Opinion ID: 197216
Heading Depth: 3
Heading Rank: 2

Heading: Honest Services Fraud (Section 1346)

Text: 23 In McNally v. United States, 483 U.S. 350, 107 S.Ct. 2875, 97 L.Ed.2d 292 (1987), the Supreme Court held that the mail and wire fraud statutes do not prohibit schemes to defraud individuals of their intangible, nonproperty right to honest government services. Id. at 359-60, 107 S.Ct. at 2881-82. 9 Congress responded to McNally in 1988 by enacting section 1346, the honest services amendment, which provides: 24 For the 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. 25 18 U.S.C. § 1346 (effective Nov. 11, 1988). We have held, after considering the relevant legislative history, that section 1346 effectively restores to the scope of the mail and wire fraud statutes 10 their pre-McNally applications to government officials' schemes to defraud individuals of their intangible right to honest services. See Grandmaison, 77 F.3d at 566 (collecting cases). 11 26 We recently had the opportunity to discuss, at some length, the proper application of the section 1346 honest services amendment to the wrongful acts of public officials. See Sawyer, 85 F.3d at 722-26. The discussion and holding in Sawyer directly guide our disposition of the instant appeal. 12 First, as a general matter, we noted in Sawyer that although the right to honest services eludes easy definition, honest services convictions of public officials typically involve serious corruption, such as embezzlement of public funds, bribery of public officials, or the failure of public decision-makers to disclose certain conflicts of interest. Id. at 724. Second, we cautioned that [t]he broad scope of the mail fraud statute, however, does not encompass every instance of official misconduct that results in the official's personal gain. Id. at 725. Third, and most importantly, Sawyer holds that the government must not merely indicate wrongdoing by a public official, but must also demonstrate that the wrongdoing at issue is intended to prevent or call into question the proper or impartial performance of that public servant's official duties. Id. at 725 (citing pre-McNally precedent to demonstrate that even where public officials violated state laws, their actions were not found to defraud citizens of their right to honest services, because the officials did not actually fail to perform their official duties properly). In other words, although a public official might engage in reprehensible misconduct related to an official position, the conviction of that official cannot stand where the conduct does not actually deprive the public of its right to her honest services, and it is not shown to intend that result. Id. 27 Applying these principles to Czubinski's acts, it is clear that his conviction cannot stand. First, this case falls outside of the core of honest services fraud precedents. Czubinski was not bribed or otherwise influenced in any public decisionmaking capacity. Nor did he embezzle funds. He did not receive, nor can it be found that he intended to receive, any tangible benefit. His official duty was to respond to informational requests from taxpayers regarding their returns, a relatively straightforward task that simply does not raise the specter of secretive, self-interested action, as does a discretionary, decision-making role. Cf. United States v. McNeive, 536 F.2d 1245, 1251 (8th Cir.1976) (finding no mail fraud violation where city employee accepted gratuities in connection with non-discretionary duty). 28 Second, we believe that the cautionary language of Sawyer is particularly appropriate here, given the evidence amassed by the defendant at trial indicating that during his span of employment at IRS, he received no indication from his employer that this workplace violation--the performance of unauthorized searches--would be punishable by anything more than dismissal. 13 To allow every transgression of state governmental obligations to amount to mail fraud would effectively turn every such violation into a federal felony; this cannot be countenanced. Sawyer, 85 F.3d at 728. Here, the threat is one of transforming governmental workplace violations into felonies. We find no evidence that Congress intended to create what amounts to a draconian personnel regulation. We hesitate to imply such an unusual result in the absence of the clearest legislative mandate. 29 These general considerations, although serious, are not conclusive: they raise doubts as to the propriety of this conviction that can be outweighed by sufficient evidence of a scheme to defraud. The third principle identified in Sawyer, instructing us as to the basic requirements of a scheme to defraud in this context, settles any remaining doubts. The conclusive consideration is that the government simply did not prove that Czubinski deprived, or intended to deprive, the public or his employer of their right to his honest services. Although he clearly committed wrongdoing in searching confidential information, there is no suggestion that he failed to carry out his official tasks adequately, or intended to do so. 30 The government alleges that, in addition to defrauding the public of his honest services, Czubinski has defrauded the IRS as well. The IRS is a public entity, rendering this contention sufficiently answered by our holding above that Czubinski did not defraud the public of his honest services. Even if the IRS were a private employer, however, the pre-McNally honest services convictions involving private fraud victims indicate that there must be a breach of a fiduciary duty to an employer that involves self-dealing of an order significantly more serious than the misconduct at issue here. See, e.g., United States v. Lemire, 720 F.2d 1327, 1332-34 (D.C.Cir.1983) (employee took bribes and did not disclose that contractor was overcharging); United States v. Siegel, 717 F.2d 9, 14 (2d Cir.1983) (employees used corporate funds for non-corporate purposes); United States v. Boffa, 688 F.2d 919, 931 (3d Cir.1982) (union official bribed into accepting lower wages for union members). Once again, the government has failed to prove that Czubinski intended to use the IRS files he browsed for any private purposes, and hence his actions, however reprehensible, do not rise to the level of a scheme to defraud his employer of his honest services.II. The Computer Fraud Counts 31 Czubinski was convicted on all four of the computer fraud counts on which he was indicted; these counts arise out of unauthorized searches that also formed the basis of four of the ten wire fraud counts in the indictment. Specifically, he was convicted of violating 18 U.S.C. § 1030(a)(4), a provision enacted in the Computer Fraud and Abuse Act of 1986. Section 1030(a)(4) applies to: 32 whoever ... knowingly and with intent to defraud, accesses a Federal interest computer without authorization, or exceeds authorized access, and by means of such conduct furthers the intended fraud and obtains anything of value, unless the object of the fraud and the thing obtained consists only of the use of the computer. 33 We have never before addressed section 1030(a)(4). Czubinski unquestionably exceeded authorized access to a Federal interest computer. 14 On appeal he argues that he did not obtain anything of value. We agree, finding that his searches of taxpayer return information did not satisfy the statutory requirement that he obtain anything of value. The value of information is relative to one's needs and objectives; here, the government had to show that the information was valuable to Czubinski in light of a fraudulent scheme. The government failed, however, to prove that Czubinski intended anything more than to satisfy idle curiosity. 34 The plain language of section 1030(a)(4) emphasizes that more than mere unauthorized use is required: the thing obtained may not merely be the unauthorized use. It is the showing of some additional end--to which the unauthorized access is a means--that is lacking here. The evidence did not show that Czubinski's end was anything more than to satisfy his curiosity by viewing information about friends, acquaintances, and political rivals. No evidence suggests that he printed out, recorded, or used the information he browsed. No rational jury could conclude beyond a reasonable doubt that Czubinski intended to use or disclose that information, and merely viewing information cannot be deemed the same as obtaining something of value for the purposes of this statute. 15 35 The legislative history further supports our reading of the term anything of value. In the game of statutory interpretation, statutory language is the ultimate trump card, and the remarks of sponsors of legislation are authoritative only to the extent that they are compatible with the plain language of section 1030(a)(4). Rhode Island v. Narragansett Indian Tribe, 19 F.3d 685, 699 (1st Cir.1994) (citing Grove City College v. Bell, 465 U.S. 555, 567, 104 S.Ct. 1211, 1218, 79 L.Ed.2d 516 (1984)). Here, a Senate co-sponsor's comments suggest that Congress intended section 1030(a)(4) to punish attempts to steal valuable data, and did not wish to punish mere unauthorized access: 36 The acts of fraud we are addressing in proposed section 1030(a)(4) are essentially thefts in which someone uses a federal interest computer to wrongly obtain something of value from another.... Proposed section 1030(a)(4) is intended to reflect the distinction between the theft of information, a felony, and mere unauthorized access, a misdemeanor. 37 132 Cong. Rec. 7128, 7129, 99th Cong., 2d. Sess. (1986). The Senate Committee Report further underscores the fact that this section should apply to those who steal information through unauthorized access as part of an illegal scheme: 38 The Committee remains convinced that there must be a clear distinction between computer theft, punishable as a felony [under section 1030(a)(4) ], and computer trespass, punishable in the first instance as a misdemeanor [under a different provision]. The element in the new paragraph (a)(4), requiring a showing of an intent to defraud, is meant to preserve that distinction, as is the requirement that the property wrongfully obtained via computer furthers the intended fraud. 39 S. Rep. No. 432, 99th Cong., 2d Sess., reprinted in 1986 U.S.C.C.A.N. 2479, 2488. For the same reasons we deemed the trial evidence could not support a finding that Czubinski deprived the IRS of its property, see discussion of wire fraud under section 1343 supra, we find that Czubinski has not obtained valuable information in furtherance of a fraudulent scheme for the purposes of section 1030(a)(4).