conspiring to help the officers violate it. In effect, the garage owners were charged with conspiring to help the police officers extort money from the garage owners themselves.

Ocasio argued the conspiracy charge was improper. Part of his argument was similar to that made by the defendant in Gebardi. Although every Hobbs Act extortion case necessarily involves at least two parties, Congress expressly chose not to punish the person who pays the public official. Prosecuting the payer for conspiracy to violate the Hobbs Act, Ocasio argued, would undermine this Congressional decision.

Supreme Court precedent supports charging foreign officials with conspiracy to violate the FCPA

The Supreme Court on the Nature of Conspiracy

The Supreme Court disagreed with Officer Ocasio. The Court relied on basic principles of conspiracy law. It noted that conspiracy has always been a separate offense from the underlying crime. In a conspiracy charge, the crime is the agreement itself – the joint undertaking to engage in criminal activity.

Conspiracy does not require that the co-conspirators successfully commit the crime that is the object of the conspiracy. It does not require that each co-conspirator agree to commit or facilitate each and every element of the underlying crime. In fact, a conspirator may be convicted even if he was legally incapable of committing the underlying offense. Conspirators need only agree to help some member of the conspiracy commit the crime.

In Ocasio’s case, the garage owners conspired with the police officers to help the officers violate the Hobbs Act. The Court held this conspiracy theory was sound even though the garage owners, who were not public officials, would be legally incapable of committing extortion under color of official right: “It is sufficient to prove that the conspirators agreed that the underlying crime be committed by a member of the conspiracy who was capable of committing it. In other words, each conspirator must have specifically intended that some conspirator commit each element of the substantive offense.”

The Mann Act Precedents

The Ocasio Court also discussed Gebardi, as well as an even earlier Mann Act case, United States v. Holte (1915). In Holte the Court rejected the claim that it was impossible for the woman transported across state lines to be guilty of conspiracy to violate the Mann Act. The Court gave an example of a prostitute who buys the train tickets, arranges for the travel, and then crosses state lines with a companion. In such a case, the Court said, there was no reason the woman could not be charged with conspiracy even though the terms of the Mann Act did not cover her conduct.

The Court in Ocasio concluded Holte and Gebardi mean that merely participating in a two-sided transaction will not always be enough to charge the person not covered by the statute  with conspiracy. However, there could be cases where the active participation of the other party would rise to the level where a conspiracy charge would be warranted. Gebardi, the Court held, rejected the conspiracy charge not because it was inherently improper but simply because there was no evidence that the woman in that case had actually joined the conspiracy.

The Court concluded: “Holte and Gebardi make perfectly clear that a person may be convicted of conspiring to commit a substantive offense that he or she cannot personally commit. They also show that when that person’s consent or acquiescence is inherent in the underlying substantive offense, something more than bare consent or acquiescence may be needed to prove that the person was a conspirator.”

Charging Foreign Officials with Conspiracy to Violate the FCPA

Ocasio suggests the current Supreme Court would not agree with the Castle court’s reading of Gebardi. Like the FCPA, the Hobbs Act expressly fails to criminalize the acts of one of the two necessary parties in a criminal transaction. The court in Castle held that this Congressional judgment meant a conspiracy charge would always be improper. But the Supreme Court in Ocasio rejected a similar claim.

Castle essentially concluded that Congress’s failure to include foreign officials in the FCPA immunizes those officials from any FCPA-related charge, even under separate statutes. The current Supreme Court is unlikely to be sympathetic to that argument. If Congress wants to pass a statute prohibiting any charges of any kind against foreign officials who accept bribes, it is free to do so. But the Court is unlikely to infer such a broad policy decision from the silence in the FCPA. It is much more likely to find, as it did with the Hobbs Act, that nothing in the FCPA alters the basic law of conspiracy.

This suggests DOJ could properly charge a foreign official who receives bribes with conspiracy to violate the FCPA. The theory would be that the foreign official conspired to help U.S. persons violate the FCPA by bribing that official. Just as the garage owners in Ocasio conspired to help others extort money from the owners, foreign officials could conspire to help others pay bribes to the foreign officials.

This charge would be most appropriate where the foreign official was aggressively encouraging the bribes. As the Court noted in Ocasio, something more than mere passive participation likely would be required to find the officials guilty of a conspiracy. But if they were actively engaged in the scheme, a conspiracy charge may be warranted.

In a case where the foreign official is aggressively demanding bribes, punishment of the official may be particularly justified. The bribe payers arguably are being “shaken down.” They may feel they have little choice but to pay. Charging only the bribe payers in such a case is akin to charging only the victims of extortion in a Hobbs Act case – it may let the most culpable party off the hook.

Of course, cases where DOJ is interested in prosecuting the foreign official may be relatively rare. Where the official is more of a passive recipient, conspiracy charges may not be warranted. In many cases diplomatic, jurisdictional, evidentiary, or other concerns will counsel against filing charges.

But in appropriate cases, DOJ should consider charging foreign officials who accept bribes with conspiracy to violate the FCPA. Ocasio suggests the Department’s legal position more than twenty-five years ago in Castle was correct: conspiracy is a separate crime and there is no barrier to prosecution.

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The Bob McDonnell Case May Have Been Won Months Before Trial

The U.S. Supreme Court unanimously overturned Bob McDonnell’s corruption convictions on June 27. The Court held that the actions McDonnell took in exchange for the secret gifts and loans he received from businessman Jonnie Williams did not constitute “official acts” within the meaning of federal bribery law. I’ve written here and here about why I think the Court’s decision is wrong. But in this post I’d like to examine a different aspect of the case: how a tactical move by the defense, months before trial, may well have been the key to McDonnell’s ultimate victory.

As I noted, the basis of the Supreme Court’s decision was its conclusion that McDonnell did not perform “official acts.” If you’ve been reading the commentary about the case for the past two years, you could be forgiven for thinking it was always clear that the definition of “official act” was the key issue. Virtually all media reports focused on the question of “official acts.” At trial, in the court of appeals, and in the Supreme Court, both sides agreed this was the relevant test. In its decision the Supreme Court simply noted, with no analysis, that both sides agreed the government was required to prove that McDonnell agreed to perform “official acts” in exchange for the bribes.

But in fact, it’s far from clear that this focus on “official acts” was the proper legal standard by which to judge McDonnell’s actions. That this became the central legal issue in the case is a testament to the skill of McDonnell’s defense team. By convincing both the prosecutors and the trial court that this was the correct legal standard, they may have won McDonnell’s case months before his trial even began.

IMG_3053

The Definition of “Official Act”

The Supreme Court began its analysis by stating: “The issue in this case is the proper interpretation of the term ‘official act.'” The definition of “official act” in question comes from the federal bribery statute, 18 U.S.C. §201.  Section 201(a)(3) provides:

the term “official act” means any decision or action on any question, matter, cause, suit, proceeding or controversy, which may at any time be pending, or which may by law be brought before any public official, in such official’s official capacity, or in such official’s place of trust or profit.

Under Section 201(b)(2)(A), a public official is guilty of bribery if he or she “corruptly demands, seeks, receives, accepts, or agrees to receive or accept” anything of value in exchange for being influenced in the performance of any such “official act.”

The Supreme Court agreed with McDonnell that this definition of “official act” envisions some formal exercise of government power; a public official making a decision or taking action on a particular question or matter. The bulk of the legal portion of the Court’s opinion is a rather dry analysis of the “official act” definition quoted above, with the Court using tools of statutory construction to decide what is meant by a “decision or action on” a “question, matter, cause, suit, proceeding, or controversy.”

The Court held that if all McDonnell agreed to do was introduce Williams to others in the Virginia government who might help him, or hold an event at the Governor’s mansion to promote Williams’ product, these were simply routine political courtesies and did not represent the kind of exercise of government power that this definition suggests. Because the jury was not properly instructed on the definition of “official act” as announced by the Court, the convictions were vacated and the case sent back to the lower courts.

This may all sound unremarkable, but for one fact: McDonnell was never charged with violating 18 U.S.C. §201. That statute applies only to bribery by federal public officials or those acting on behalf of the federal government. As a state governor acting on state matters, McDonnell was not covered. The really unusual thing about the McDonnell opinion is that it consists almost entirely of analysis of a statute that no one in the case was charged with violating.

The Charges in McDonnell’s Case

McDonnell was actually indicted for violating two different corruption statutes: Hobbs Act extortion under color of official right and honest services wire fraud. These are two of the most common vehicles for the federal prosecution of state or local corruption. The Supreme Court held, in Evans v. United States, that Hobbs Act extortion under color of official right is basically the equivalent of bribery. And in the landmark 2010 case of Skilling v. United States, the Supreme Court held that honest services fraud applies only to bribery and kickbacks.

Both the Hobbs Act and honest services fraud, therefore, may be used to prosecute bribery — but neither statute defines that term. From the beginning of the case, McDonnell’s defense team successfully argued that since these statutes don’t define bribery, courts should use the definition of bribery found in a different federal statute, 18 U.S.C. §201. And this led to the focus on whether McDonnell had performed “official acts” within the meaning of that law.

At first glance this argument seems reasonable: why not look to another federal statute for the definition of bribery under the Hobbs Act and honest services fraud? But as I argued in greater detail in this earlier post, using the Section 201 definition of bribery for purposes of these other statutes actually makes little sense.

In Skilling the Court said that honest services fraud applies to bribery – but it didn’t say “bribery as defined in 18 U.S.C. §201.” And upon reading Skilling it is clear that the Court had a broader, more general concept of bribery in mind. For example, honest services fraud applies to state and local public officials like McDonnell who would not be subject to bribery charges under § 201. It also applies to private sector bribery, such as an employee who violates his duty of honest services to his employer by accepting payments from a competitor to sell his employer’s secrets. Private sector bribery is not covered by 18 U.S.C. §201 and private individuals cannot, by definition, perform “official acts.” It cannot be that bribery for purposes of honest services fraud is equivalent to bribery as defined by 18 U.S.C. §201, because much of the bribery unquestionably covered by honest services fraud would not violate §201.

When the Skilling Court defined honest services fraud it looked to the broader universe of bribery law and drew upon many cases that would not have fallen under 18 U.S.C. §201. In fact, the Court expressly noted (in footnote 45) that honest services fraud, as it was defining it, reached well beyond the scope of 18 U.S.C. §201.

Similarly, Hobbs Act extortion under color of official right applies to bribery by state and local officials, who are not covered by Section 201. The definitions of Section 201 are therefore similarly inadequate to cover all of the conduct encompassed by Hobbs Act extortion.

The McDonnell case might also leave the impression that every instance of federal bribery under Section 201 involves “official acts” – but that too is incorrect. Section 201 defines three different ways to commit bribery, and only one of them involves official acts. Bribery is also committed by an official who accepts a thing of value in exchange for being induced to do or omit to do any act in violation of his or her official duty (18 U.S.C. §201(b)(2)(C)) or in exchange for agreeing to help commit a fraud against the United States (18 U.S.C. §201(b)(2)(B)). Even within the federal bribery statute itself, the crime of bribery is not limited by a focus only on whether an official performed “official acts.” Why should bribery for honest services fraud or the Hobbs Act be so limited?

The Essence of Bribery

Bribery is an ancient common-law crime that was around long before Congress attempted to define it in one statute. There is nothing magical about the definition in 18 U.S.C. §201, and as we’ve seen, that definition is inadequate to capture all cases covered by honest services fraud or Hobbs Act extortion. The key to bribery is the corrupt agreement to be influenced, or quid pro quo. It’s the influence component that is critical, more than the precise nature of the action taken. Bribery corrupts the political system because the actions of the public official are being altered for an improper purpose. The recipient of a bribe is influenced to act not in the best interests of all but rather to benefit the person who paid the bribe. Similarly, the bribe payer obtains political favors or exercises of power that are unavailable to the general public, thanks to a corrupt deal to reward the public official in exchange.

When defining bribery, the Supreme Court could have looked to many sources. For example, one standard authority, the Model Penal Code (§240.1), defines bribery as agreeing to accept “any pecuniary benefit as consideration for the recipient’s decision, opinion, recommendation, vote or other exercise of discretion as a public servant.” The heart of the crime is the same: the quid pro quo, exchange of something of value to influence an official’s discretionary action.  But the language is much more general than §201(a)(3) and does not include the specific focus on a “question, matter, cause, suit, proceeding or controversy.”

Other possible sources include other laws. In a case involving the Virginia governor it might make sense, for example, to consider the Virginia state bribery statute, since it was the citizens of Virginia to whom McDonnell owed a duty of honest services. Virginia law tracks the Model Penal Code and provides that a public official is guilty of bribery if he or she accepts any pecuniary benefit from another 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). This definition, particularly the references to the official making a “recommendation” or the “exercise of discretion,” seems clearly to cover some of the actions taken by McDonnell.

The Court in McDonnell also could have looked to the many other state and local bribery cases that historically have been prosecuted as honest services fraud. If it surveyed those cases it would have found a wide variety of state law definitions of bribery that do not include the restrictive “official act” definition of Section 201.

In short, there is no reason to believe that meeting the precise definition of “official act” in 18 U.S.C. §201 should be required in all federal bribery prosecutions under all statutes. Up until McDonnell, the Supreme Court had never held that the specific language of Section 201 applied in prosecutions of honest services fraud or Hobbs Act extortion. But thanks to the efforts of McDonnell’s defense team, by the time the case arrived at the Supreme Court everyone, including the Justices, simply assumed this was the correct standard.

How “Official Acts” Became the Focus

So how did the McDonnell case end up focusing on “official acts?” There is some suggestion in the early pleadings that this was not always a foregone conclusion. In a defense motion filed on January 21, 2014, the same day the indictment was returned, the defense said the government had suggested that bribery under honest services fraud and the Hobbs Act may not require proof of “official acts” as defined in 18 U.S.C. §201. (It’s unclear when and where the government may have made that argument; perhaps it was in pre-indictment meetings with the defense team.) In that same motion the defense argued vigorously against this broader definition and pushed their claim that the government was required to prove “official acts.”

By the time the government responded to that defense motion in February, it appears the prosecution had made a tactical decision to agree that proving “official acts” as defined in §201(a)(3) was required. From that point on, up to and including in the Supreme Court, both sides proceeded on the assumption that this was the proper standard. Although some organizations that filed amicus briefs expressed some doubts on this point, for the most part everyone else also agreed that the government had to prove McDonnell performed “official acts.”

It appears to me the defense made an aggressive early effort to narrow the playing field to McDonnell’s advantage by insisting that the “official act” definition applied, and the prosecutors ultimately acquiesced. This may be a decision the government now regrets.

The Consequences of a Definition

It’s hard to overstate the importance to McDonnell’s case of this focus on “official acts.” First of all, from day one, it allowed the defense to shift the narrative: “This case is not really about corruption and buying access, it’s about a technical dispute over the meaning of a statute. Let’s not focus on the corrupt deal where the Governor agreed to use the powers of his office to benefit the man who was secretly paying him off. Instead, let’s focus on whether McDonnell’s actions fit some precise statutory definition.” Legalistic and kind of boring; not sexy and corrupt.

Lawyers all know the old saying: “When the facts are with you, pound the facts. When the law is with you, pound the law. And when neither the facts nor the law are with you, pound the table.” The facts clearly were not with McDonnell; whether the law was with him is a matter of debate, but there’s no doubt the defense did a great job of pounding the law and thereby shifting the entire focus of the case.

Similarly, in the Supreme Court, the emphasis on “official acts” meant that we ended up with an opinion consisting largely of a dry, lawyerly statutory analysis of what precisely is meant by a “decision or action on” a “question, matter, cause, suit, proceeding or controversy.” If this had not been the focus, perhaps the Court would have been forced to grapple with the nature of the crime of bribery itself – the quid and the pro, not just the quo – and the overall corrupt agreement between McDonnell and Williams. Perhaps the opinion would have stepped back and seen the big picture, how secretly purchasing the kind of access and influence that Williams obtained is precisely what the crime of bribery is supposed to prevent. Instead, the Court dove down into the weeds of statutory interpretation and never emerged.

We will never know for certain whether the outcome in McDonnell would have changed had the definition of “official act” not become the focus of the case. But the defense victory on this one legal issue, months before trial and more than two years before the Supreme Court’s decision, may ultimately have been the key to McDonnell’s win.

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Extortion Distortion: Ocasio v. United States

In criminal law, we ordinarily think of perpetrator and victim as two distinct entities. It would be nonsensical, for example, to talk about me robbing myself or defrauding myself. But the same may not be true of an extortion conspiracy under the Hobbs Act. In Ocasio v. United States, the Supreme Court ruled 5-3 that a defendant may be charged with conspiring to extort money from himself.

So what makes such a contortionist extortionist possible? Although it sounds a bit bizarre, this result doesn’t represent some new watershed in white collar crime or dramatic expansion of federal criminal jurisdiction. It’s simply the logical, albeit unfortunate, outgrowth of a questionable Supreme Court decision more than two decades old.

Samuel Ocasio was one of dozens of Baltimore police officers involved in a widespread corruption scheme with the owners of a garage called Majestic Auto Repair. Police officers would refer drivers involved in car accidents to Majestic for necessary repairs, and in return the garage owners would pay the officers $150 to $300 per car. When the scheme came to light Ocasio, a number of other officers, and the owners of Majestic were charged with conspiracy to commit extortion under the Hobbs Act.

Extortion usually connotes payments made under some kind of duress; think burly guy smacking his palm with a baseball bat while he recommends that you buy the “health insurance” he is selling. But the Hobbs Act also prohibits extortion “under color of official right,” which essentially operates as bribery by another name. And because the federal bribery statute generally applies only to federal officials, prosecutors frequently turn to Hobbs Act extortion to prosecute state and local bribery schemes such as that in Ocasio.

Evans and Extortion Under Color of Official Right

The use of Hobbs Act extortion to prosecute bribery has its roots in a 1992 Supreme Court Case, Evans v. United States. 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. The Court rejected Evans’ claim that he had to actually induce the payment or “shake down” the payer to be guilty of extortion. It held that at common law extortion under color of official right was the “rough equivalent of what we would now describe as ‘taking a bribe.’” It was enough that a public official accepted a payment knowing that it was given in exchange for some exercise of official power.

Justice Thomas wrote a vigorous dissent in Evans, joined by Justice Scalia and Chief Justice Rehnquist. He argued that bribery and extortion had always been distinct crimes and that the majority’s decision obliterated that distinction. In particular, in a bribery case both sides – the bribe payer and the bribe recipient – are guilty parties to a corrupt deal, and both may be prosecuted. But in extortion, the person who pays the official is considered a victim, not a willing and culpable participant.

Because the payer of extortion is generally considered a victim, extortion under color of official right applies only to public officials. On its face, the Hobbs Act does not punish the payment of the extortion. What Evans resulted in, therefore, was an oddity probably unique in criminal law: a statute that prohibits bribery but only punishes the public official side of the bribe transaction. More than twenty years later, the implications of that decision led to the dispute that landed before the Supreme Court in Ocasio.

Once Evans declared extortion under color of official right to be equivalent to bribery, it was predictable that prosecutors in appropriate cases would seek a way to charge the payer’s side of those bribery transactions. Some cases have charged bribe payers with aiding and abetting their own extortion by the officials they were paying. An equally inelegant theory is that used in Ocasio: prosecutors indicted the garage owners and Officer Ocasio for conspiracy to violate the Hobbs Act, charging that the owners conspired with Ocasio to extort money from the owners themselves.

In Ocasio, Baltimore police were charged with extortion conspiracy under the Hobbs Act

Ocasio and the Court’s Opinions

Ocasio’s case before the Court challenged this conspiracy theory and hinged on the language of the Hobbs Act. The statute’s definition of extortion requires that the public official obtain property from “another.” In the context of a conspiracy, Ocasio claimed, this must mean the conspirators agree to obtain property from someone outside of that conspiracy. If the co-conspirators simply agree to exchange property among themselves, he argued, they do not obtain property of “another” within the meaning of the statute.

The majority, through Justice Alito, rejected this argument. Ocasio’s conviction, the Court said, was simply a straightforward application of textbook conspiracy law: someone can be guilty of conspiracy to commit a crime even if they didn’t — or couldn’t — commit all elements of the underlying crime themselves.

For example, if I act as an agent for a Congressman to solicit bribes from defense contractors, I can be found guilty of conspiracy to accept bribes even though, as someone who is not a public official, I could not be charged with accepting bribes myself. If I participate in a bank robbery by providing the robbers with inside information about the bank vault and security, I’ve conspired to commit bank robbery even if I never take part in the actual robbery itself.

In Ocasio’s case, the Court held, it’s true the garage owners, as private citizens, could not commit the crime of extortion under color of official right, and if they obtained their own money it would not be property from “another.”  But although the owners could not commit the crime themselves, they could conspire to help officer Ocasio commit it. Ocasio violated the statute by obtaining property from another — which simply means someone other than Ocasio, in this case, the owners — and the owners agreed to help him do it. Accordingly, the conspiracy charge was not inconsistent with the language of the Hobbs Act, even though the “victims” whose property was obtained were also part of the conspiracy itself.

The Court rejected concerns that this holding might make even innocent extortion victims liable for conspiring with public officials who were shaking them down. There is a distinction, the Court noted, between grudging consent given by a payer who feels he has no alternative and the proof of intent required to establish that the payer knowingly and voluntarily joined a conspiracy. Only the latter is the equivalent of bribery that would render the payer equally as culpable as the public official.

Justice Breyer wrote a brief concurrence, saying that the convoluted result made him tend to agree with Justice Thomas that Evans was probably wrongly decided. Nevertheless, he concluded, Ocasio had not asked the Court to overrule Evans, and given that case’s holding the majority opinion was correct as a matter of conspiracy law.

Justice Thomas, not surprisingly, dissented and reiterated his view that Evans was a mistake. He argued the Court should not compound the error by extending the reasoning of Evans to encompass Hobbs Act conspiracy. Justice Sotomayor, joined by Chief Justice Roberts, wrote a separate dissent agreeing with Officer Ocasio that the most natural reading of the statutory language required the members of the conspiracy to obtain the property of someone outside the conspiracy.

The Impact of Ocasio: Not Much

I think Justice Breyer has it right; if we start with the Evans holding as a given, then Ocasio seems correct. The linguistic gymnastics required to frame a charge against the bribe payers in what is really a bribery case do highlight the shaky foundation of the Evans holding equating extortion with bribery. But as the majority noted, if you accept Evans, then basic conspiracy law dictates the result in Ocasio.

The dissenters expressed concerns about the breadth of federal criminal statutes and the scope of conspiracy law. Justice Sotomayor said she feared the Court’s ruling would invite prosecutors to round up all parties in an extortion scheme, charge everyone with conspiracy, and see “what sticks and who flips.” They also raised federalism concerns, questioning whether it was appropriate for the federal government to pursue local corruption cases that could be left to the states.

Debates about sweeping federal criminal statutes and the dangers of prosecutorial power are common these days. The pending case involving the corruption convictions of former Virginia Governor Bob McDonnell (also a Hobbs Act case) contains many of the same themes. But in Ocasio, concerns about inappropriate charges have little force. No one suggests the owners of Majestic were not blameworthy or did not deserve to be prosecuted.

As for federalism concerns, there are already many ways for federal prosecutors to charge state and local bribery. Even before the Court’s decision in Skilling v. United States, for example, it’s been clear that honest services mail and wire fraud applies to bribery and kickback schemes like that in Ocasio. Under certain conditions the Travel Act (18 U.S.C. § 1952) and the Federal Program Bribery statute (18 U.S.C. § 666) also apply to state and local corruption. It’s even likely that prosecutors could have named Majestic as a RICO enterprise and indicted everyone involved for violating RICO (18 U.S.C. § 1962) based on a pattern of state-law bribery.

In short, there are plenty of ways for federal prosecutors to pursue state and local corruption. The Hobbs Act is just one potential arrow in the prosecutor’s quiver. If Ocasio had gone the other way, I doubt there’s a single future case that would have gone unprosecuted as a result. If some members of the Court really have issues with federal prosecutors having the power to charge state and local bribery, they are several decades late to that party.

The concern about prosecutors having the power to pick and choose whom to charge with conspiracy is similarly misplaced. Prosecutors do this all the time when deciding whether a particular scheme is a true extortion scheme, where the payers are the victims, or is more like a traditional bribery scheme where the payers should be charged. That’s the essence of prosecutorial discretion and making sound charging decisions.

It’s a little disheartening to hear Justice Sotomayor, herself a former prosecutor, suggest that prosecutors might just round up everyone they see and charge them with conspiracy with no regard for their actual culpability. If that were to actually happen it would be a much bigger problem than simply the breadth of the Hobbs Act – but the presence or absence of one legal theory would not make any practical difference to such “rogue prosecutors.”

In the end, therefore, Ocasio leaves the white collar crime landscape largely unchanged. Future defendants, seeing a potential invitation in Ocasio, will likely file petitions asking the Court to overturn Evans, but it’s tough to see a current majority willing to do that. Congress, of course, could step in and clear everything up by amending the Hobbs Act, but that seems even less likely given the current gridlock on Capitol Hill.

And so the Hobbs Act remains as one of many powerful tools for federal prosecutors — and a quirky one, given the untidy legacy of Evans and its peculiar version of extortion distortion.

Note: this post is adapted from an article I published in the George Washington Law Review’s On the Docket.  You can find that article here.

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The Impact of Justice Scalia’s Death on the Bob McDonnell Case

Justice Scalia’s death could end up spelling prison time for Bob McDonnell.

Scalia’s unexpected death over the weekend is a watershed in the legal community. Whether they agreed with him or not, few would deny that Scalia was a towering intellectual force on the Supreme Court for the past three decades. He was an aggressive and witty questioner from the bench, who almost single-handedly made Supreme Court oral arguments a lot more interesting. His elegantly-written and sometimes caustic opinions were eminently readable and could send many of us scurrying off to Google obscure terms such as “jiggery-pokery.” He had a tremendous impact on the Court and on the law.

But — this being Washington — Scalia’s body was not yet cold before people moved past the tributes and started debating the political and legal implications of his demise. President Obama and Senate Republicans promptly squared off over whether Obama should appoint a successor and whether the Senate would act on the nomination if he did.

There was also a good deal of commentary about how Scalia’s absence from the Court might affect the outcome of major cases pending in areas such as affirmative action, abortion, the Affordable Care Act, and the President’s powers on immigration and climate change. The loss of a single Justice can have a great impact because it opens up the possibility of a 4-4 tie. When that occurs, it is as though the Supreme Court case never happened. The lower court opinion stands and the Supreme Court’s decision has no value as precedent.

For former Virginia Governor Bob McDonnell, that’s a worrisome prospect. McDonnell and his wife Maureen were convicted on multiple counts of corruption back in September 2014. Prosecutors charged that the Governor and his wife agreed to use the power of his office to benefit a businessman, Jonnie Williams, by promoting his dietary supplement product within the state government. In exchange, Williams gave the McDonnells secret gifts and no-paperwork “loans” that totaled about $170,000. Following their convictions, Bob McDonnell was sentenced to two years in prison and Maureen was sentenced to one year and one day.

A panel of the U.S. Court of Appeals for the Fourth Circuit unanimously affirmed McDonnell’s conviction, and the full court declined to re-hear the case. But this past January, in a move that surprised at least some observers, the Supreme Court agreed to hear McDonnell’s appeal. The case likely will be argued in April and decided near the end of the Court’s term in June. (Maureen’s appeal in the Fourth Circuit is on hold pending the outcome of Bob’s case; the legal issues are virtually identical and whatever happens in his case will almost certainly determine the outcome of hers.)

A 4-4 Supreme Court tie in McDonnell’s case would mean the Fourth Circuit opinion upholding his convictions would stand – and that would mean the former Governor, and almost certainly his wife, would soon be heading to prison.

The McDonnell case, like all others currently pending, now faces this possibility of an equally-divided Court.  But when it comes to McDonnell, Justice Scalia was not simply one of nine Justices. If I had to pick the one Justice on the Supreme Court most likely to be sympathetic to McDonnell’s arguments, it would have been Justice Scalia. Whether in the majority or in dissent, it’s a safe bet Scalia would have had something to say about McDonnell’s case – and it’s almost certain it would have been good for McDonnell.

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Justice Scalia – A Likely Champion for Bob McDonnell

Justice Scalia was a leading voice on the Court in the area of white collar crime. He wrote the majority opinion in a number of important cases and powerful dissents in others. Consistent with his overall judicial philosophy, when it came to white collar crimes he typically argued for a strict interpretation of the statutory language and objected to any judicial “glosses” or expansive interpretations that arguably went beyond the literal words of the statute.

McDonnell’s “big picture” argument to the Supreme Court is that the government’s interpretation of federal corruption laws is too broad and potentially criminalizes a great deal of protected political activity. Justice Scalia’s overall approach to the law suggests he would have been sympathetic to this claim.

But even beyond issues of general judicial philosophy, Justice Scalia had previously staked out strong positions on the particular statutes McDonnell was convicted of violating — positions that would have directly supported McDonnell’s legal theories:

Official acts: From day one, a centerpiece of McDonnell’s legal defense has been the definition of “official acts” contained in the federal bribery and gratuities statute, 18 U.S.C. § 201. That statute defines an official act as “any decision or action on any question, matter, cause, suit, proceeding, or controversy” that may be pending or may be brought before the public official. McDonnell claims that favors he did for Williams, such as introducing him to other government officials or suggesting to state researchers that they study Williams’ product, were not “decisions” or “actions” on matters pending before McDonnell that would fall within this definition. Accordingly, he says, they cannot form the basis of a bribery conviction.

McDonnell was not charged with violating § 201, which generally applies only to federal officials. But he and his supporters have claimed that the language of § 201 governs all federal corruption laws, including those he was convicted of violating: the Hobbs Act and honest services fraud. I think this is wrong, for reasons that I’ve detailed in earlier posts here and here. But the claim remains the heart of McDonnell’s defense and is central to his Supreme Court appeal.

In support of their interpretation of the term “official act,” McDonnell and his supporters rely primarily on the Supreme Court’s 1999 decision in United States v. Sun-Diamond, which involved the appeal of Sun-Diamond’s conviction for paying gratuities to Secretary of Agriculture Mike Espy. In the course of its opinion, the Court discussed the definition of “official act” and pointed out that it was deliberately narrow. The Court noted that some routine political events, such as the President hosting a winning sports team at a White House reception, would not be “official acts” under this definition because they would not involve decisions or actions on matters pending before the President.

Sun-Diamond was not a bribery case and its discussion of “official acts” was not central to the Court’s decision.   Nevertheless, McDonnell and many other public corruption defendants routinely cite this portion of the Court’s opinion to argue that their conduct in a bribery case did not amount to official acts and thus cannot be punished.

And who was the author of the Sun-Diamond opinion? Justice Scalia. He also famously remarked in that same opinion that in an area as complex as public corruption, where there are many different statutes and regulations concerning the intersection of law and politics, “a statute . . . that can linguistically be interpreted to be either a meat axe or a scalpel should reasonably be taken to be the latter.” (He did know how to turn a phrase.)

Scalia’s view that the federal bribery statute must be narrowly construed would be directly in line with McDonnell’s position. McDonnell claims his conviction threatens all routine political interactions and that if it stands a politician could not attend a fundraiser (or host a team at the White House) without fearing a potential prosecution. He argues that fundamental First Amendment rights of political association and expression forbid this, and that the federal corruption statutes must be more narrowly tailored.

With his claim that all federal corruption laws should be interpreted by using a scalpel that would carve out a safe zone for his own actions, Governor McDonnell almost certainly would have found a sympathetic audience in Justice Scalia.

Honest Services Fraud: One of the two principal corruption statutes under which McDonnell was convicted is honest services wire fraud. In an honest services fraud case, a politician is charged with defrauding his constituents of their right to his fair and honest services by using his public office to line his own pockets.

In an important 2010 case, Skilling v. United States (involving the conviction of former Enron CEO Jeff Skilling), the Supreme Court addressed Skilling’s argument that the term “honest services” was so vague and amorphous that it rendered the statute unconstitutional. The majority disagreed. The Court held that honest services fraud should be limited to cases involving bribery or kickbacks, and that so construed the law was sufficiently clear. Because Skilling’s conduct involved neither bribery nor kickbacks, his convictions for honest services fraud were reversed.

Justice Scalia (joined by Justices Thomas and Kennedy) wrote an opinion agreeing with the final outcome but not with the analysis. Scalia agreed with Skilling that the phrase “honest services” is hopelessly unclear. He criticized the majority’s decision, arguing that narrowing the law to only bribery and kickbacks “requires not interpretation but invention.” Justice Scalia wrote that he would reverse Skilling’s convictions on the ground that the honest services law was unconstitutionally vague.

Bob McDonnell is arguing that honest services fraud requires proof of “official action” that goes beyond anything he did for Williams. But as an alternative, McDonnell claims that if honest services fraud is construed to apply to his conduct, then that law is unconstitutionally vague.

As noted above, Justice Scalia likely would have agreed with McDonnell about the need for a narrow concept of “official action” in a bribery case. But beyond that, Scalia had already written an opinion agreeing with McDonnell’s fallback argument that the honest services statute is so amorphous that it violates the constitution.

Justice Scalia was a long-standing and ardent critic of the honest services law. There’s little doubt he would have been solidly in McDonnell’s camp when it came to the challenges to McDonnell’s honest services fraud convictions.

Hobbs Act: The other corruption offense of which McDonnell was convicted was Hobbs Act extortion. As I wrote in an earlier post here, this is a somewhat unusual corruption law. The Hobbs Act applies to more traditional extortion by force or violence, but also to extortion “under color of official right.”

In the landmark 1992 case of Evans v. United States, the Supreme Court held that Hobbs Act extortion under color of official right requires only that a public official accept something of value knowing that it is being given in exchange for some exercise of official power. At common law, the Court said, extortion under color of official right “was the rough equivalent of what we would now describe as ‘taking a bribe.’”

Justice Thomas dissented in Evans – in an opinion joined by Justice Scalia. He argued that extortion and bribery are distinct crimes and that the majority’s opinion obliterated that distinction. Extortion under color of official right, he claimed, could not be committed by simply passively accepting a bribe; the public official had to induce or demand the payment under the wrongful pretense that he was entitled to it by virtue of his office.

Justice Thomas also argued that the Court’s interpretation of the Hobbs Act improperly opened up for federal prosecution a wide array of corruption crimes that traditionally had been prosecuted by the states. This federalism argument – that the federal government should not lightly assume jurisdiction over possible state and local corruption offenses – is also one of McDonnell’s claims, and is one to which Justice Scalia would have been sympathetic.

Last fall I attended the Supreme Court oral arguments in another Hobbs Act corruption case, Ocasio v. United States. Although it was not directly at issue in that case, I recall Justice Scalia, within the first few minutes, expressing his skepticism about the proposition that the Hobbs Act applies to routine state law bribery. When counsel noted that this was the holding of Evans, Scalia replied, to laughter, “I dissented, I assume.”

When it comes to the second pillar of McDonnell’s corruption convictions – Hobbs Act extortion – Scalia again was on record disagreeing with the prosecution’s legal theory. He almost certainly would have sided with McDonnell in his challenges to the Hobbs Act charges.

bob and maureen

Of course, there’s no way to know for certain what impact Justice Scalia’s absence will have on the final outcome in McDonnell’s case. It may be that McDonnell was going to lose anyway – it only takes four Justices to grant certiorari, but it takes five to reverse. Or it may be that he is destined to win or lose by a wider margin, where Scalia’s vote would not have tipped the balance.

But a 5-4 decision in McDonnell’s favor seemed like a real possibility. If that had happened, one of those almost certainly voting in the majority – and very possibly writing the opinion – would have been Justice Scalia. If that was destined to be the outcome, Scalia’s death means there will now be a 4-4 tie – which means the McDonnells will likely be going to prison.

The Supreme Court has lost one of its strongest, most consistent, and most articulate conservative legal voices. But the McDonnells have lost their most likely champion among the Justices. The impact on the outcome of their cases could be profound.

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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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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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Why Bob McDonnell Was Convicted of Extortion

Bob McDonnell didn’t threaten to break anyone’s kneecaps — so how did he end up convicted of extortion? It’s thanks to a federal statute known as the Hobbs Act, one of the quirkier arrows in the public corruption prosecutor’s quiver.

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The former Virginia governor and his wife Maureen were convicted last fall of accepting $175,000 in gifts and loans from businessman Jonnie Williams in exchange for agreeing to use the power of the governor’s office to promote Williams’ dietary supplement, Anatabloc. A public official agreeing to take action in exchange for gifts sounds like bribery, and indeed the McDonnell case is widely (and properly) understood as a bribery case. If you review the Indictment, however, you won’t find a charge called “bribery” anywhere.

The essence of the crime of bribery is a quid pro quo, or “this for that” – in exchange for something of value to which she is not entitled, a public official agrees to exercise the powers of her office to benefit the bribe payor. Bribery is the quintessential public corruption offense: the political system is corrupted because a public official is acting not in the best interest of all but in order to benefit the person who paid the bribe.

But the federal bribery statute, 18 U.S.C. § 201, applies only to federal public officials and to those acting for or on behalf of the federal government. In most cases it will not apply to state or local government corruption. Using it was not an option in the McDonnell case. (This, by the way, is why I believe all of the focus on whether McDonnell’s actions qualified as “official acts” under section 201 has been misplaced. For my analysis of the question of “official acts” see my earlier posts here and here.)

Federal prosecutors looking to charge state and local bribery must therefore turn to different statutes. The three most common are 18 U.S.C. § 666 (covering bribery in connection with certain programs receiving federal funds); honest services fraud (a species of mail and wire fraud), and something called “extortion under color of official right” under the Hobbs Act. McDonnell was actually convicted of two counts of conspiracy, three counts of honest services fraud, and six counts of Hobbs Act extortion.

 The Hobbs Act

The Hobbs Act prohibits acts of robbery or extortion that have an effect on interstate commerce. Passed in 1946 and named for its sponsor, Alabama Democrat Sam Hobbs, the Act appears in a section of the criminal code alongside statutes aimed primarily at organized crime and racketeering. Its title is “Interference with commerce by threats and violence” – no mention of bribery.

The link to interstate commerce is basically a jurisdictional hook, necessary to give Congress the power under the Commerce Clause to criminalize offenses historically prosecuted by the states. Even the most trivial effect on interstate commerce will suffice and this requirement usually is easily satisfied, but it is nevertheless an element of the offense that the government must prove beyond a reasonable doubt. (McDonnell’s lawyers actually argued unsuccessfully in their post-trial motions that the government had failed to present sufficient evidence of an effect on interstate commerce.)

The meat of the statute is the requirement of robbery or extortion. Robbery is defined in the usual way as taking property from another against their will through the use of actual or threatened force or violence. Extortion 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.”

The word “extortion” conjures up images of a burly guy smacking his palm with a baseball bat while recommending that you pay him a “health insurance premium” – if you want to remain healthy, that is. In extortion, unlike robbery, the victim consents to turn over his or her property but does so under some kind of coercion or duress.

The Hobbs Act prohibition on extortion by force, violence or fear covers this classic “baseball bat” extortion. It applies to extortion by fear not only of physical injury but also of economic injury, such as a computer hacker threatening to crash a company’s website if it does not pay up. But it’s the extortion “under color of official right” clause in the Hobbs Act that has become so important in federal corruption cases.

 Evans v. United States: When Is Extortion Not Really Extortion?

The Supreme Court outlined the contours of Hobbs Act extortion under color of official right in the 1992 case of Evans v. United States. John Evans was a member of the Board of Commissioners of DeKalb County, Georgia. In 1985 and 1986 the FBI was conducting an undercover investigation into public corruption involving rezoning of property in the Atlanta area. An FBI agent posing as a real estate developer had a number of meetings and phone calls with Evans discussing the possible re-zoning of a parcel of land.

In July 1986 the agent gave Evans $7,000 in cash, along with a check for $1,000 made out to Evans’ campaign. Evans did not report the cash on his campaign finance forms or on his income taxes. The government charged that he took the money knowing it was intended to ensure that he would vote in favor of the re-zoning application and would attempt to persuade his fellow commissioners to do the same. On that basis, he was convicted of one count of extortion under color of official right under the Hobbs Act.

In the Supreme Court Evans argued that a payment was not “induced . . . under color of official right” within the meaning of the Hobbs Act unless the public official had taken some specific action to seek out or demand the payment. It was not extortion, he argued, for a public official just to accept the money knowing that it was in exchange for a promised official action – the official must do something to initiate the transaction.

Evans’ argument certainly squared with the common understanding of the term extortion, which brings to mind visions of a public official strong-arming or “shaking down” a victim and demanding payment in exchange for exercising official power. (“Oh, you want that property re-zoned? So what are you going to do for me?”) Extortion connotes some element of duress, and there was no evidence that Evans even requested the payment, much less pressured the agent to make it.

But the Supreme Court disagreed. After a lengthy examination of legal history, the Court concluded that at common law extortion by a public official “was the rough equivalent of what we would now describe as ‘taking a bribe.’” A demand or request by the public official was not an element of the offense. Congress, the Court said, must have had this common-law definition in mind when it passed the statute.

The Court therefore concluded (over a vigorous dissent) that extortion under color of official right requires only that the public official accept a thing of value to which he or she is not entitled, knowing that the payment was made in exchange for some exercise of official power. No demand, shakedown, or other affirmative act of inducement by the public official is required. Evans’ conviction was therefore affirmed.

 Is it Bribery or Extortion?

In the wake of Evans, as the Supreme Court itself basically agreed, there is not much difference between Hobbs Act extortion under color of official right and bribery. This is an odd result for a couple of different reasons.

First, it’s clear that bribery and extortion are in fact distinct crimes and that Congress knows the difference. For example, a companion statute to the Hobbs Act called the Travel Act (18 U.S.C. § 1952) prohibits interstate travel to further any unlawful activity, which is defined to include “extortion, bribery or arson.” 1952(b). If Congress really meant the Hobbs Act to apply to bribery rather than (or in addition to) extortion, it knew how to say so.

Second, as the dissent in Evans pointed out, in terms of criminal liability there is a fundamental difference between bribery and extortion: the status of the person paying the public official. In a bribery case, both parties to the transaction are willing participants and are considered equally culpable. The crime of bribery applies to both the payor (who is seeking to influence the official) and to the payee (the public official agreeing to be influenced) and both may be charged. The federal bribery statute, 18 U.S.C. § 201, reflects this by criminalizing both the bribe payment (§ 201(b)(1)) and the receipt of the bribe (§ 201(b)(2)).

In an extortion case, by contrast, the person paying the public official is considered a victim who paid under duress (physical or emotional) and because they felt they had no choice. As a result, the crime of extortion applies only to the person receiving the payment. There is no express provision in the Hobbs Act for charging the person who turns over the extorted property.

This critical difference between the two crimes supports Evans’ arguments and makes it particularly odd that the Supreme Court would conclude that bribery and extortion by a public official are essentially the same crime. The effect of Evans is that the Court created a unique statutory animal: a bribery statute where only one side of the corrupt transaction may be punished.

(A few courts have held that the payor in a Hobbs Act case may be charged with aiding and abetting the extortion by the official he paid, although other courts disagree. This seems like a reach; charging the “victim” of a crime with aiding and abetting the perpetrator is a strange concept. The holding in Evans may make such a charge theoretically possible, but that simply illustrates what a tortured result Evans is.)

A federal prosecutor looking at a public corruption case and considering the Hobbs Act has to keep in mind this distinction between bribery and extortion. From a prosecutor’s perspective, in a bribery case the payor should be sitting at the defense table with the public official. In an extortion case, the payor is usually your star witness.

If the facts of a case suggest that what took place was a bribery transaction with both sides willingly participating then a Hobbs Act charge likely is not a good choice — at least if you want to charge the payor. Better options would be the federal bribery statute (for federal officials) or honest services fraud, which also applies to both sides of a bribery transaction.

Extortion in the McDonnell Case

In the McDonnell case the government chose to immunize the bribe payor, Jonnie Williams, and have him testify for the prosecution. Since it had already chosen not to charge the payor, the government did not need to worry about the fact that the Hobbs Act would apply only to McDonnell.

Still, even though legally it is perfectly sound and appropriate, it feels a bit incongruous to see the same events charged as both honest services fraud bribery and as Hobbs Act extortion, as they were in the McDonnell case. Theoretically, at least, the two charges describe two quite different factual scenarios, one where the payor is culpable and one where he is not.

In McDonnell’s case, of course, the evidence showed that Jonnie Williams was a more than willing participant in the corrupt transactions. That describes a classic bribery scenario in which Williams is also culpable and could be charged – hence Williams’ need for immunity. Hypothetically, though, if the government had charged McDonnell with only Hobbs Act violations there would have been no ready basis on which to charge Williams – even though as a factual matter that’s absurd.

In accordance with Evans, McDonnell was convicted of simply accepting the gifts from Williams while knowing they were being given in exchange for his agreement to use the power of his office to promote Williams’ product. So McDonnell was convicted of extortion for conduct that was actually bribery, and under the current state of the law that was perfectly normal.

Like I said, the Hobbs Act is quirky.

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