# Percoco v. United States

Note: Where it is feasible, a syllabus (headnote) will be released, as is being done in connection with this case, at the time the opinion is issued. The syllabus constitutes no part of the opinion of the Court but has been prepared by the Reporter of Decisions for the convenience of the reader. See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337.
SUPREME COURT OF THE UNITED STATES
Syllabus
PERCOCO v. UNITED STATES ET AL. CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT No. 21–1158. Argued November 28, 2022—Decided May 11, 2023
Held: Instructing the jury based on the Second Circuit’s 1982 decision in Margiotta on the legal standard for finding that a private citizen owes the government a duty of honest services was error. Pp. 5–12.
(a) Prior to this Court’s 1987 decision in McNally v. United States, 483 U. S. 350, “all Courts of Appeals had embraced” the view that the federal wire fraud and mail fraud statutes proscribe what came to be known as “honest-services fraud.” Skilling v. United States, 561 U. S. 358, 401. Most cases prosecuted under these statutes involved public employees accepting a bribe or kickback that did not necessarily result in a financial loss for the government employer but did deprive the government of the right to receive honest services. See id., at 400–401. The Second Circuit considered a different fact pattern in Margiotta, in which the government had charged an unelected individual with honest-services mail fraud for using his position as a political-party chair to exert substantial control over public officials. The court held that a private person could commit honest-services fraud if he or she “dominate[d] government.” 688 F. 2d, at 122. Shortly after Margiotta, however, this Court rejected the entire concept of honest-services fraud in McNally. But “Congress responded swiftly” to McNally, and enacted 18 U. S. C. §1346, which provides that “ ‘the term “scheme or artifice to defraud,” ’ ” which appears in both §1341 and §1343, “ ‘includes a scheme or artifice to deprive another of the intangible right of honest services.’ ” Skilling, 561 U. S., at 402 (quoting §1346). Decades later in Skilling, this Court rejected the broad argument that §1346 is unconstitutionally vague and clarified that “the intangible right of honest services” in §1346 relates to “fraudulent schemes to deprive another of honest services through bribes or kickbacks supplied by a third party who had not been deceived.” 561 U. S., at 404.
Skilling’s approach informs the Court’s decision in this case. The Second Circuit concluded that “Congress effectively reinstated the Margiotta-theory cases by adopting statutory language that covered the theory.” 13 F. 4th 180, 196. But Skilling took care to avoid giving §1346 an indeterminate breadth that would sweep in any conception of “intangible rights of honest services” recognized by some courts prior to McNally. By rejecting the Government’s argument that §1346 should apply to cases involving “ ‘undisclosed self-dealing by a public official or private employee,’ ” 561 U. S., at 409, the Skilling Court made clear that “the intangible right of honest services” must be defined with the clarity typical of criminal statutes and should not be held to reach an ill-defined category of circumstances simply because of a few pre-McNally decisions. Pp. 5–8.
(c) The jury instructions based on the Margiotta theory in Percoco’s case were erroneous. Margiotta’s standard in the instructions—implying that the public has a right to a private person’s honest services whenever that private person’s clout exceeds some ill-defined threshold—is too vague. Without further constraint, the jury instructions did not define “the intangible right of honest services” “ ‘with sufficient definiteness that ordinary people can understand what conduct is prohibited’ ” or “ ‘in a manner that does not encourage arbitrary and discriminatory enforcement.’ ” McDonnell v. United States, 579 U. S. 550, 576.
The Government does not defend the jury instructions as an accurate statement of the law, but instead claims that the imprecision in the jury instructions was harmless error. The Government argues that a private individual owes a duty of honest services in the discrete circumstances (1) “when the person has been selected to work for the government” in the future and (2) “when the person exercises the functions of a government position with the acquiescence of relevant government personnel.” Brief for United States 25. These theories, however, differ substantially from the instructions given the jury in this case, and the Second Circuit did not affirm on the basis of either of them. Pp. 9–12.
13 F. 4th 180, reversed and remanded.
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