If all politicians are corrupt, but all defendants are presumed innocent, then what? A case for change in honest services fraud prosecutions.

• Author: Huigens, Joseph E.

Who steals my purse steals trash; 't is something, nothing; 'T was mine, 't is his, and has been slave to thousands; But he that filches from me my good name Robs me of that which not enriches him, And makes me poor indeed. (1) PROLOGUE

On December 8, 2009, the Supreme Court heard arguments in United States v. Black (2) and United States v. Weyhrauch. (3) The Court has also granted certiorari in United States v. Skilling, (4) which it will hear this Term. Each case requires the Court to interpret 18 U.S.C. [section] 1346, an arrow in the Department of Justice's quiver for prosecuting corrupt politicians and businessmen. (5) Considering the issues presented, it seems that the Court intends to throw light on a subject it admonished Congress to "speak more clearly" about nearly twenty-two years ago in McNally v. United States, (6) in which the Court refused to extend federal mail fraud (7) to schemes to deprive the public of its right to honest and fair government. (8) Congress subsequently amended the statute in 1988 to include frauds that "deprive another of the intangible fight of honest services," (9) thereby reinstating any "honest services" jurisprudence preceding McNally. (10) Ever since, the question of what constitutes "honest services" has festered in the courts of appeals, which have adopted a variety of principles to limit the statute's reach, albeit not uniformly. (11) The resulting circuit split and post-McNally caselaw evinces concerns regarding vagueness, federalism, and how best to preserve the force of [section] 1346. (12) And so, regardless of how the Court decides these issues, this much is certain: a unifying definition for the "outer boundaries" (13) of honest services fraud, in light of [section] 1346's enactment, is long overdue.

INTRODUCTION

Are all politicians crooked? Are all captains of industry thieves? In the United States, where scandals in Washington, D.C. and on Wall Street make headlines (14) and movie plots, (15) can anyone be blamed for answering those questions affirmatively? Between print, television, radio, film, and Internet, Americans are regularly reminded that even white-collared professionals often have evil-meaning minds and evildoing hands. Indeed, many Americans assume that politicians and businessmen are corrupt--they are presumed guilty. (16) Certainly, an unsettling number of politicians misuse their offices--be it for money or interns--and lately Wall Street seems chock-full of swindlers looking to fleece unsuspecting investors. Nevertheless, honest politicians and fair-dealing businessmen do exist. (17)

Regardless of how their cases are decided, Bruce Weyhrauch, Conrad Black, and Jeffrey Skilling fit the bill of high-profile citizens who are widely regarded as corrupt. (18) Weyhrauch was a lawyer and member of the Alaska House of Representatives, (19) Black was CEO of Hollinger International, (20) and Skilling was CEO of Enron Corporation. (21) Each man was indicted pursuant to 18 U.S.C. [section] 1346 for honest services mail fraud. (22) Another such individual is former Alabama governor, Don Siegelman, who was also indicted (and convicted) under [section] 1346. (23) Each man was charged with the same federal crime in a different circuit, and now seeks Supreme Court review of his case to decide whether honest services fraud may be fairly enforced against him. (94)

What constitutes a "scheme or artifice to deprive another of the intangible right of honest services"? (25) The answer varies depending on the federal circuit in which a defendant is charged, and then it may be based on state law or subject to interpretation by a federal court. (26) At its core, the problem is that a comprehensive definition for "honest services" cannot be gleaned from the language of [section] 1346, or from case law, or from legislative history. (27) Each circuit has had to establish a judicial construction of honest services, (28) and the resultant split has been criticized as subjecting defendants to ad hoc standards of culpability by federal prosecutors and judges. (29)

A politician whose conduct is legal (though not commendable) in one circuit may amount to honest services fraud in another. Weyhrauch, for example, was indicted under [section] 1346 because he "failed to disclose that he was soliciting work from a company with business before the Legislature," an undisclosed conflict-of-interest that "did not violate a state criminal law." (30) In the Ninth Circuit, where Weyhrauch was charged, culpability pursuant to [section] 1346 is independent of state law, and he may therefore be found guilty. (31) But if Weyhrauch served in the Fifth Circuit, all other things being equal, his actions could not sustain an honest services fraud charge because they do not breach a fiduciary duty owed under state law. (32)

Unlike the Fifth Circuit, most courts of appeals hold that honest services are determined by a uniform federal standard based on Congress's interest in ensuring unbiased decisionmaking at the subnational levels of government. (33) That interpretation has been criticized as violating federalism, because it affords federal prosecutors latitude to police state and local officials under a vaguely defined, open-ended criminal standard. (34) It has been said that such power "opens the door for abuse through selective prosecution" by prosecutors with "careerist motives to stalk the big kill." (35) Justice Scalia has expressed similar concern that the statute "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." (36) Ominous power is, indeed, conferred upon prosecutors when the foremost limiting principle of a criminal statute is their discretion. As former U.S. Attorney General Robert H. Jackson wrote:

The [federal] prosecutor has more control over life, liberty, and reputation than any other person in America. His discretion is tremendous. He can have citizens investigated and, if he is that kind of person, he can have this done to the tune of public statements and veiled or unveiled intimations. .... If the prosecutor is obliged to choose his cases, it follows that he can choose his defendants. Therein is the most dangerous power of the prosecutor: that he will pick people that he thinks he should get, rather than pick cases that need to be prosecuted.... It is here that law enforcement becomes personal, and the real crime becomes that of being unpopular with the predominant or governing group, being attached to the wrong political views, or being personally obnoxious to ... the prosecutor himself. (37) This Note is not about extramarital affairs of politicians or furtive dealings of corporate officers. Suffice it to say that dishonest behavior, whether unlawful or not, should be neither applauded nor condoned. But not all failings of character amount to federal criminal law violations, even if the person is a politician. Politicians make easy targets for mudslingers--particularly when the mudslinger has political aspirations of his own. In politics, where the mere suggestion of impropriety can damage one's reputation, a prosecutor wielding the specter of an honest services fraud charge has the power to end careers and influence elections. (38) On the other hand, corruption may be so entrenched at the state or local level that the responsible investigative agencies and prosecutors, averse to upsetting the established order, are effectively deterred from building cases and filing indictments. (39) Indeed, that possibility influenced Congress's decision to enact [section] 1346, (40) and remains a strong argument for sustaining honest services fraud as a federal prosecutorial tool. But given the circuit split on [section] 1346, (41) whereby state politicians may face federal criminal charges for conduct that does not amount even to a state law violation or that confers nothing more than de minimis private gain, some measure of restraint is warranted.

Accordingly, this Note advocates substantive legal limits on honest services fraud; namely, required violation of a state criminal law and existence of a material private gain. In view of the widespread belief that politicians and businessmen are corrupt, this Note also recommends evidentiary safeguards against prejudicial juries and judges. This Note proceeds in three parts. Part I presents a history of mail fraud and the honest services doctrine, including [section] 1346's seldom acknowledged legislative history. Part II surveys the federal circuits' interpretations of [section] 1346 and criticisms fueling that split. Part III makes a case for adopting unifying limitations on honest services fraud prosecutions, including substantive legal requirements and evidentiary safeguards. While I recognize that private [section] 1346 cases implicate more concerns than addressed by this Note, I contend that the limitations espoused herein constitute the base of a restraining touchstone equally befitting of public and private honest services fraud cases. As such, this Note proceeds from the context of [section] 1346 cases involving politicians only.

1. MAIL FRAUD AND HONEST SERVICES: A BRIEF HISTORY

   This Part is an account of milestones that eventuated in the honest services doctrine and crystallized issues upon which the federal circuits are split. (42) This Part begins with the original mail fraud statute and ends with Congress's enactment of 18 U.S.C. [section] 1346.

   1. The Mail Fraud Statute and Durland v. United States (43)

      The original mail fraud statute was enacted in 1872, (44) making it "one of the oldest federal criminal statutes in continuous use." (45) Although the legislative history is sparse, (46) Congress evidently sought to prevent the postal system from being used to facilitate "the sale of counterfeit currency" (47) and scheming "lottery swindlers." (48) The Supreme Court has...