Bridgegate and Flynngate

Last Thursday was an eventful day in the white collar world. In the morning the Supreme Court decided Kelly v. United States, the “Bridgegate” case, a significant ruling concerning the scope of federal mail and wire fraud. Then in the afternoon came word that the Department of Justice had moved to drop the case against Trump’s former national security advisor Michael Flynn. The Bridgegate decision was not a surprise, and I think the Court got it right. As for the Flynn case, DOJ’s action was deeply troubling and, frankly, dishonest — the latest demonstration of Attorney General William Barr’s politicization of the DOJ.

Former NJ Governor Chris Christie

The Bridgegate Decision

The facts of Bridgegate are familiar by now. In September 2013, officials at the Port Authority of New York and New Jersey closed two of the three inbound lanes on the George Washington Bridge that spans the Hudson River between New Jersey and Manhattan. This caused several days of severe traffic gridlock that paralyzed the town of Fort Lee, New Jersey. School buses were unable to transport students, first responders had trouble responding to calls, and tens of thousands of commuters were stuck in hours-long traffic jams.

When the incident was investigated, officials falsely claimed they had closed the lanes to conduct a traffic study. The true purpose was to punish the Democratic mayor of Fort Lee for refusing to endorse then-Republican Governor Chris Christie for re-election. The scandal caused severe political damage to Christie, who once had presidential ambitions. Christie himself was not prosecuted, but federal prosecutors did charge his Deputy Chief of Staff Bridget Anne Kelly and Port Authority official William Baroni with fraud for their role in the scheme. They were convicted at trial and sentenced to prison.

The issue in the case was never whether or not the defendants had misbehaved. Everyone agrees their actions were deplorable. The issue was whether it was criminal, and in particular, whether it was federal fraud. In a unanimous opinion by Justice Kagan, the Court ruled it was not.

Before 2010, prosecutors almost certainly would have charged this case as honest services fraud. That popular theory charged defendants with scheming to deprive victims of the intangible right of fair and honest services that they were owed by someone – most often by a public official. The theory was used to prosecute a wide range of political misconduct that was not necessarily otherwise illegal. But in the 2010 case of Skilling v. United States, the Court ruled that honest services fraud must be limited to cases involving the payment of bribes or kickbacks – core corruption. There were no bribes or kickbacks involved here.

With honest services fraud off the table, prosecutors chose to charge the bridge-closing scheme as wire fraud and federal program fraud. Those fraud statutes require proof that the defendant sought to deprive the victim of money or property. Prosecutors had two different theories. The first was that the defendants had “commandeered” the bridge lanes to carry out their scheme and had thereby deprived the Port Authority of its property. The second was that the defendants had deprived the Port Authority of the salaries of the employees whose labor was necessary to execute the scheme, such as those who manned the toll collection booths.

The Limits of Fraud

The Supreme Court rejected both arguments. The Court first held the defendants did not deprive the Port Authority of property by shifting the bridge lanes. It relied primarily on a 2000 case called Cleveland v. United States. In Cleveland the defendants were convicted of defrauding the state of Louisiana when they obtained video poker licenses by lying on the license application forms. The Court  threw out those convictions, holding that an unissued license was not property in the hands of the state and so could not support a fraud conviction. The state’s interest in the unissued licenses was a regulatory interest, not a property one.

The Court in Bridgegate held that the same was true of the bridge lanes. The Port Authority was not deprived of any property; it still controlled the lanes and collected the tolls. All the defendants did was re-allocate the use of the lanes by different drivers. Like issuing a license, that is a government regulatory power, not a property interest. Even if the defendants made that decision for a bad reason and lied about it, that did not deprive the Port Authority of property for purposes of the fraud statutes.   

The Court likewise rejected the claim that the defendants had deprived the Port Authority of the salaries of the employees who carried out the scheme. Those employees were still doing the work they were hired to do, moving cones and collecting tolls. If the defendants lied about the true reason for having the employees carry out particular tasks, that was not enough to constitute fraud. The object of a fraud scheme must be to obtain money or property; here the object was to create a traffic jam. Salary payments to Port Authority employees were merely incidental side-effects of that scheme. For the payment of those salaries to constitute a fraud, the defendants would have had to order the employees to perform some personal task for them unrelated to their Port Authority duties. That was not the case here.

Not All Misconduct Is Criminal

Bridgegate was the latest example of federal prosecutors trying to use expansive fraud theories to pursue political misconduct that was not otherwise clearly criminal. The Bridgegate defendants did not use their public positions for personal financial gain, as in a bribery case. Closing the lanes was not otherwise illegal our outside of their authority. They just lied about why they were doing it. But politicians routinely lie – or more politely, engage in “spin” – about why they are taking actions that are otherwise within the scope of their duties. Without more, such political misconduct is usually not considered criminal.

Even if the conduct here could have been criminal, the Court said that was a matter for New Jersey state authorities, not the federal government. The Court expressly noted it was possible New Jersey criminal remedies could apply, and that “federal fraud law leaves much public corruption to the States (or their electorates) to rectify.” Even absent a state prosecution, the state’s residents have remedies at the ballot box and can exact political penalties, as they did by tanking Governor Christie’s career. But ever since the McNally case first rejected the sweeping honest services fraud theory in 1987, the Court has been wary of allowing federal prosecutors to use federal fraud statutes to set “standards of disclosure and good government for state and local officials.”

I’ve been critical of a number of the Court’s recent public corruption decisions, but I think they got Bridgegate right. This was bad and harmful behavior, but it wasn’t federal fraud. If the case had gone the other way, then almost any case of state or local political mischief could be the subject of a federal criminal prosecution, because there will almost always be a salary paid to someone in connection with it. Federal prosecutors should not try to stretch fraud theories to cover local political hardball that can be handled at the local level, either by state prosecutors or by the voters. More broadly, I think Bridgegate was one of several recent high-profile cases where the appropriate remedy was probably not a criminal prosecution.

Michael Flynn
Michael Flynn

The Flynn Motion to Dismiss

In last Thursday’s other news, the government filed a motion to dismiss the criminal case against former national security advisor Michael Flynn. Flynn pleaded guilty in December 2017 to lying to the FBI about his contacts with the Russian ambassador on behalf of the incoming Trump administration. He cooperated extensively with the government during the Mueller investigation. But in 2019, after the Mueller probe was completed, Flynn changed his mind.  He fired his attorneys from the top D.C. law firm of Covington and Burling and hired Sydney Powell, a vocal DOJ critic and Fox News regular. She began an aggressive campaign to withdraw Flynn’s guilty plea and have the case dismissed based on alleged government misconduct.

Attorney General Barr recently appointed the U.S. Attorney from St. Louis, Jeff Jensen, to review the handling of Flynn’s case. Now, reportedly on Jensen’s recommendation, Barr has decided DOJ should drop the Flynn case altogether and that it never should have been brought in the first place. But the government’s arguments in support of this motion to dismiss are dishonest and disingenuous.

Flynn pleaded guilty to one count of false statements, 18 U.S.C. 1001. DOJ now claims it doesn’t believe that Flynn’s false statements were material. Materiality is a very low bar. To be material, a false statement does not need to actually affect any government decision, it only needs to be the type of statement that has the potential to do so.

DOJ says that Flynn’s lies about his contacts with the Russian ambassador could not have been material because the FBI did not have a legitimate reason to interview him. At the time of Flynn’s interview, the FBI was conducting an investigation, code-named Crossfire Hurricane, into the Trump campaign’s contacts with Russia and Russian interference in the election. It had a separate, related investigation into Flynn and his own Russian contacts, code-named Crossfire Razor. Having found nothing incriminating, the FBI was preparing to close Crossfire Razor when it learned about Flynn’s contacts with the Russian ambassador on behalf of the president-elect. In light of that new information, the FBI decided to keep the investigation of Flynn open until it could interview him about those contacts.

Flynn’s supporters have characterized this sequence of events as nefarious and as evidence that Flynn was “set up.” And DOJ has now said it basically agrees. It claims that, having decided to close the Flynn investigation, there was no good reason for the FBI to interview him, even after learning the new information about his conversations with the Russian ambassador. And because the interview was therefore not properly predicated, DOJ says, any lies that Flynn may have told could not possibly have been material.

Flynn’s Statements Were Material

This is nonsense on several different levels. First, whether or not the FBI had properly opened or closed an internal case file has nothing to do with whether Flynn lied about something that matters. If the FBI screws up some internal docket entry it doesn’t mean a witness gets a free pass to lie. I don’t know of any case where a false statement to the FBI was found not to be criminal because the interview was not “properly predicated.” Why the FBI is talking to you and whether you choose to tell material falsehoods are completely unrelated.

Second, you don’t have to be investigating someone personally to have a reason to interview them. Even if the FBI believed Flynn himself was not a security risk and they should close their file on him, there would still be reason to talk to him in connection with Crossfire Hurricane. It would be an odd investigative world where the only people the FBI was allowed to speak to were those who were personally under investigation. People who are interviewed and are not under investigation are known as “witnesses.” And Flynn was, at the very least, an important witness to Trump-Russia contacts who needed to be interviewed.

Whether or not the Crossfire Razor file was properly open or closed, the FBI had every reason to talk to Flynn as part of the broader Crossfire Hurricane investigation. Remember, the focus of that investigation was Russian contacts with the Trump campaign. Flynn had been a part of the campaign, and the FBI had just learned that he had recent contacts with the Russian ambassador. How could the agents possibly ignore that? 

Flynn lied to the FBI by denying he asked the Russian ambassador not to retaliate based on the sanctions the Obama administration had imposed on Russia in December 2016. Why was he having that conversation?  Who asked him to do it? Was there a possible link between the incoming administration promising to ease up on Russia and the Russian help for Trump during the election? There’s no question the FBI had a good reason to talk to Flynn, and that Flynn’s lies about his conversations with the ambassador had the potential to influence the FBI’s fledgling investigation into the Trump-Russia connection. That’s all that materiality requires.

What’s more, Judge Emmet Sullivan, the judge in Flynn’s case, has already ruled that Flynn’s statements were material. He made that ruling when denying Flynn’s earlier motion to dismiss based on alleged government misconduct. But the government now says (in a footnote) that doesn’t really count because the judge didn’t have all of the relevant facts before him – even though nothing in the government’s motion to dismiss should come as any news to the judge, and none of the supposedly “new” facts affect materiality.

The government also now claims, somewhat half-heartedly, that Flynn’s answers were not clearly lies, that they were “equivocal” or “indirect.” Again, this flatly contradicts both the evidence in the case and the position taken by the government for the past two years. And Flynn himself has admitted under oath  – twice — that he knowingly lied to the FBI. But as with Judge Sullivan, prosecutors now suggest that Flynn didn’t really know what he was doing.

As I wrote in my Washington Post column about the Flynn motion:

So to sum up: The government claims it cannot prove materiality when the judge has already ruled the lies were material, and the government says it cannot prove Flynn lied when he has already admitted twice that he lied. Such a bizarre argument could be put forward only in a Trumpian world where facts truly don’t matter.

The Politicization of the DOJ

The reaction by former Department of Justice officials to the Flynn motion has been almost uniformly negative. Former U.S. Attorney Chuck Rosenberg wrote in the Washington Post that there’s a long list of people who thought Flynn’s lies were material – including Trump himself. Mary McCord, Assistant Attorney General for National Security at the time of Flynn’s interview, wrote in the New York Times that the investigation and interview of Flynn were entirely appropriate and justified, that his lies were material, and that DOJ had wrongly twisted her words in the motion to suggest otherwise. Jonathan Kravis, one of the career prosecutors who resigned from the Roger Stone case when Barr intervened at Stone’s sentencing, wrote that the Flynn motion to dismiss was another “disastrous mistake” highlighting the politicization of the DOJ. And more than two thousand former DOJ officials of both parties signed an open letter protesting Barr’s actions and urging Judge Sullivan to scrutinize them carefully.

Attorney General William Barr

This Flynn motion is similar to the Roger Stone incident in a number of ways. In both cases, the career prosecutors assigned to the case withdrew in protest after they were undermined by the Attorney General’s intervention. In both cases that intervention was signed off on by acting U.S. Attorney for D.C. Timothy Shea, a longtime Barr aide who was recently installed to replace the former U.S. Attorney Jessie Liu. Both incidents involved attempts to undermine or discredit cases brought by the Trump’s nemesis, special counsel Robert S. Mueller. And both involved personal intervention by the U.S. Attorney General to benefit political allies of the president, in ways that would never happen with an ordinary defendant.

It will be very interesting now to see how Judge Sullivan acts on the motion. He has a number of options. The rules say the case may be dismissed only with “leave of court.” It would be rare for a judge to buck a prosecutor’s decision to drop a case – but this is far from a typical case. Judges don’t like to be manipulated, and you can imagine Judge Sullivan demanding that DOJ officials explain in person what exactly changed that caused them to drop a case they had defended for two years. As a sign that this may not be over, on May 12 Judge Sullivan issued an order essentially inviting outside parties to file amicus brief about what he should do. A group of sixteen former Watergate prosecutors has already filed a motion seeking permission to do so.

Regardless of the outcome, this is an outrageous and disheartening demonstration of the current rot at the Department of Justice. It’s more clear than ever that Barr sees his role as protecting the president and manipulating the justice system to benefit Trump’s political cronies. There is one brand of justice for the president’s friends, and another brand for everyone else. Barr’s decision also protects Trump from taking the political heat that would come if he were to pardon Flynn; instead, Barr will simply drop the case while claiming that’s what justice requires.

This latest incident makes one fear what else is coming. You can almost guarantee that between now and the election there will be reports “revealing” that the entire Mueller investigation was a hoax and an attempt by the FBI and the Obama/Biden administration to take down Trump. And I wouldn’t be surprised to see the announcement of some kind of criminal investigation of Joe Biden or his family. As others have pointed out, for an authoritarian the first step is using the justice system to benefit your friends. The next step is using it to investigate and punish your enemies.

That’s why what is happening is so frightening – and so dangerous.

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Sidebars Five Year Anniversary: The Top Ten Posts

Five years ago today I published my first post on this blog, a piece about a New York Times reporter at risk of being held in contempt for refusing to identify a source. Sidebars has grown a lot since then and has been fortunate enough to gain some accolades along the way (including my favorite shout-out from the D.C. Bar Magazine: “Come for the ongoing smackdown with Alan Dershowitz, stay for the trenchant commentary on the rule of law”) . To mark this anniversary,  I thought it would be fun to take a look back at the Sidebars “Top Ten”: my ten most-read posts over the past five years.

During those five years I’ve written more than 120 posts on Sidebars, an average of about one every two weeks. My pace of posting on the blog has definitely slowed down over the past couple of years as I’ve been writing more as a contributing columnist for the Washington Post and working on an upcoming video lecture course on white collar crime for The Great Courses. But the blog continues to be a great vehicle for deeper dives on selected topics; at about 2500-3000 words, my average post on Sidebars is more than three times the length of a typical op-ed in the Post. Brevity may be the soul of wit, but it’s rarely a lawyer’s strong suit — and some of these subjects really do call for a more in-depth analysis.

As readers know, my focus on Sidebars is on white collar crime. The investigation by special counsel Robert Mueller was the most consequential white collar case in a generation, so it’s probably not surprising that a majority of my top posts related to that investigation. Other major white collar cases, such as the prosecutions of Virginia governor Bob McDonnell and New Jersey Senator Bob Menendez, also have been bountiful sources of material. But whatever else you might think of them, you can’t top the Mueller investigation and the Trump administration when it comes to providing material for commentators on white collar crime. These results definitely reflect that.

And with that – here are the Sidebars Top Ten.

#10: Fake News and the National Review

Andrew McCarthy of the National Review is a former federal prosecutor for the Southern District of New York. As a columnist, he’s been a vociferous critic of the Mueller probe and booster of president Trump. During the Mueller investigation he regularly wrote columns attacking the investigation that were so factually and legally off-base that it’s hard to believe he was once an Assistant U.S. Attorney. Now that Mueller is done, McCarthy is still at it, peddling pro-Trump conspiracy theories about Ukrainian interference with the election and the “Deep State” efforts to take down the president. In what became my tenth most popular post, I collected a number of the arguments from McCarthy’s columns about Mueller and showed how he was misleading his readers. I sent the post to the National Review, and I along with some other law professors on Twitter encouraged McCarthy and the National Review to respond, but they never did.

10) What Andrew McCarthy Gets Wrong about the Mueller Investigation – 3/22/18

 

#9: When is Lying a Federal Crime?

The False Statements statute, 18 U.S.C. 1001, is a workhorse in the white collar prosecutor’s stable. It broadly criminalizes material false statements made to the federal government, even if not under oath. A number of witnesses in the Mueller investigation, including Michael Flynn and George Papadopoulos, pleaded guilty to false statements for lying to the FBI during interviews. The statute applies to written false statements as well, and early in the Mueller investigation there was speculation that individuals including Jared Kushner and Jeff Sessions might be liable for concealing various foreign contacts when they filled out paperwork to apply for a security clearance. In this post I explained the scope and requirements of the false statements statute and how it potentially could apply in such a case.

9) Lying on a Security Clearance Form: The Crime of False Statements – 6/5/17

#8: The Dershowitz “Smackdown”

Harvard Law Professor Alan Dershowitz was a vocal critic of the Mueller investigation. For two years Professor Dershowitz was all over conservative media attacking the investigation and making sweeping arguments about executive power and presidential immunity from prosecution that frankly seemed increasingly unhinged.  I’ve written several different posts and articles rebutting Dershowitz’s claims.  The most popular blog post has been this one from June 2017,  taking on Dersh’s argument that the president can’t be charged with obstruction of justice because, well, he’s the president.

8) Trump and Obstruction: What Alan Dershowitz Gets Wrong – 6/19/17

#7: A RICO Review

The Mueller probe offered me several opportunities to write posts explaining the elements of leading white collar statutes and then illustrating them by discussing their potential application to the Mueller investigation. The False Statements post, number nine above, was one such example. Another one ended up as number seven on the list. It provides a primer on the Racketeer Influenced and Corrupt Organizations act (RICO) and then discusses how it potentially could apply to the matters that Mueller was investigating. Mueller, of course, did not end up pursing RICO charges against anyone, Russian or American. But we may not have heard the last of RICO and president Trump. Prosecutors in the Southern District of New York may be looking at possible RICO charges involving the Trump Organization. The SDNY is notoriously fond of RICO, and regardless of whether the other elements of the crime could be established, the Trump Organization is a classic RICO “enterprise.”

7) RICO and the Mueller Investigation – 1/16/18

#6: Fraud and the Sentencing Guidelines

My sixth most popular post is completely unrelated to Mueller. In 2015 the Federal Sentencing Commission revised the guideline used to calculate the sentence in federal fraud cases. That guideline is key to white collar practice because so many white collar cases involve fraud charges. The old guideline had come under a lot of criticism for the way it calculated white collar sentences, and reform was thought to be long overdue. In this post I discussed the changes made by the new fraud guideline and explained why those amendments really amounted to little more than tinkering around the edges.

6) The New Sentencing Guideline for Fraud Cases – 5/4/2015

#5: What’s This Blog About, Anyway?

I’m particularly pleased this post made it into the Top Ten. It deals with what seems like it should be a fairly simple and foundational question: what is white collar crime? If you look in the federal criminal code you won’t find a definition, or a section titled “white collar offenses.” In fact, there is no universally accepted definition of white collar crime, even though it clearly is recognized as a distinct practice area — not to mention as the subject of my law school class. This post, way back from only the second month of the blog, is my take on the definition and characteristics of white collar crime. One key takeaway?   — the name itself is something of a misnomer.

5) The Definition of White Collar Crime – 11/26/14

 

#4: Who Isn’t Guilty of That?

I wrote this post on Contempt of Congress back during the Obama administration, when the Republican Congress held the IRS Commissioner, Lois Lerner, in contempt. Prosecutors declined to pursue the case and that was the end of it, and the post lay largely dormant for a couple of years. But recently there has been renewed interest in Congress’s contempt power, in light of the apparent stonewalling of Congressional investigations by the Trump administration. And that has led to a lot of renewed interest in this post, catapulting it to number four on the list. Will Congress dust off its inherent contempt power and start locking up recalcitrant witnesses in that  rumored jail cell in the basement of the Capitol? We may soon see.

4) Contempt of Congress – 4/20/15

#3: Bribery and the Emoluments Clause

Since before president Trump even took office, there has been controversy about his extensive business holdings and whether he might profit from the presidency in violation of the Constitution’s emoluments clause. This relatively obscure Constitutional prohibition is now the subject of several ongoing lawsuits. My third most popular post, written after the election but before Trump was inaugurated, explained the foreign emoluments clause, how it relates to federal bribery law, and whether Trump was at risk of violating it.

3) The Emoluments Clause, Bribery, and President Trump – 11/29/16

#2: It’s Conspiracy, Not Collusion

In the early days of the Mueller investigation, a frequent refrain from the president and his supporters was that collusion with the Russians, even if it did take place, would not be a crime. I wrote this post early on in the Mueller investigation. It explained how, for criminal law purposes, the proper term is conspiracy, not collusion. It also described how allegations that the Trump campaign colluded with the Russians to influence the election, if true, could in fact constitute a conspiracy to defraud the United States — even if the conduct did not directly violate another criminal statute.

2) Yes, Colluding with Russians to Interfere with the Election is a Crime – 7/5/17

#1: “Collusion” is a Crime

My most popular post of all time — by quite a large margin — also dealt with the question of “collusion.” In February 2018 Mueller indicted thirteen Russian individuals and three Russian companies for engaging in a social media campaign to influence the 2016 presidential election. The lead charge in that indictment was a conspiracy to defraud the United States by impairing, obstructing, and defeating the lawful government functions of the Federal Election Commission, State Department, and Justice Department. This was the same legal theory I had outlined about six months earlier in my second most popular post, described above. One of the indicted Russian companies appeared in court and challenged that conspiracy charge. In November 2018 the federal judge in the case denied that challenge and upheld the conspiracy theory that effectively can make “collusion” a crime. My post describing that judge’s ruling, and the possible implications for the Trump campaign, because my most popular post of all time.

1) Judge in Mueller Case Upholds Legal Theory that Makes Collusion a Crime – 11/23/18

Thanks for indulging me in this look back.  Whatever the next years bring, I suspect there will continue to be no shortage of material. Thank you for reading!

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