Results matching “"honest services"”

"The catchall fraud law that catches too much" - PointOfLaw Forum

Roger Parloff in Fortune on "honest services" doctrine.

Around the web, December 21 - PointOfLaw Forum

Jim Copland on honest services fraud - PointOfLaw Forum

His new op-ed in the Washington Examiner, "Vague law is bad law", takes a look at the alarmingly amorphous statute now before the Supreme Court:

Justice Antonin Scalia has suggested that the law "would seemingly cover a salaried employee's phoning in sick to go to a ballgame." ...As Scalia notes, the statute "invites abuses by headline-grabbing prosecutors" who hope to advance their careers by collecting high-profile scalps.

New Marie Gryphon paper on overcriminalization - PointOfLaw Forum

The newest Civil Justice Report from the Manhattan Institute, by senior fellow Marie Gryphon, is entitled "It's a Crime: Flaws in Federal Statutes That Punish Standard Business Practice". Executive summary:

Since the dawn of Anglo-Saxon common law, conviction for committing a crime required evidence of malicious intent--that is, a conscious willingness to violate society's norms by inflicting harm on people directly or by misappropriating or abusing their property. This stricture, which is often referred to as the blameworthiness principle, has tended to ensure that people who inadvertently and in good faith infringe laws and regulations will not suffer the stigmatization of a criminal conviction, not to mention the penalty of a steep fine or incarceration.

For their own compelling reasons, the economic and social policies of the New Deal came to undermine the blameworthiness principle. Standards of conduct promulgated to protect and advance the public's health, safety, and welfare carried with them deterrents imported from the criminal law. Today, the regulatory state, the New Deal's descendant, so thoroughly encompasses the range of commercial activity that businesses and businesspeople trying to reduce their costs, better their products, best their rivals--do all of the things, in short, on which survival in a market economy depends--run an ever-present risk of becoming ensnared in the criminal law. In many instances, the laws in question are so voluminous and loosely drafted that even a student of the legislation would not have fair notice of what conduct was prohibited and what was not.

Ordinary Americans have been convicted of crimes under overbroad federal laws because their employer unsuspectingly forwarded drugs that had been mislabeled by another company; because their adult children failed to properly record the itinerary of a camping trip in a public park while doing volunteer work for the family touring business; and because their computer servers stored copies of clients' e-mails as an emergency precaution. Others have been judged criminals for such common failings as violating the terms of an employee handbook that prohibited otherwise legal behavior; lying about the details of a legal business transaction in response to media inquiries; and falsely claiming to be a talent scout in order to attract women.

Perhaps the most egregiously catch-all statutes are those governing mail and wire fraud. They assign criminal penalties to any "scheme or artifice to defraud" as long as the defendant could foresee that someone would use either the U.S. Postal Service or any form of electronic communication in (perhaps inadvertent) furtherance of the scheme as it unfolded. Yet these statutes lack any explicit language requiring a showing of harm, and the courts have not inferred or supplied such a requirement. Today criminal liability attaches to "any scheme or artifice to deprive another of the intangible right of honest services" in the above areas. Such vague and capacious language gives overzealous prosecutors a virtual carte blanche to indict.

Around the web, December 8 - PointOfLaw Forum

  • Searle Center at Northwestern releases new interim report on how creditor claims fare in arbitration and in court;
  • Previewing the Supreme Court arguments on "honest services fraud" law [WSJ Law Blog]
  • Trial lawyers ask Missouri Supreme Court to strike down legislated damage limits [St. Louis Post-Dispatch]
  • Three Kane County, Ill. judicial candidates won't accept money from attorneys, are scoffed at by those who do [Daily Herald]
  • "Pigs get fat, Mississippi got slaughtered" in AG Hood's Zyprexa-pricing suit [Beck & Herrmann]
  • Jack McConnell of Motley Rice, picked by Rhode Island senators for federal judgeship, was generous political donor who recycled tobacco money into lead-paint crusade [Public Nuisance Wire and more, Providence Journal]

Supreme Court takes up honest services fraud - PointOfLaw Forum

The Washington Legal Foundation will be co-sponsoring a panel discussion with the National Association of Criminal Defense Lawyers this Wednesday morning Dec. 2 in Washington, D.C., with former Attorney General Dick Thornburgh of K&L Gates, Brady Dugan of Akin Gump, Jonathan Marcus of Covington & Burling, and Richard Craig Smith of Fulbright & Jaworski. (Invitation and speakers, PDF; webcast and other info)

"The Skilling debacle heads for the Supremes" - PointOfLaw Forum

Larry Ribstein and Tom Freeland on the grant of certiorari to Jeff Skilling of Enron. See also the links in our addendum to Tuesday's post on honest services doctrine, including the latest commentary from Houston lawyer Tom Kirkendall, the most eloquent crusader in Skilling's defense. More on honest-services fraud theories: Jacob Sullum.

Adam Liptak at the Times has a good overview of two cases (appeals by former Alaska legislator Bruce Weyhrauch case and media magnate Conrad Black) in which the Court will have the chance to address a major engine of overcriminalization. Earlier Point of Law coverage here.

Update later Tuesday: the high court has agreed to hear a third honest-services case, that of Jeffrey Skilling of Enron (who also raises other issues in his appeal): WSJ Law Blog and more, Kennerly. Tom Kirkendall makes a case in Skilling's defense.

"An Honest Services Bribery Case Gets Cert" - PointOfLaw Forum

Tom Freeland has details on the Supreme Court's agreement to review a controversial body of federal criminal law, at least as regards one of its aspects: does the defendant's conduct in an "honest services" case have to violate a duty imposed by state law? The case, which originated in Alaska, is called Weyhrauch v. U.S.

It has been, as we all know, a celebrity news week to make Ahmadinejad cheer. First, South Carolina Governor Mark Sanford returned from a mysterious disappearance to confess, on Wednesday, to an extramarital affair with a woman in Argentina. Then, a day later, Michael Jackson died of sudden cardiac arrest.

As a lawyer currently researching the exceptional breadth of the federal wire fraud law, my first thought upon watching Sanford's halting confession this Wednesday was: this man could be indicted for leading his staff to incorrectly believe that he was hiking the Appalachian trail this past week. Of course, I don't know whether Sanford did any such thing. If there is enough evidence to convince a grand jury that he might have, though, he could face charges under a federal law that criminalizes "any scheme or artifice" involving any phone or email communication that is designed "to deprive another of the intangible right to honest services," regardless of whether any victim was concretely harmed and regardless of whether any benefit was inappropriately gained by the deception. The so-called "honest services" extension of the federal wire fraud law was explicitly intended to police the fiduciary relationship between state and local pols and their constituents, though it is now frequently invoked against private employees as well.

Sanford seemed very careful, during his press conference, not to admit that he may have intentionally misled his staff so that they might pass the "Appalachian trail" story along to the voting public, which leads me to believe that he may be getting legal advice. If you think that lying to voters for political advantage is such ubiquitous behavior that it can't possibly be illegal, you are only half right. Not only does the wire fraud law probably cover such conduct, but it prescribes a prison sentence of up to 20 years - ironically, the same maximum sentence faced by Jackson when he was indicted (though later acquitted) in 2003 on 14 counts of child molestation, provision of alcohol to minors, and similar offenses.

This comparison raises troubling questions about both the scope of federal wire fraud law and about the proportionality of sentencing to the blameworthiness of a crime. Surely, the crimes of which Michael Jackson was accused are far more reprehensible than a lie offered to staff over the telephone by a desperate pol. But as Justice Scalia has warned, "this expansive phrase [in the wire fraud law] invites abuse by headline-seeking prosecutors in pursuit of local officials ... who engage in any manner of unappealing or ethically questionable conduct." Let's hope that that federal prosecutors exercise better sense in the case of Mark Sanford.

"DOJ May Rein In Use of 'Honest Services' Statute" - PointOfLaw Forum

All sorts of defendants, from newspaper magnate Conrad Black to Illinois Gov. Rod Blagojevich, have been prosecuted on grounds that they violated the federal fraud statute by depriving stockholders or voters of their right to "honest services". "But the U.S. Supreme Court's May decision to review Black's 2007 conviction may put the brakes on the honest services provision. The U.S. Department of Justice is likely to rein in use of the provision, 18 U.S.C. 1346, until the high court rules on Black's appeal next term, former federal prosecutors say." That's welcome news; as Justice Scalia noted in one case, "Without some coherent limiting principle to define what the 'intangible right of honest services' is, whence it derives, and how it is violated, this expansive phrase invites abuse by headline-grabbing prosecutors in pursuit of local officials, state legislators, and corporate CEOs who engage in any manner of unappealing or ethically questionable conduct." [Lynne Marek, NLJ] Orin Kerr and Brian Walsh have more on the Scalia dissent, while Walsh notes the progress of a bill in Congress, the Public Corruption Prosecution Improvements Act of 2009, which seems aimed at intensifying the pace of such prosecutions.

More on Scalia "honest services" dissent - PointOfLaw Forum

From Rick Hills at Prawfsblawg:

The ambiguity of the "honest services" provision of the federal Mail Fraud statute (18 U.S.C. section 1346) has for decades been an open invitation to federal prosecutors to expand their sway over the political process in harmful and even corrupt ways, all in the name of fighting corruption. ...

That patronage politics are now a criminal offense in Chicago is surely eye-opening. That U.S. Attorneys can determine when patronage politics are criminal, based merely on their own sense of ethics laced with miscellaneous rules on disclosure and conflict of interest, is simply wacky. ... Have all of these state and local rules now been transformed into political weapons for use by U.S. Attorneys -- political appointees themselves and often aspiring politicians -- against their political rivals?

A "Staggeringly Broad" Statute of 28 Words - PointOfLaw Forum

"Honest services" fraud, writes Justice Antonin Scalia in a sharp dissent (PDF) to a denial of certiorari today, lacks any "coherent limiting principle" to prevent its "abuse by headline-grabbing prosecutors in pursuit of local officials, state legislators, and corporate CEOs who engage in any manner of unappealing or ethically questionable conduct." The 28-word mail-fraud statute's fundamental vagueness, he concludes, may itself be illegal, making the Court's refusal to squarely confront its meaning and constitutionality "quite irresponsible."

Update: Commentary on Scalia's Sorich dissent from Orin Kerr and my Heritage colleague Brian Walsh.

Around the web, February 20 - PointOfLaw Forum

Deprivation of honest services - PointOfLaw Forum

In an outgrowth of mail and wire fraud, federal law bans both public servants and many private actors from depriving clients and customers of their right to "honest services". But what does that mean? Well, that's where prosecutorial discretion -- and lots of it -- comes in. A WSJ editorial yesterday (sub-only) explains:

The problem is that no one is really sure what the phrase means. ...All of which has led to great confusion in the law, as each appellate circuit has marked out its own definitions. In the Merrill case, the Fifth Circuit chose a narrow reading, finding that the four Merrill executives had in fact provided honest services in Enron's interest in the Nigerian barge deal]. ... In his concurring opinion, Judge Harold DeMoss slammed Congress for putting the courts in this spot. Because the honest services statute was "undeniably vague and ambiguous," he wrote, "our court, and our sister circuits end up doing precisely what most would say we lack the constitutional power to do, that is, define what constitutes criminal conduct on an ex post facto and ad hoc basis." Judge DeMoss added that the statute is so vague as to be unconstitutional, and that at the very least Congress had a duty to provide the "requisite 'minimal guidelines to govern law enforcement.'"

Blogs on Milberg indictment, cont'd - PointOfLaw Forum

More reactions and commentary: Peter Henning explores the possibly relevant distinction between fraud and dishonesty, especially as regards the offense of "deprivation of honest services", and sketches out a possible defense for Milberg, namely to argue that "the victim really never lost anything and the defendants didn't get more than what a judge and opponent said they deserved". Betsy Newmark thinks the "story should be as big as Enron". Ed Morrissey at Captain's Quarters traces the political implications, Milberg being a heavy-hitting donor to elected officials. Larry Ribstein criticizes the decision to indict the firm as a whole. Independent Sources isn't impressed with the Milberg defense website. Right Thinking Girl links to a Bloomberg piece on the Arthur Andersen parallel. I've got a roundup at Overlawyered with reactions from Stephen Bainbridge, Evan Schaeffer and others, and also a post noting a peculiarly ill-timed announcement.

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