Jury Charge Issues Loom In Silver, Skelos Appeals

Originally published in the New York Law Journal

In the afterglow of the near universal public acclaim for the guilty verdicts in the public corruption cases brought by the U.S. Attorney's Office for the Southern District of New York against former New York Assembly Speaker Sheldon Silver and former Senate Majority Leader Dean G. Skelos comes this month's consideration of post-trial motions in both cases challenging the honest services fraud, bribery and extortion convictions and, specifically, the jury instructions on the quid pro quo element of these offenses. This judicial review process obviously will continue on for months following sentencing with the expected appeals to the Second Circuit and then possibly to the U.S. Supreme Court. But for now, the central question to be addressed prior to sentencing is whether the district judges in both cases got it right in instructing the jury on what is required in order to prove that a public official corruptly received an illegal gift or other thing of value in exchange for an official act or action.

In these and other similar cases brought by the U.S. Attorney's Office led by Preet Bharara and by other federal prosecutors around the rest of the country, the relevant charging language in the indictment is some variation of the following:

Public Official X used the power and influence of his official position to obtain benefits from Corporation Y, an entity with substantial legislative interests before the State, by fostering the expectation that Public Official X would take official action favorable to and would refrain from taking official action detrimental to Corporation Y, in return for those benefits. Specifically, Public Official X used his official position intending to take numerous actions beneficial to Corporation Y as the opportunities arose under color of his authority and in his official capacity in exchange for the illegal benefits received.1 At the pre-trial motion to dismiss stage of the two New York State Legislature cases and later on at the Rule 29 phase at the close of the evidence in both cases, the defense raised the argument that the quid pro quo element is not satisfied merely by demonstrating that the gift giver intended to obtain generalized goodwill and that the public official, at worst, was self-dealing in receiving benefits from interested industry entities by acting in an official capacity based upon undisclosed conflicts of interest.2 In rejecting the failure to allege and prove the requisite "in exchange for" nexus between the benefits received and the official action taken or to be taken, Judge Valerie Caproni in the Silver case held that post-Skilling v. United States3 it is enough that the Government show, for example, that the public official used the power of his office to obtain benefits for his law firm in the form of referrals and referral fees from another law firm of one of his friends so long as it was done in exchange for the public official's use of his position to benefit those responsible for the referrals "as the opportunities arose."4

One of the benefits to the Government of charging honest services fraud and Hobbs Act extortion in public corruption cases is, of course, the ability to allege and place before the jury the jarring allegation that the public official was dishonest in betraying the public trust. Federal law provides that under the mail and wire fraud statutes,5 "fraud" includes, among the requisite schemes to defraud, "a scheme or artifice to deprive [the public] of [its] intangible right of honest services."6 In 1988, Congress passed §1346 in response to the Supreme Court's 1987 decision in McNally v. United States7 limiting the scope of the federal mail and wire fraud statutes to theft of tangible property. Thereafter, in Skilling, however, the Supreme Court in 2010 again limited the otherwise sweeping breadth of the federal fraud statutes to "only the bribe-and-kickback core of the pre-McNally case law."8

What this means insofar as federal public corruption prosecutions of state governmental officials is that the Government's corruption nexus must be based on Hobbs Act9 "color of official right" kickback extortion and/or an honest services bribery scheme to defraud.10 Thus, proof of the "in exchange for," or quid pro quo, element of the offenses is critical to sustaining a conviction in these cases. Determining what is required in that regard is no easy matter and, indeed, it is equally difficult to decide what constitutes a sufficient showing of official action.

In the Skelos case, for example, the defendant urged the district court to embrace a narrow reading of the bribery and extortion statutes, limiting the reach of the "official acts" element to the specific legislative functions of Senator Skelos' office. He relied on the Supreme Court's decision in United States v. Sun-Diamond Growers of Cal.11 to argue that Senator Skelos' exerting influence with Nassau County officials to obtain funding for particular projects benefitting a Long Island technology company in exchange for that company's payments to his son did not supply the required nexus between gifts given and specific official action. In Sun-Diamond, the Supreme Court held that gifts given in an attempt to generate generalized goodwill by a USDA-regulated agricultural company with matters pending before the U.S. Secretary of Agriculture was not sufficient, without more, to sustain a conviction for commission of the less serious federal gratuities offense. In that case, the Supreme Court noted that the federal gratuity statute's link between gifts given "for or because of an official act" mandated at least proof of specific and identifiable official action by the Secretary of Agriculture and a nexus between that action and the gifts given. Analogously, Skelos argued that the federal bribery statute should also be construed narrowly to limit "official acts" to "purely legislative functions." In rejecting that construction, Judge Kimba...