Source: http://www.westerncity.com/article/making-federal-case-out-corruption
Timestamp: 2019-04-19 13:30:18+00:00

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I have been closely following the prosecution of a local colleague who is facing corruption charges. It would be an interesting story if it weren’t so sad. This guy is quite bright and prided himself on knowing exactly where the boundaries are in terms of the Political Reform Act and other such laws. But now he finds himself in federal court, charged with crimes that include something called “honest services fraud,” extortion and income tax evasion. He’s had to hire an expensive lawyer experienced in federal court practice to defend himself against these charges.
I can’t remember ever having been told about these laws as a public official. Can you explain?
The importance of the public’s trust in government processes means that there are laws designed to prevent breaches of that trust at both the state and federal levels. The same conduct can be charged under both sets of laws. State laws tend to be more specific in describing what kind of behavior crosses the line. Federal law is broader in some respects and thus arguably offers more opportunities for missteps, as your colleague has discovered.
The history of “honest services” mail fraud is quite interesting. Back in the1930s, a court ruled a New Orleans public official violated the federal fraud laws when he used the mails in the course of being bribed. In the course of that ruling, the court observed that the public has a right to honest government.3 This observation was relied upon in the 1973 trial of an Illinois state official that attracted widespread attention.4 Prosecutors then began using this theory in a variety of public corruption cases.
The U.S. Supreme Court temporarily nixed such prosecutions in 1987, finding that the concept of “honest services” fraud represented too broad of a reading of the federal fraud statutory language.5 The case involved a Kentucky public official and a private individual who were participating in a patronage scheme.
The clearest cut example is when an official receives a personal financial gain as the result of his or her public service. Examples include bribes and kickbacks (for example, receiving money back from proceeds paid to a company that does business with a public entity).
There is a dispute between prosecutors and defense attorneys as to whether such a quid pro quo is a necessary element of honest services fraud. This was an issue in another California prosecution involving allegations that city officials agreed to pursue a repeal of a ban on touching between strippers and patrons in return for campaign contributions.23 The trial court said that such a showing of an exchange is necessary; prosecutors disagree and are seeking to appeal that determination. In this case, the prosecutors wanted to be able to find the defendants guilty of fraud even though the defendants had not actually delivered what was promised and there was something less than an explicit agreement.
A federal court found that a New Mexico state official acted improperly (extortionately) when he suggested that a bank competing for state business contribute to the governor’s campaign. In upholding the conviction, the appellate court noted that the coercive solicitation of political contributions (give me a campaign contribution and I will do what you want) constitutes extortion.26 So could a public official’s demand for gifts or money in exchange for a favorable action.
RICO law is enormously complex. An example may be helpful.
In early 2006, an Illinois governor was convicted of 18 counts of racketeering, conspiracy, mail fraud, lying to the FBI, obstructing the Internal Revenue Service (IRS) and filing false tax returns.31 One of the charges was that a group of friends and staffers constituted a racketeering enterprise that engaged in a pattern of criminal activity. Among the things the enterprise was involved in were: 1) using public resources to support campaign activities; 2) performing official acts in return for campaign benefits; and 3) concealing such activity from public exposure, administrative action and possible criminal prosecution.32 Other charges included that the governor arranged lucrative public contracts in return for vacations, gifts and other benefits to himself and his family.
Income tax evasion is another important tool in federal prosecutors’ arsenal. The IRS even has a page on its website dedicated to “Examples of Public Corruption Tax Crimes Investigations.”37 Income tax problems arise when officials receive money and other kinds of valuable items and don’t report them on their income tax forms. Prosecutors don’t need to show that the money or gifts were received in exchange for improper purposes, only that they were not reported on the official’s income tax form.
The sweep of these federal laws is one of the reasons that the Institute for Local Government strongly encourages local officials to stay as far away as possible from the lines dividing lawful from unlawful conduct. The laws are so numerous — and in the case of federal laws, so broad — that it simply isn’t possible to know that conduct close to the line withrespect to one law isn’t over the line withrespect to another. The safest course is tonot take any chances.
What is so hard for me is that I will live with this scarlet letter for the rest of my life, and that it’s so painful and so hard. … When the raid of my office took place and the indictments and the conviction, I [felt] as if part of me had died, and I know that part of my obituary has already been written.
This column is a service of the Institute for Local Government Ethics Project (ILG), which offers resources for local officials on public service ethics. For more information, visit www.ca-ilg.org/trust.
It can be tempting to think that “no one will know” about breaches of the public trust and that everyone involved has an incentive to keep from disclosing such breaches. Many public officials have learned otherwise the hard way.
In one instance, local officials were approached and encouraged to engage in conduct that landed them in federal court by someone who was already cooperating with federal law enforcement authorities. The reason? The federal authorities promised the cooperating individual favorable consideration with respect to other federal charges already pending against the individual. As a result, the cooperating individual agreed to wear a wire in his subsequent conversations about campaign contributions with candidates.
 Now 18 U.S.C. § 1341.
 Andrew Zajac, “’Honest Services’ Law Vexes Defense Lawyers in Fraud Cases,” Chicago Tribune, June 7, 2006 (available at www.chicagotribune.com).
 McNally v. U.S., 483 U.S. 350, 355 (1987).
 See 18 U.S.C § 1346 (“For purposes of this chapter, the term ‘scheme or artifice to defraud’ includes a scheme or artifice to deprive another of the intangible right of honest services.”).
 18 U.S.C. §1341 (“… shall be fined under this title or imprisoned not more than 20 years, or both). 18 U.S.C. § 1343 (“shall be fined under this title or imprisoned not more than 20 years, or both.”).
 U.S. v. Sawyer, 239 F.3d 31, 39 (1st Cir. 2001) (finding sufficient evidence of guilt apart from proof of violation of state law).
 U.S. v. Lopez-Lukis, 102 F.3d 1164, 1169 (11th Cir. 1997) (noting that effort to improperly control composition of decision-making body constituted an effort to deprive public of honest services); McNally v. U.S., 483 U.S. at 362-63 (Justice Stevens, dissenting).
 U.S. v. Genova, 333 F.3d 750, 759 (7th Cir. 2003) (finding failure to disclose income from kickbacks was essential to continuation of the scheme; also finding a RICO violation).
 U.S. v. Paradies, 98 F.3d 1266, 1283 (11th Cir. 1996) (“It should be plain to ordinary people that offering and accepting large sums of money in return for a city councilman’s vote is the type of conduct prohibited by” mail fraud statutes.”).
 Press Release, U.S. Attorney’s Office, Central District of California, “Current and Former Elected Officials in City of Carson Charged in Bribery Schemes Involving Trash Contract Cases Show Extortion Attempts Against Four Haulers,” Nov. 21, 2002.
 Nick Schou, “A Federal Case: Investigation Sparked By Weekly Culminates With 18 Counts Against Ex-Surf City Mayor Houchen,” Dec. 9, 2004.
 U.S. v. Kemp, 379 F. Supp. 2d 690, 697-98 (E.D. Penn. 2005).
 Press Release, U.S. Attorneys Office, Central District of California, “Former Mayor of Lynwood and Three Associates Indicted on Federal Corruption Charges: Indictment Alleges Paul Richards Systematically Deceived Citizens of Lynwood and Wasted Taxpayer Dollars to Enrich Himself, His Family and Friends,” Oct. 14, 2004.
 News 10 “Jury Finds McFall Guilty in Corruption,” March 8, 2005, available at http://www.news10.net/storyfull1.asp?id=9622.
 See, e.g., U.S. v. Blumeyer, 114 F.3d 758, 765 (8th Cir. 1997) (allowing conviction to stand even with public official’s acquittal of corruption charges).
 U.S. v. Woodward, 149 F.3d 46, 55 (1st Cir. 1998) (company’s ongoing pattern of gifts and entertainment to chair of key legislative committee constituted intent to deprive citizens of chair’s honest services), citing U.S. v. Sawyer, 85 F.3d 716, 730 (1st Cir. 1996).
 U.S. v. Welch, 327 F.3d 1081 (10th Cir. 2003).
 Kelly Thornton, “Vagueness of Statute on Corruption Stirs Dispute: Honest Services’ Fraud Law Gets Frequent Use,” San Diego Union Tribune, Jan. 12, 2006 (available online on www.signonsandiego.com).
 See U.S. v. Sawyer, 239 F.3d 31, 47 (1st Cir. 2001).
 [shouldn’t this be an “ibid; Thornton”?] Kelly Thornton, “Vagueness of Statute on Corruption Stirs Dispute: ‘Honest Services’ Fraud Law Gets Frequent Use,” San Diego Union-Tribune, January 12, 2006 (available online at www.signsonsandiego.com).
 U.S. v. Troutman, 814 F.2d 1428, 1456 (10th Cir. 1987).
 Matt O’Connor and Rudolph Bush, Ryan Convicted in Corruption Trial: Co-Defendant Warner Also Guilty, Chicago Tribune, April 17, 2006.
 Press Release, U.S. Attorney’s Office, Northern District of Illinois, “Citizens for George Ryan, Top Aides Fawell and Juliano Indicted on Alleged Corruption Charges Involving SOS Office and Campaigns: RICO Indictment Includes Fraud, Bribery and Obstruction Acts; Perjury and Tax Violations,” April 2, 2002.
 U.S. v. Genova, 333 F.3d at 759 (kickbacks from city prosecutor’s firm).
 Press Release, U.S. Attorney’s Office, Eastern District of California, “Former Northridge Water Board Assistant General Manager Pleads Guilty to Tax Evasion and Mail Fraud,” Oct. 25, 2004 (available online).
 Scott Smith, “McFall Fires Attorney, Makes Own Final Case: Deliberations Expected to Begin Today in Corruption Trial of Former S.J. Lawman, Lobbyist,” Stockton Record, March 2, 2005.
 Kelly Thornton, “Split Decision: Judge Tosses Out 7 of 9 Counts Against Zucchet; Inzunza Gets 21 Months for Corruption Convictions,” San Diego Union Tribune, Nov. 11, 2005 (available online on www.signonsandiego.com).
Sam Stanton, “Dunn Gets 6 Months, $40,000 Fine: Former San Joaquin Sheriff Is Spared a Harsher Sentence After He Aids Prosecutors in Lengthy Corruption Case,”Sacramento Bee, June 1, 2005.

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