14:36, July 14 76 0 law.com

2017-07-14 14:36:05
How the Supreme Court Has Reined in Federal Prosecutors
Robert McDonnell. July 9, 2013. Photo: vastateparksstaff via Wikimedia Commons.

Federal prosecutors have taken it on the chin in recent U.S. Supreme Court decisions that pushed back against the government’s expansive reading of federal criminal laws. The latest setback came Thursday, when a federal appeals court voided the corruption conviction of a once-powerful New York state Assembly speaker.

The U.S. Court of Appeals for the Second Circuit said the jury in that case might not have convicted the lawmaker, Sheldon Silver, had they been instructed properly on the justices’ narrow definition of “official act” in the context of prosecutions for honest services fraud.

That narrowed definition was adopted by a unanimous Supreme Court in the June 2016 decision in McDonnell v. United States, the most recent of a chain of rulings that cabined prosecutors’ use of often broadly worded criminal provisions. Prosecutors plan to retry Silver.

“Regardless of what happens with Sheldon Silver upon retrial, the Second Circuit’s opinion, on top of the Supreme Court’s unanimous decision in McDonnell, nonetheless sends perhaps more than just a cautionary tale to prosecutors about overreaching in political corruption cases,” Lathrop Nelson III of Montgomery McCracken Walker & Rhoads wrote on his white-collar blog. “There indeed is a line between what is an improper quid pro quo and acts that constitute constituent services that we expect our elected officials to perform.”

Here’s a snapshot of the McDonnell decision and other rulings—four of which were issued by the Roberts Court—that restricted prosecution offices.

‘Tawdry Tales’ (McDonnell v. United States)

Former Virginia Gov. Robert McDonnell, represented by then-Jones Day partner Noel Francisco, was indicted on honest services fraud and Hobbs Act extortion charges related to his and his wife’s acceptance of $175,000 in loans, and other benefits from a Virginia businessman while the governor was in office. To convict them—his wife was also charged—prosecutors had to show the governor committed, or agreed to commit, an “official act” in exchange for the loans and gifts.

“There is no doubt that this case is distasteful; it may be worse than that,” wrote Chief Justice John Roberts Jr. “But our concern is not with tawdry tales of Ferraris, Rolexes, and ball gowns. It is instead with the broader legal implications of the government’s boundless interpretation of the federal bribery statute. A more limited interpretation of the term ‘official act’ leaves ample room for prosecuting corruption, while comporting with the text of the statute and the precedent of this court.”

Criminal defense lawyers and others had predicted the ruling would reach beyond public corruption cases to all federal bribery cases and potentially force prosecutors to prove a quid pro quo in insider trading cases. However, others have argued the decision isn’t as broad as some said.

“The reality is that McDonnell is of limited significance: It prevents prosecutors from bringing only the weakest of public corruption cases, those where the prosecution lacks even circumstantial evidence that a corrupt payoff was for something more than a chance to meet with the public official,” Covington & Burling lawyers Arlo Devlin-Brown and Erin Monju wrote in this piece at the New York Law Journal.

‘Mad Prosecutors’ (Yates v. United States)

After a federal agency discovered that a commercial fishing vessel had captured undersized red grouper in violation of conservation regulations, the owner ordered his crew to throw them overboard in an attempt to evade the violation. The owner was charged with violating a provision of the Sarbanes-Oxley Act that prohibited, among other things, the knowing destruction or alteration of any record, document or tangible object with the intent to obstruct a federal investigation.

Were the fish “tangible objects” under the law? During arguments, the late Justice Antonin Scalia asked, “What kind of a mad prosecutor would try to send this guy up for 20 years?”

Justice Ruth Bader Ginsburg, writing for a 5-4 majority in 2015 said: “The words of Section 1519, the government argues, support reading the provision as a general ban on the spoliation of evidence, covering all physical items that might be relevant to any matter under federal investigation. We resist reading Section 1519 expansively to create a coverall spoliation of evidence statute, advisable as such a measure might be. Leaving that important decision to Congress, we hold that a ‘tangible object’ within Section 1519’s compass is one used to record or preserve information.”

Feds Can’t ‘Reach Into the Kitchen Cupboard’ (Bond v. United States)

Carol Anne Bond, seeking revenge against a woman with whom her husband had an affair, spread two toxic chemicals on the woman’s car, mailbox and doorknob in hopes she would get an uncomfortable rash. The woman suffered a minor burn treated by rinsing with water. Federal prosecutors charged Bond with violating a section of the Chemical Weapons Convention Implementation Act of 1998.

In the court’s unanimous decision, Roberts wrote: “We are reluctant to ignore the ordinary meaning of ‘chemical weapon’ when doing so would transform a statute passed to implement the international Convention on Chemical Weapons into one that also makes it a federal offense to poison goldfish. In sum, the global need to prevent chemical warfare does not require the federal government to reach into the kitchen cupboard, or to treat a local assault with a chemical irritant as the deployment of a chemical weapon. There is no reason to suppose that Congress—in implementing the Convention on Chemical Weapons—thought otherwise.”

‘Vagueness Shoal’ (Skilling v. United States)

Jeffrey Skilling was convicted of honest services wire fraud for deceiving Enron Corp. investors about the company’s financial well-being.

“Section 1346, which proscribes fraudulent deprivations of ‘the intangible right of honest services,’ is properly confined to cover only bribery and kickback schemes,” Ginsburg wrote. “The government urges us to go further by locating within Section 1346’s compass another category of proscribed conduct: ‘undisclosed self-dealing by a public official or private employee—i.e., the taking of official action by the employee that furthers his own undisclosed financial interests while purporting to act in the interests of those to whom he owes a fiduciary duty.’ Construing the honest-services statute to extend beyond that core meaning, we conclude, would encounter a vagueness shoal. Because Skilling’s alleged misconduct entailed no bribe or kickback, it does not fall within the court’s confinement of Section 1346’s proscription.”

Skilling actually involved a trio of high court cases in which the justices vacated and remanded convictions. Shortly after the ruling, defendants across the country began winning relief, including former Alabama Gov. Don Siegelman and former HealthSouth  Corp. CEO Richard Scrushy, and prosecutors reportedly dropped charges in the wake of the high court’s action.

Court Defines ‘Knowingly’ (Arthur Andersen v. United States)

As Enron’s financial difficulties became public in 2001, Arthur Andersen, Enron’s auditor, instructed its employees to destroy documents pursuant to its retention policy. Arthur Andersen was indicted under 18 U.S.C. Section 1512(b)(2)(A) and (B), which make it a crime to “knowingly … corruptly persuade another person … with intent to … cause” that person to “withhold” documents from, or “alter” documents for use in, an “official proceeding.” A jury convicted Arthur Andersen.

Writing for the unanimous court Chief Justice William Rehnquist in 2005 said: “The government suggests that it is ‘questionable whether Congress would employ such an inelegant formulation as ‘knowingly … corruptly persuades.’ Long experience has not taught us to share the government’s doubts on this score, and we must simply interpret the statute as written. Only persons conscious of wrongdoing can be said to ‘knowingly … corruptly persuad[e].’ The outer limits of this element need not be explored here because the jury instructions at issue simply failed to convey the requisite consciousness of wrongdoing.”