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Friday, March 02, 2012

Which is worse -- corruption, or lawless anti-corruption prosecutions?

I ask, because I am a bit concerned that the U.S. Attorney's charging Jennie Hou with "honest services" Mail Fraud might come close to being lawless. Jennie Hou is the former campaign treasurer for NYC Comptroller John Liu . She has been accused of using "straw donors" to obtain illegal campaign donations from real donors who thereby exceeded their legal donation limits. Apparently, these allegations are the basis of her being arrested and charged with depriving the public of the intangible rights to Liu's (or her?) honest services, in violation of 18 U.S.C. § 1346.

Maybe I am missing something here, but did not the SCOTUS just hold in Skilling v. United States, 130 S. Sct. 2896 (2010) that the Mail Fraud statute's "honest services fraud" provision covers only bribery and kickbacks and not just any "dishonest" act that happens to violate state or local law? So far as I know, no one has accused Hou of accepting bribes or kickbacks: She was simply accepting checks for Liu's campaign from donors who exceeded their legal limit on donations by reimbursing "straw donors" in whose name the dough was officially donated. This is certainly not ethical or legal behavior: It runs afoul of NYC's campaign finance laws that limit the size of donations for candidates like Liu that accept public financing. But those state and local laws do not carry with them a twenty-year criminal sentence: Using them as the basis for defining an otherwise undefined federal felony is a grotesque distortion of non-federal law.

More important, does not such a prosecution flagrantly defy SCOTUS's holding in Skilling that due process and the rule of lenity limit "honest services" mail fraud to the accepting of bribes and kickbacks? I hasten to add that the U.S. Attorney may have some theory to fit the allegations against Hou within Skilling. I simply cannot now think of this can be done, given what is alleged. If it is true that the U.S. Attorney is flagrantly ignoring Skilling in a high-pressure effort to induce Hou to cop a plea, then would you agree with me that the threat to our liberties from such lawless prosecutions dwarfs the threat from citizens' giving donations over their individual limit?

Of course, the prosecutor is not being venal -- just tyrannically lawless. But (as I have complained before on this blog) I guess I think that lawless tyranny from U.S. Attorneys is more corrupting to the legal process than venality is to the political. So let's hope that there is more legal substance to the federal case against Hou than what meets the naked eye from newspaper accounts.

Posted by Rick Hills on March 2, 2012 at 10:04 PM | Permalink


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Sam appears to be correct. The sidebar to the article contains a link to the complaint in the case. Count One alleges conspiracy to commit wire fraud, and doesn't specifically allege the honest-services form of fraud (unless that's necessarily alleged by virtue of the "scheme or artifice to defraud language"). Although it's not clear to me that matching funds were the object of the scheme described in Count One. Count Two, which charges attempted wire fraud, also lacks any honest-services language; it specifically alleges that matching funds were the object of the scheme.

Posted by: Brad Bogan | Mar 5, 2012 5:03:36 PM

I am not (at all) standing up for the prosecution in this or any modern federal campaign- or election-related prosecution; I agree that there are severe problems with the current prosecutorial approach.

But my impression, from doing a little but not a lot of digging, was that the theory of this prosecution wasn't "honest services" fraud, but traditional "property" fraud - the theory (I am inferring) being that the "property" target of the fraud was City or State matching funds. Could be wrong.

Posted by: Sam | Mar 3, 2012 5:07:42 PM

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