Originally published in the New York Law Journal
In the afterglow of the near universal public acclaim for the guilty verdicts in the public corruption cases brought by the U.S. Attorney's Office for the Southern District of New York against former New York Assembly Speaker Sheldon Silver and former Senate Majority Leader Dean G. Skelos comes this month's consideration of post-trial motions in both cases challenging the honest services fraud, bribery and extortion convictions and, specifically, the jury instructions on the quid pro quo element of these offenses. This judicial review process obviously will continue on for months following sentencing with the expected appeals to the Second Circuit and then possibly to the U.S. Supreme Court. But for now, the central question to be addressed prior to sentencing is whether the district judges in both cases got it right in instructing the jury on what is required in order to prove that a public official corruptly received an illegal gift or other thing of value in exchange for an official act or action.
In these and other similar cases brought by the U.S. Attorney's Office led by Preet Bharara and by other federal prosecutors around the rest of the country, the relevant charging language in the indictment is some variation of the following:
At the pre-trial motion to dismiss stage of the two New York State Legislature cases and later on at the Rule 29 phase at the close of the evidence in both cases, the defense raised the argument that the quid pro quo element is not satisfied merely by demonstrating that the gift giver intended to obtain generalized goodwill and that the public official, at worst, was self-dealing in receiving benefits from interested industry entities by acting in an official capacity based upon undisclosed conflicts of interest.2 In rejecting the failure to allege and prove the requisite "in exchange for" nexus between the benefits received and the official action taken or to be taken, Judge Valerie Caproni in the Silver case held that post-Skilling v. United States3 it is enough that the Government show, for example, that the public official used the power of his office to obtain benefits for his law firm in the form of referrals and referral fees from another law firm of one of his friends so long as it was done in exchange for the public official's use of his position to benefit those responsible for the referrals "as the opportunities arose."4
One of the benefits to the Government of charging honest services fraud and Hobbs Act extortion in public corruption cases is, of course, the ability to allege and place before the jury the jarring allegation that the public official was dishonest in betraying the public trust. Federal law provides that under the mail and wire fraud statutes,5 "fraud" includes, among the requisite schemes to defraud, "a scheme or artifice to deprive [the public] of [its] intangible right of honest services."6 In 1988, Congress passed §1346 in response to the Supreme Court's 1987 decision in McNally v. United States7 limiting the scope of the federal mail and wire fraud statutes to theft of tangible property. Thereafter, in Skilling, however, the Supreme Court in 2010 again limited the otherwise sweeping breadth of the federal fraud statutes to "only the bribe-and-kickback core of the pre-McNally case law."8
What this means insofar as federal public corruption prosecutions of state governmental officials is that the Government's corruption nexus must be based on Hobbs Act9 "color of official right" kickback extortion and/or an honest services bribery scheme to defraud.10 Thus, proof of the "in exchange for," or quid pro quo, element of the offenses is critical to sustaining a conviction in these cases. Determining what is required in that regard is no easy matter and, indeed, it is equally difficult to decide what constitutes a sufficient showing of official action.
In the Skelos case, for example, the defendant urged the district court to embrace a narrow reading of the bribery and extortion statutes, limiting the reach of the "official acts" element to the specific legislative functions of Senator Skelos' office. He relied on the Supreme Court's decision in United States v. Sun-Diamond Growers of Cal.11 to argue that Senator Skelos' exerting influence with Nassau County officials to obtain funding for particular projects benefitting a Long Island technology company in exchange for that company's payments to his son did not supply the required nexus between gifts given and specific official action. In Sun-Diamond, the Supreme Court held that gifts given in an attempt to generate generalized goodwill by a USDA-regulated agricultural company with matters pending before the U.S. Secretary of Agriculture was not sufficient, without more, to sustain a conviction for commission of the less serious federal gratuities offense. In that case, the Supreme Court noted that the federal gratuity statute's link between gifts given "for or because of an official act" mandated at least proof of specific and identifiable official action by the Secretary of Agriculture and a nexus between that action and the gifts given. Analogously, Skelos argued that the federal bribery statute should also be construed narrowly to limit "official acts" to "purely legislative functions." In rejecting that construction, Judge Kimba Wood found that subsequent decisions in the Second Circuit and elsewhere have made clear that "Sun-Diamond does not undermine ... the central [proposition] that 'official acts' extend beyond purely legislative functions to encompass those activities generally thought to be part of a legislator's legitimate use of his office."12
Determining how far beyond those core legislative functions official acts may still lie, therefore, remains open to question. The Fourth Circuit has held that even "mere steps in furtherance of a final act or decision may constitute an official act."13 It is well settled under the Hobbs Act, and mail and wire fraud statutes that proof of a scheme does not require a showing that the official act was ever carried out.14 In other words, "consummation of an official act is not an element of the offense."15 Moreover, the Second Circuit held in a decision prior to Sun-Diamond that the federal bribery statute criminalizes schemes in which payment is made for official acts even if the opportunity to take the acts has not yet arisen.16 Thus, not only is no proof required that the quid pro quo be fulfilled, but also no proof earmarking the gifts to specific official action is necessary given the Second Circuit's post-Sun-Diamond holding in United States v. Ganim.17 In that case, the Second Circuit reaffirmed its prior decisions in Coyne and Alfisi and specifically endorsed a jury instruction that "[t]he government does not have to prove an explicit promise to perform a particular act made at the time of payment. It is sufficient if the defendant understood he was expected as a result of the payment to exercise particular kinds of influence, that is, on behalf of the payor, as specific opportunities arose."18
Given this relatively relaxed formulation of the quid pro quo requirement, it is not surprising that the "as specific opportunities arose" surrogate for a bargained for exchange of benefits for official action has crept into the Government's charging instruments—and not just in the Southern District of New York. In the District of New Jersey, for example, in the pending prosecution of U.S. Senator Bob Menendez (D-N.J.) on conspiracy to commit bribery and honest services fraud charges, the Government likewise has alleged the "as the opportunities arose" formulation in attempting to satisfy the "in exchange for official acts" element of the offenses.19 Although Judge William Walls denied a defense pre-trial motion to dismiss the indictment for failure to sufficiently plead a quid pro quo arrangement, he did sharply question the Government's "stream of benefits" theory of the case as it relates to what the jury would have to find in order to satisfy the "in exchange for" requirement.20
Thus, in the Second Circuit, the defense argument in both Silver and Skelos that these cases seek to criminalize what is otherwise generalized goodwill so far has fallen on deaf ears. And it is not difficult to imagine that either district judge in those cases will stray far from the Ganim endorsement of a jury charge that allows the court to explain to the jury, in effect, that the Government is relieved of having to prove that any of the benefits received were connected to a specific official act. Put another way, the objection that the defense is expected to raise in post-trial motions and later on appeal in these two cases is that the jury instructions corresponding to the "in exchange for" element of the bribery and Hobbs Act extortion related charges pay only lip service to the quid pro quo requirement. While proof of an explicit (as distinguished from a specific) quid pro quo under existing Supreme Court precedent is required only in honest services/bribery/extortion cases involving campaign contributions,21 left open for prosecution is the implicit quid pro quo in the "wink and a nod"22 cases presented by the Silver and Skelos proceedings.23 In the current environment, public sentiment undeniably supports the outcome resulting in guilty verdicts in these two cases.24
And yet, both cases present the rather anomalous (and perhaps unsettling) reality that none of the gift givers—as supported by the testimony at trial of representatives of the respective donor entities, most of whom testified under grants of immunity or pursuant to non-prosecution agreements—claimed to have had any intention to influence the official actions of the respective New York Legislative leader officials. Once again, the law supports the seemingly counter-intuitive, since it does not require any concordance of intent as between the gift giver and receiver.25 Nevertheless, as the defense argued (unpersuasively as it turned out) to the Silver jury in summation, it is a rather "bizarre"26 result indeed that a public official can be convicted of bribery-related charges when the gift givers—among them, in the Silver case, two of the most prominent and powerful commercial real estate developers in New York City, Glenwood Management (which also figured in the Skelos case) and the Witkoff Group—not only did not intend to influence the public official, they did not even know that they had given gifts, or things of value, to the public official.27 While Silver, for one, knew what he was receiving in the form referral fees from the law firm that represented Glenwood and Witkoff in tax certiorari matters before the New York City Tax Commission, both Brian Meara and Richard Runes, Glenwood's lobbyists, as well as Steve Witkoff, the Witkoff Group's principal, testified that they knew nothing at the time about kickbacks or referral fees eventually going to Silver.28 What these men did testify to, in possibly the most damning evidence presented at trial, was that none of them felt free to be perceived as antagonistic to the whims of Silver's requests to move their legal business to the law firm of the Speaker's friend.29 Similarly, at the Skelos' trial, Charles Dorego, Glenwood's general counsel, testified about the dilemma the company faced in not wanting to do what Skelos asked, but not wanting to cross him either.30
Conclusion
What all of this portends in post-trial litigation, at sentencing31 and on appeal is, of course, anybody's guess at this point. Proof by circumstantial evidence of an implicit quid pro quo in order to prove the "in exchange for official acts" element of the honest services fraud, bribery and Hobbs Act extortion related charges in the Silver, Skelos and other similar public official prosecutions in the Southern District of New York and elsewhere appears to be alive and well.32 Whether convictions based upon such evidence and corresponding jury instructions will be upheld ultimately will be left to the Second Circuit and possibly the U.S. Supreme Court33 to decide. The juries in these two cases evidently concluded that crimes were committed. Whether those crimes, as a matter of law, constituted honest services fraud, bribery and extortion remains to be determined.
Endnotes:
1. In pertinent part, the district court's corresponding charge to the jury in the Silver case relative to the quid pro quo element was as follows:
United States v. Silver, 15 Cr. 93 (VEC), ECF Doc. 135 at 17-18 (SDNY), filed Nov. 24, 2015 (jury charge).
2. That is to say, for example in the Silver case, conflicts arose by accepting undisclosed gifts from Manhattan real estate developers while presiding, as Speaker of the New York Assembly, over legislation, including the renewal of rent control laws and the New York Real Property Tax Law §421-a tax abatement exemption, that was worth hundreds of millions of dollars to the commercial real estate industry in New York City. See Jillian Jorgensen, "How Sheldon Silver Became a Convicted Felon Thanks to Shady Real Estate Relationships," NY Observer, Jan. 13, 2016.
3. 561 U.S. 358 (2010).
4. United States v. Silver, 15 Cr. 93 (VEC), 2015 WL 4496295 (SDNY July 24, 2015). Or, as Judge Caproni explained more precisely:
Id. n.13 (emphasis in original).
5. 18 U.S.C. §§1341 and 1343, respectively.
6. 18 U.S.C. §1346.
7. 483 U.S. 350 (1987).
8. Skilling, 561 U.S. at 409 (emphasis in original).
9. 18 U.S.C. §1951(b)(2).
10. The general substantive federal bribery and gratuity statute by its terms applies only to federal government officials. 18 U.S.C. §§201(a), (b) & (c); see United States v. Brewster, 408 U.S. 501, 526 (1972) (bribery). As the Skelos case demonstrates, however, solicitation of bribes and gratuities can be prosecuted against a state governmental official to the extent that the gift giver received in excess of $10,000 of funds under a federal program of assistance, pursuant to 18 U.S.C. §666(a)(1)(B), otherwise known as the federal funds bribery statute. See United States v. Skelos, et al., Indictment (S1) 15 Cr. 317 (KMW), Counts 6-8.
11. 526 U.S. 398, 409 (1999).
12. United States v. Skelos, et. al, 15 Cr. 317 (KMW), 2015 WL 6159326 (SDNY Oct. 20, 2015). Judge Wood instead cited, inter alia, the Supreme Court's 100-year-old decision in United States v. Birdsall, 233 U.S. 223, 231 (1914), the Fourth Circuit's recent decision in United States v. McDonnell, 792 F.3d 478 (4th Cir. 2015), cert. granted, 84 U.S.L.W. 966 (U.S. Jan. 15, 2016) No. 15-474 and the Second Circuit's prior decision in United States v. Alfisi, 308 F.3d 144, 151 n.4 (2d Cir. 2002) in favor of a holding that even following Sun-Diamond, actions that fall within the scope of official acts under Birdsall, "such as speaking with aides and arranging meetings," can constitute official acts. Skelos, at n.1. Accord United States v. Biaggi, 853 F.2d 89, 97 (2d Cir. 1988) (rejecting "suggestion that a congressman's only official acts ... are acts in the legislative process itself" in favor of recognition of reality that official acts also encompass "all of the acts normally thought to constitute a congressman's legitimate use of his office"); cf. Alfisi, 308 F.3d at 151 n.4 (Winter, J.) ("We do not agree that Sun-Diamond requires us to define the crime of bribery narrowly. Sun-Diamond says nothing about bribery."). Judge Wood's decision and specifically her reliance onMcDonnell, however, may not survive review by the Supreme Court. See Reply to Br. in Opp. to Cert. Pet. at 6, McDonnell v. United States, 2015 WL 9302651 (No. 15-474) ("The Fourth Circuit's rule is thus that, even if an official never urges a specific governmental decision, no employee intuits any directive, and no decision is ever made—a jury can still infer attempted 'influence' and convict.") (emphasis in original).
13. McDonnell, 792 F.3d at 510.
14. See Evans v. United States, 504 U.S. 255, 268 (1992) (Hobbs Act); United States v. Ring, 706 F.3d 460, 467 (D.C. Cir. 2013) (honest services fraud); United States v. Bruno, 661 F.3d 733, 743 (2d Cir. 2011) (same).
15. McDonnell, 792 F.3d at 510.
16. United States v. Coyne, 4 F.3d 100, 113-14 (2d Cir. 1993).
17. 510 F.3d 134 (2d Cir. 2007) (Sotomayor, J.).
18. Id. at 142-43. See also Coyne, 4 F.3d at 114. Ganim is also of recent public interest due to the unusual (to say the least) turn of events that after serving a seven-year sentence following affirmance by the Second Circuit of his 2003 conviction on federal corruption charges as mayor of Bridgeport, Conn., he ran again upon release from prison and was re-elected as Bridgeport's mayor—with the endorsement of the FBI agent who helped prosecute him! See Kristin Hussey, "Joseph Ganim, Disgraced Ex-Mayor of Bridgeport, Conn., Wins Back Job," The New York Times, Nov. 4, 2015, at A26.
19. United States v. Menendez, et al., 15 Cr. 155 (WHW), 2015 WL 5915480 (DNJ Oct. 8, 2015).
20. Charles Toutant, "Judge 'Confused' by Prosecutors' Theory in Menendez Case," NJLJ, Sept. 17, 2015. That case is delayed in proceeding to trial while the defendant takes an interlocutory appeal to the Third Circuit on the constitutional issue relative to the defendant's alleged immunity as a U.S. Senator from prosecution under the Speech or Debate Clause of Section VI of Article I of the Constitution. The case is not expected to go to trial until at least October 2016.
21. McCormick v. United States, 500 U.S. 257, 273 (1991). See also Buckley v. Valeo, 424 U.S. 1, 16-19 (1976) (per curiam) (holding that campaign contributions and expenditures are speech under First Amendment requiring special protection). In a related context, the Seventh Circuit recently held that political logrolling in the form of trading then Illinois Governor Blagojevich's appointment to fill the vacancy of a U.S. Senate seat occasioned by Pres. Barack Obama's ascendency to the Presidency in exchange for promises of post-gubernatorial employment insufficient unless there was an explicit promise of a private sector salary or other private payment. United States v. Blagojevich, 794 F.3d 729 (7th Cir. 2015) (Easterbrook, J.) ("a proposal to trade one public act for another, a form of logrolling, is fundamentally unlike the swap of an official act for a private payment"), pet. for cert. filed, 84 U.S.L.W. 3304 (U.S. Nov. 17, 2015) (No. 15-664).
22. Evans v. United States, 504 U.S. 255, 274 (1992) (Kennedy, J., concurring) ("[t]he [public] official and the payor need not state the quid pro quo in express terms, for otherwise the law's effect could be frustrated by knowing winks and nods").
23. Compare Reply to Br. in Opp. to Cert. Pet. at 7, McDonnell v. United States, 2015 WL 9302651 (U.S. Dec. 21, 2015) (No. 15-474) (district court in instructing jury "quot[ed] a complex statutory definition [of official action] along with a lengthy disquisition on what conviction does not require—without even a word clarifying what it does require (namely, taking or urging a governmental decision)") (emphasis in original) with United States v. Silver, 15 Cr. 93 (VEC), ECF Doc. 135 at 24-25 (SDNY), filed Nov. 24, 2015 (jury charge) ("... it is not necessary that Mr. Silver or the person giving the property state the quid pro quo in express or explicit terms. A quid pro quo can be implied from Mr. Silver's words and actions, so long as you find that Mr. Silver intended there to be a quid pro quo ... . The Government does not need to prove that Mr. Silver could or actually did perform any specific official act on behalf of the extorted party, it does not matter if the actions he took were desirable or beneficial or that he would have taken the same action regardless of the receipt of property from the extorted party.") (emphasis added).
24. Editorial, "The Year in Corruption," Jan. 1, 2016, New York Post ("Glenwood ladled out $14 million or so to buy favors ... . The money is hopelessly tainted, even if no favors were directly exchanged."); but cf. Rebecca Davis O'Brien and Joe Palazzolo, "Legal Murkiness Hovers Over Sheldon Silver Case," Wall Street Journal, Jan. 23, 2015; Benjamin Weiser, "Sheldon Silver's Lawyers Are Likely to Argue U.S. Failed to Prove Quid Pro Quo," The New York Times, Dec. 3, 2015, at A28.
25. See United States v. Anderson, 509 F.2d 312, 332 (D.C. Cir. 1974) ("The payment and the receipt of a bribe are not interdependent offenses, for obviously the donor's intent may differ completely from the donee's.").
26. John Riley, "Sheldon Silver's fate will soon be in the hands of a jury," Newsday, Nov. 24, 2015 ("The developers didn't even know a bribe was being paid when it was supposedly being paid? It has to be the strangest quid pro quo ever. What kind of bribe is that?") (defense summation).
27. Cf. Evans, 504 U.S. at 274 (Kennedy, J., concurring) ("The inducement from the public official is criminal if it is express or if it is implied from his words and actions, so long as he intends it to be so and the payor so interprets it.") (emphasis added).
28. John Riley and William Murphy, "Developer testifies he didn't know about Sheldon Silver's share of referral fees," Nov. 17, 2015; Benjamin Weiser and Susanne Craig, "Lobbyist Cites Unease Over Payments to Sheldon Silver," The New York Times, Nov. 17, 2015, at A19.
29. Christine Simmons, "Firm Was Wary of Ending Silver Fee Sharing, Witness Testifies," NYLJ, Nov. 17, 2015.
30. Christine Simmons, "Witness Describes Pressure From Adam Skelos About Jobs," NYLJ, Nov. 23, 2015.
31. To underscore the severity of the consequence of conviction and, in that regard, the significance of whether the conduct involved truly amounted to bribery, extortion and honest services fraud, it is worth noting that the guidelines range in the Silver case, for example, is expected to be 235-293 months' imprisonment. See U.S.S.G. §§2C1.1 & 2B1.1(b)(1)(J). While former Assembly Speaker Silver's actual sentence likely will be far less, the prospect of facing 20-25 years in prison—that is, at age 72, for the rest of his life—is a sobering one indeed. Beyond that daunting reality, of course, remains the question of whether such a broad definition of bribery in these cases is sustainable under the law. At any rate, Skelos' sentencing currently is scheduled for March 2016, with Silver's sentencing on the calendar for April 2016. These dates may be affected, however, by the impending decision of the Supreme Court in McDonnell before the end of June.
32. See Evans, 504 U.S. at 268 ("the Government need only show that a public official has obtained a payment to which he was not entitled, knowing that the payment was made in return for official acts").
33. In McDonnell v. United States, the Supreme Court just last month granted certiorari on the following question presented: "Whether 'official action' under the controlling fraud statutes is limited to exercising actual governmental power, threatening to exercise such power, or pressuring others to exercise such power, and whether the jury must be so instructed; or, if not so limited, whether the Hobbs Act and honest-services fraud statutes are unconstitutional." 84 U.S.L.W. 966, cert. granted (U.S. Jan. 15, 2016) (No. 15-474). Oral argument in the case is expected during April 2016, with a decision by the Supreme Court before the close of this year's term at the end of June 2016. Washington Post, "Supreme Court will review corruption conviction of former Va. Governor Robert McDonnell," Jan. 15, 2016.
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