Opinion ID: 778656
Heading Depth: 2
Heading Rank: 3

Heading: The Salinas Speculation and Its Sequellae: The Funds Focus, Requiring a Further Nexus

Text: 51 In reviewing Marmolejo, under the caption Salinas v. United States, 20 the Supreme Court asked whether § 666 is limited to cases in which the bribe has a demonstrated effect upon federal funds. 21 The Court stated that [t]he statute's plain language fails to provide any basis for such a limitation and that the legislative history forecloses it. 22 The Court thus agreed with our Marmolejo holding that federal funds need not be directly involved in a violation of § 666. 23 The Court nonetheless obliquely suggested that there might be obstacles to applying § 666 to different facts: 52 We need not consider whether the statute requires some other kind of connection between a bribe and the expenditure of federal funds, for in this case the bribe was related to the housing of a prisoner in facilities paid for in significant part by federal funds themselves. And that relationship is close enough to satisfy whatever connection the statute might require. 24 53 Even so, the Court disposed of any constitutional question: 54 [T]here is no serious doubt about the constitutionality of § 666(a)(1)(B) as applied to the facts of this case. [The briber] was without question a prisoner held in a jail managed pursuant to a series of agreements with the Federal Government. The preferential treatment accorded to him was a threat to the integrity and proper operation of the federal program. Whatever might be said about § 666(a)(1)(B)'s application in other cases, the application of § 666(a)(1)(B) to Salinas did not extend federal power beyond its proper bounds. 25 55 Since Salinas, the Supreme Court has decided only one more § 666 case: Fischer v. United States, 26 which also sent mixed messages. Echoing Salinas, the Fischer Court described § 666 as expansive, both as to the conduct forbidden and the entities covered 27 and read the statute to reveal Congress's expansive, unambiguous intent to ensure the integrity of organizations participating in federal assistance programs 28 — clearly embracing the corruption focus. The Court therefore affirmed the conviction of a defendant who had defrauded a municipal hospital authority that participated in the federal Medicare program. 29 In so doing, however, the Court once again mentioned in passing a conceivable constitutional problem: To read the statutory term benefits too broadly, the Court cautioned, so as to mean [a]ny receipt of federal funds, could turn almost every act of fraud or bribery into a federal offense, upsetting the proper federal balance. 30 Justice Thomas, joined in dissent by Justice Scalia, likewise warned that [w]ithout a jurisdictional provision that would ensure that in each case the exercise of federal power is related to the federal interest in a federal program, § 666 would criminalize routine acts of fraud or bribery and threaten principles of federalism. 31 56 Although Salinas and Fischer did not unconditionally validate our view that once a local government accepts more than $10,000 per year from the federal government, no further federal interest is needed to justify prosecution under § 666, neither did either of those cases condemn our broad approach. The Salinas Court merely observed in passing that, even if a federal interest were required, such an interest clearly existed in preventing federal prisoners from bribing local jail officials participating in a federal incarceration program. Similarly, the Fischer Court construed a term in § 666 broadly, simply musing that federalism principles might somehow limit the statute's sweep. As either a statutory or constitutional matter, then, the Court might be seen as harboring inchoate qualms about whether, for § 666 to apply, there might be some need for a direct interest in the funds involved in the prohibited conduct (or, alternatively, a need for either a nexus between the federal dollars and the offense conduct or an extra-textual jurisdictional element to § 666). Lipscomb argues this inference forcefully, noting that Salinas left open the question whether § 666 requires some other kind of connection between a bribe and the expenditure of federal funds. 32 He urges us to overlook Westmoreland and answer this question in the affirmative. 57 This, of course, we could not do even if we were so inclined. Mere ruminations in Supreme Court opinions do not empower a subsequent panel of our court to disregard, much less overrule, the holding of a prior panel. And, as we noted just last year, [w]e are not convinced that Salinas wrought a change upon our earlier precedents. 33 Because Salinas and Fischer went no further than to advert in dicta to the mere possibility that the argument now advanced by Lipscomb might someday be favored, we are bound to adhere to Westmoreland 's statutory holding. 34 58 Likewise, our post- Salinas decisions interpreting § 666 must be read as adhering to this rule. Nevertheless, the cautionary words in Salinas and Fischer, combined with our prior opinions' silence on the constitutional question, divided the next panel of this court to interpret § 666. The panel majority in United States v. Phillips 35 reiterated Moeller 's requirement of a nexus between the misconduct and the agency (as distinct from a nexus between the misconduct and the federal funds themselves), 36 but added some extra-textual teeth in holding that defendant Phillips, a tax assessor, was not an agent of Louisiana's St. Helena Parish, which received over $10,000 in federal funds, so as to be liable himself under § 666 for putting on his payroll a political ally who then did no work. 37 The panel instead viewed Phillips as an agent of the Louisiana Tax Commission, which received no federal funds, and concluded that the statute did not reach his activity. Underlying this definitional question about agent, however, lurked the majority's concern that the defendant was too functionally distant from the flow of federal funds to the parish: 59 We know from the Supreme Court's decision in Salinas that the funds in question need not be purely federal, nor must the conduct in question have a direct effect on federal funds. The statute possibly can reach misuse of virtually all funds of an agency that administers the federal program in question. It is a different matter altogether, however, to suggest that the statute can reach any government employee who misappropriates purely local funds, without regard to how organizationally removed the employee is from the particular agency that administers the federal program. 38 60 We acknowledge that it is at least arguable, albeit tenuously, that this organizationally removed language conflicts with Westmoreland and Moeller, even though the Phillips majority purported to distinguish those two cases factually, and the Phillips panel may be perceived as having favored the funds focus for § 666. To the extent that there is a conflict, however, the older case controls, as the Phillips dissenter correctly noted. 39 61 Only by interpreting agent narrowly was the Phillips majority able to avoid the constitutional question. 40 The Phillips dissent read our own precedents as rejecting any nexus requirement whatsoever and took issue with the panel majority's narrow definition of agent. 41 The dissent asserted that a specific nexus — between Phillips and the federal funds inside Parish coffers — is not required and furthermore that it is sufficient that the criminal conduct affect the agency receiving federal assistance: in essence, we have determined that there is an inherent federal interest in insuring that agencies receiving significant amounts of federal funding are not corrupt. 42 In a nutshell, this is precisely the corruption focus that we had firmly adopted in Westmoreland, a focus that has never been overruled either by this court en banc or by the Supreme Court. 62