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Category: Honest Services Fraud

Second Circuit Doubles Down on Expansive Application of Federal Fraud Statutes

In United States v. Percoco, the Second Circuit (Raggi, Chin, Sullivanthe Second Circuit affirmed the convictions of several defendants involved in the so-called “Buffalo Billion” scandal.  The charged crimes included three distinct schemes.  One involved bid rigging by a lobbyist, his clients, and an individual with sway over awarding contracts under the project.  The other two involved a former aide to Governor Andrew Cuomo, Joseph Percoco, who was charged with helping two companies achieve their business goals by using his influence over state officials.  While the allegations are redolent of public corruption in New York State government, these schemes do not comfortably sit within the traditional purview of federal wire, mail, and honest services fraud.  In two separate, lengthy opinions, the Circuit upheld the convictions in their entirety, stretching the federal fraud statutes to their limits in order to affirm.  Although there is nothing more destructive to a democracy than the public’s loss of faith in its elected officials’ willingness to put the public good over private interests, we express some concerns about the approach taken by the Court in these decisions.


Silver Conviction Vacated Due To Jury Instructions

This morning the Second Circuit (Cabranes, Wesley, Sessions, D.J.) released an opinion vacating the conviction of Sheldon Silver and remanding the case to the district court for further proceedings including a retrial.  The Second Circuit concluded that the evidence of guilt was sufficient to permit a retrial, but found that the jury instructions did not comport with the Supreme Court’s McDonnell decision and that the error was not harmless. The panel took no joy in rendering its decision, observing that “many would view the facts adduced at Silver’s trial with distaste.”  Nor did the panel blame either the district court or the government for today’s reversal, recognizing that the McDonnell decision—which changed the law of the Circuit—was issued after the Silver trial had concluded.  Nevertheless, the panel felt itself compelled by McDonnell and the facts of the case to decide the matter as it did.


Honest Services Fraud Conviction Upheld Despite Error In Jury Instructions

On July 10, 2017, in United States v. Boyland, No. 15-3118 (Kearse, Walker, Hall), the Second Circuit affirmed the conviction of former New York State Assembly member William F. Boyland, Jr. on twenty-one counts of public corruption offenses, including eleven counts of honest services fraud.  Many of these counts involved determining that the benefits Boyland offered in exchange for bribes amounted to “official acts” under 18 U.S.C. § 201, the federal bribery statute prohibiting public officials from “being influenced in the performance of any official act.”  Id. § 201(b)(2)(A).  The U.S. Supreme Court recently narrowed the definition of this term in McDonnell v. United States, 136 S. Ct. 2355 (2016), which led the government to concede in Boyland’s appeal that the trial court’s jury instructions on the meaning of “official act” were in part erroneous.  The Second Circuit, however, determined on plain error review that the error did not affect Boyland’s “substantial rights” and thus affirmed his convictions.  This decision may prove problematic for other high-profile former elected officials whose appeals are currently pending before the Second Circuit.


Second Circuit Affirms Bribery Conviction of Former Mayor of Spring Valley, New York

In United States v. Noramie Jasmin, 15-2546-cr, a Second Circuit panel (Walker, J., Cabranes, J. and Lohier, J.), affirmed by summary order the bribery conviction of Noramie Jasmin, a former mayor and trustee of the Village of Spring Valley, New York, a town in Rockland County, New York.  Jasmin was convicted of participating in a scheme to obtain financial benefits for herself in exchange for exercising her official powers to facilitate the construction of a community center.  Jasmin appealed from a conviction of one count of mail fraud in violation of 18 U.S.C. §§ 1341 & 1346, and one count of Hobbs Act extortion in violation of 18 U.S.C. § 1951, and her sentence of four years imprisonment. 


Corrupt Public Officials Can Be Ordered to Pay Forfeiture Judgments Out of Pensions

On August 17, 2016, the Second Circuit issued a decision in United States v. Stevenson, No. 14-1862-cr, holding that a state legislator convicted of bribery could be required to forfeit a portion of his pension fund as part of a sentence.  Former New York State Assemblyman Eric Stevenson was convicted in 2014 of conspiracy to commit honest services wire fraud, conspiracy to commit federal programs bribery and to violate the Travel Act, accepting bribes, and extortion under color of official right.  The charges arose out of an investigation finding that Stevenson took bribes of $22,000 from businessmen in the Bronx who ran an adult day care center in exchange for proposing legislation that would have imposed a moratorium on new facilities that would have provided competition.


Second Circuit Affirms Honest Services Fraud Conviction Amidst Doubt About The Future Viability Of Honest Services Fraud

Does the act of paying money to a party official to allow a candidate merely to run for public office constitute bribery?  And does a party official owe a “fiduciary duty” to his party to open its ticket to candidates from opposing parties only sparingly, such that an exchange of money for a place on the party ticket supports a conviction under the honest services fraud statute (18 U.S.C. § 1346)?