CA1: First reverses conviction in “honest services” legislature case

US v. Urciuoli, Nos. 07-1297, 07-1327.  This case vacates the convictions of conspiracy to commit "honest services" mail fraud and various counts of such mail fraud; 18 U.S.C. §§ 371, 1341, 1346 (2000) in a legislator-bribery scheme.  What makes this interesting is the Rhode Island has a part-time legislature.  The legislators have day jobs.

This is a very big case for anyone working an "honest services" case.  There are a lot of them out there.

So, when they start wearing two hats, you need to read on to find out more.

On appeal, the defendants “...say that the jury instructions wrongly allowed for conviction based on Celona's lobbying of mayors and his meetings with insurance companies, conduct that they claim does not constitute a federal crime” After exploring 18 U.S.C. § 1341 (mail fraud), the First concludes that, duh, “honest services” is vague and shows how courts have not been too eager to apply the fraud statute to ordinary glad-handing and goofing off.  The lower court “instructed the jury that the statute extended not only to formal exercises of official power (like voting) but also to any actions done under the ‘cloak of office.’.. urging local officials to obey state law is not easily described as a deprivation of honest services, actually or potentially harmful to the citizens of Rhode Island. Footnote  Unobvious harms are imaginable--as, for example, if [he] was pressing on mayors a dishonest interpretation of the law or false statistic--but the government has not made such an argument and the instructions given did not impose such a limitation.”

This is a fairly interesting discussion of the role of politicians at all levels, and it would appear that the Department of Justice is taking a very extreme position which would, if taken seriously, land most of their (honest) political appointees in jail if they do so much as schmooze just a bit with a law firm that they hope to make a soft landing at. The First notes that even if someone used a government title (or even stationary) to discuss something that related to their day job it probably wouldn’t make a difference because everyone knew what their day job was, anyway.

However, the defendants are not going free.  There is still a remand to deal with other episodes (involving using the legislative position to extort favorable conduct from insurers) which might sustain a conviction.

The First also notes that 1) the relationship between state law and federal law on the issue of honest services based on conflicts of interests is unsettled and the District Court should make it clear that mere conflicts are not crimes, and secondly that Learned Hand’s view of “aiding and abetting” is probably the better one (and the government can’t change its position on remand).

Finally, the First gives kudos to the judge it reversed.

White Collar Crime Prof blog has a few comments here.  Some firm called Groom Law Group gives some background on HSF here.    BeloBlog comments here.