Opinion ID: 858127
Heading Depth: 4
Heading Rank: 1

Heading: Honest Services Fraud Before and After

Text: Skilling Before 1987, the government prosecuted honest services fraud cases under 18 U.S.C. §§ 1341 (mail fraud) and 1343 (wire fraud). United States v. Weyhrauch, 548 F.3d 1237, 1243 (9th Cir. 2008), vacated and remanded on other grounds, 130 S. Ct. 2971 (2010); United States v. Bruno, 809 F.2d 1097, 1099, 1104–05 (5th Cir. 1987). Sections 1341 6 T he indictment alleged that South Gate’s public officials’ “duty of honest services included the following obligations: (a) to act as trustees for the citizens, and in the best interests of the public, without pursuing their own personal interests; (b) to conduct election campaigning and fundraising activities openly and free from fraud and dishonesty; (c) to refrain from taking official action on any matter in which they might have a direct or indirect financial interest without first disclosing any such interest to the public; and (d) to abide by the laws of the United States, the laws of the State of California, and the laws of the City of South Gate.” UNITED STATES V . GARRIDO 13 and 1343 “criminalize the use of the mails or wires in furtherance of ‘any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises.’” Skilling v. United States, 130 S. Ct. 2896, 2908 n.1 (2010) (quoting §§ 1341 and 1343). Although those statutes prohibit the use of the mails or wire services to perpetrate fraudulent schemes to deprive others of “money or property,” our court and other courts interpreted the statutes to apply to the deprivation of the public’s “intangible rights” to public officials’ honest services. United States v. Milovanovic, 678 F.3d 713, 720 (9th Cir. 2012) (en banc); Weyhrauch, 548 F.3d at 1243; see also Bruno, 809 F.2d at 1105 (stating citizens “may be defrauded of nonpecuniary interests” such as the “honest services of [their] public officials”); United States v. Gray, 790 F.2d 1290, 1295 (6th Cir. 1986) (explaining “the ‘intangible rights’ theory is anchored upon the defendant’s misuse of his public office for personal profit”); United States v. Keane, 522 F.2d 534, 549 (7th Cir. 1975) (noting “the mail fraud statute in this circuit has been used . . . to prosecute public officials for . . . depriving their constituents of their right to loyal, faithful and honest public service”); United States v. States, 488 F.2d 761, 765 (8th Cir. 1973) (holding a fraudulent scheme may “deceive and defraud the public . . . of certain intangible political and civil rights”). In 1987, however, the Supreme Court held that § 1341 was limited to protecting property rights, and suggested that “[i]f Congress desires to go further, it must speak more clearly than it has.” McNally v. United States, 483 U.S. 350, 360 (1987). Congress responded by inserting § 1346 into the federal criminal code the following year. Skilling, 130 S. Ct. 14 UNITED STATES V . GARRIDO at 2927; see also Act of Nov. 18, 1988, Pub. L. 100-690, 102 Stat. 4181, 4508 (1988) (codified at 18 U.S.C. § 1346). By enacting § 1346, Congress “meant to reinstate the body of pre-McNally honest services law.” Skilling, 130 S. Ct. at 2929 (citation and internal quotation marks omitted). Section 1346 “defines the term ‘scheme or artifice to defraud’” for the purposes of honest services mail and wire fraud “to include ‘a scheme or artifice to deprive another of the intangible right of honest services.’” Id. at 2908 n.1 (quoting § 1346). Following the enactment of § 1346, courts around the country interpreted the statute to encompass various types of schemes and to make criminal a wide variety of acts. See, e.g., Weyhrauch, 548 F.3d 1243–44 (listing cases); United States v. Walker, 490 F.3d 1282, 1297 (11th Cir. 2007) (noting that “[t]he scope of conduct covered by the honest services mail fraud statute is extremely broad”). But see United States v. Brumley, 116 F.3d 728, 734 (5th Cir. 1997) (holding violation of § 1346 requires that “a state official breached a duty respecting the provision of services owed to the official’s employer under state law”). The Ninth Circuit recognized two theories of honest services fraud: (1) bribery and (2) failure to disclose a material conflict of interest. Kincaid-Chauncey, 556 F.3d at 942. The prosecution of Robles and Garrido proceeded under that framework. After Robles’s and Garrido’s trial, the Supreme Court granted certiorari in the Fifth Circuit case United States v. Skilling, 554 F.3d 529 (5th Cir 2009), to determine whether a public official may be convicted of honest services fraud for failing to disclose material information. See Skilling v. United States, 130 S. Ct. 393 (2009). UNITED STATES V . GARRIDO 15 In deciding Skilling, the Supreme Court limited the reach of § 1346. The Court held that § 1346 criminalizes only bribery and kickback schemes, not failures to disclose a conflict of interest. Skilling, 130 S. Ct. at 2933. Thus, by limiting § 1346 to bribery and kickback schemes, and prohibiting § 1346 prosecutions based on a failure to disclose a conflict of interest, Skilling changed the applicable analysis that applies to the present appeal.7 The question after Skilling is whether Robles and Garrido were indicted, tried, and convicted of honest services fraud based on a proper bribery or kickback theory, or whether they were indicted, tried, and convicted on the unconstitutional undisclosed conflict of interest theory.