'Honest Services' Statute

by Hodgson Russ LLP
Contact

Former Virginia Governor Bob McDonnell may not have violated any Virginia statutes, yet he and his wife both face criminal prosecution under the federal “Honest Services” statute

On Tuesday, January 21, 2014, former Virginia Governor Robert F. McDonnell and his wife, Maureen McDonnell, were indicted on federal corruption charges. The 14-count indictment consisted of conspiracy, wire fraud and other charges. The wire fraud charges are based upon alleged violations of the Federal “Honest Services” statute and are predicated on the allegation that for nearly two years, the governor and his wife repeatedly asked a campaign donor for loans and gifts of money, clothes, golf fees and equipment, trips, and private plane rides totaling at least $165,000.

While the receipt of lavish gifts from a political donor may appear unseemly, the federal indictment of Governor McDonnell and his wife does not allege that either violated any state statute. Unlike New York State, Virginia’s laws apparently place no financial limit on the gifts a state or local official can receive. While Virginia’s laws require a governor to disclose gifts worth more than $50, they do not require disclosure of gifts to spouses or children. The majority of the gifts were provided to the governor’s family, and apparently under Virginia law the private loan provided for the governor’s real estate business does not fall under the category of a gift. The indictment alleges multiple acts of promotion of the campaign donor’s business over the course of the two years that Governor McDonnell and his wife received gifts from that donor.

The federal mail fraud statute (18 U.S.C. § 1341) provides that “[w]hoever, having devised or intending to devise any scheme or artifice to defraud, ... for the purpose of executing such scheme or artifice or attempting so to do,” places with the United States Postal Service or any private or commercial interstate carrier any matter or thing whatever shall be liable for fine or imprisonment for up to 20 years, or both. The federal honest services statute (18 U.S.C. § 1346) provides simply that, for purposes of the federal mail fraud statute, that “...the term ‘scheme or artifice to defraud’ includes a scheme or artifice to deprive another of the intangible right of honest services.” Thus, the allegation of the receipt of gifts by the governor’s family in conjunction with his promotion of the campaign donor’s business is enough to warrant an indictment under the federal honest services statute.

The federal honest services statute is often used by federal prosecutors to enforce good governance on state and local officials. The theory is that when a local or state official takes a bribe or a kickback, he or she defrauds the people of the state or locality of their right to that public official’s honest services.

The U.S. Supreme Court has indicated that “honest services” fraud covers only bribery and kickbacks, and does not criminalize mere failures to disclose conflicts of interest. A criminal conviction under the “Honest Services” statute is a felony, punishable by up to twenty years in prison.

In order to convict a defendant based upon a scheme to defraud another of the intangible right of honest services, as contemplated by the “Honest Services” statute, it is unnecessary to prove that defendant intended economic or pecuniary harm or that any such harm actually resulted from fraud. All that is required is proof 1) that the defendant engaged in a scheme to defraud, 2) with intent to deprive another of the intangible right of honest services by accepting a bribe or kickback, 3) that it was reasonably foreseeable to the defendant that the scheme could result in some economic or pecuniary harm to the victim that is more than de minimis, and 4) that mails or wires were used in furtherance of said scheme. While the Supreme Court did not define the elements of “bribery” or “kickback,” prosecutors are only required to demonstrate that a) a gift was given with an expectation with respect to a specific act, or b) there was a “stream of benefits” intended to influence actions.

State and local officials should be aware that unethical conduct which does not violate any state or local statute could form the basis of a prosecution under the federal honest services statute.

A copy of the full indictment of Governor McDonnell and his wife can be found on the Wall Street Journal website or here

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Hodgson Russ LLP | Attorney Advertising

Written by:

Hodgson Russ LLP
Contact
more
less

Hodgson Russ LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.
Feedback? Tell us what you think of the new jdsupra.com!