Articles Posted in Public Corruption

Last week, the Eleventh Circuit Court of Appeals affirmed the convictions of Larry Langford, the former mayor of Birmingham, Alabama who was convicted last year on various federal white collar offenses, including mail and wire fraud, bribery, money laundering, and federal tax offenses.

To me, the most interesting aspect of the opinion is the way in which the Court of Appeals discussed the honest services portion of the federal mail and wire fraud charges. As we discussed in this previous post, last summer, the Supreme Court issued its opinion in United States v. Skilling, a case which, in essence, limited the honest services provision of the federal fraud statutes to bribery and kickback schemes.

Before Skilling was decided, many (if not all) federal circuits made a distinction between honest services prosecutions that involved public officials, as opposed to those working in the private sector. At the risk of simplifying the issue too much, it was far easier for the government to prove an honest services violation against a public official. Skilling itself, however, did not distinguish between public officials and private actors, leading some to believe that after Skilling, the prosecution of both public and private officials would be governed by the same standards.

In this post last week, we announced the Supreme Court’s decision in Skilling v. U.S. The Court held that 18 U.S.C. § 1346, the honest services law that the government has been using to prosecute nearly everything as a federal crime, applies only to bribery and kickback schemes.

The honest services fraud statute simply defines “scheme or artifice to defraud” as used in the mail- and wire fraud statutes to “include a scheme or artifice to deprive another of the intangible right of honest services.” Congress enacted this statute quickly after the Supreme Court, in McNally, held that the fraud statutes were “limited in scope to the protection of property rights.” Congress intended to incorporate pre-McNally case law that had recognized fiduciary duties as intangible rights to honest services and a breach of those duties as fraud.

The majority’s rationale for limiting the honest services fraud statute to only bribes and kickbacks was that such cases constituted the “core” of pre-McNally honest services fraud cases and that statutes should be construed, where possible, rather than invalidated. Because, the Court said, circuit conflicts and disagreements regarding honest services fraud cases were primarily outside the bribery and kickback scheme cases, limiting the application of the statute to those cases would avoid vagueness troubles.

This morning, the United States Supreme Court issued its opinions in three honest services fraud cases: Skilling, Black, and Weyhrauch. We have previously discussed these cases here (discussion of cases and background of honest services fraud,) here (Skilling,) here (Black), and here (Weyhrauch.) In Skilling, the Court limited the federal criminal honest services fraud statute to only bribery and kickback schemes. Based upon that opinion, the Court reversed in Black and Weyhruach. The Court also held that Jeffrey Skilling of Enron fame was not denied a fair trial due to publicity and community prejudice.

We will provide analysis of these opinions next week. In the meantime, the opinion in Skilling is available here; the opinion in Black is available here; and the single-sentence per curium opinion in Weyhrauch is available here.

Yesterday a jury found Georgia criminal defense attorney J. Mark Shelnutt not guilty on all counts. He was acquitted of money laundering, drug conspiracy, and attempted bribery.

Three weeks ago, the Eleventh Circuit Court of Appeals, which hears appeals from cases in Georgia, Florida, and Alabama, decided U.S. v. Velez in favor of the defendant. That case involved a money laundering charge against a criminal defense attorney under 18 U.S.C. § 1957. Shelnutt was prosecuted under 18 U.S.C. § 1956, which required federal prosecutors to attempt to prove that ill-gotten gains were used for certain prohibited purposes, including facilitating underlying criminal activity, tax evasion, or evading money laundering statutes. The prosecution was unable to prove its case.

More information in the Shelnutt case can be found here.

Last Monday, the Supreme Court granted certiorari in Weyhrauch v. United States, a federal criminal honest services fraud case. We are in Atlanta, Georgia, which is in the Eleventh Circuit. Because this case may impact Eleventh Circuit law, we will follow this case closely and provide any updates.

The question to be decided in Weyhrauch is “Whether, to convict a state official for depriving the public of its right to the defendant’s honest services through the non-disclosure of material information, in violation of the mail-fraud statute (18 U.S.C. Sec. 1341 and 1346), the government must prove that the defendant violated a disclosure duty imposed by state law.”

The defendant in this case is a lawyer and was a member of the Alaska House of Representatives. He is accused of honest services fraud due to conflicts of interest in conducting business with an oil field services company. The government wanted to introduce evidence of his concealment of the conflicts of interest to support the fraud charges, even though the state did not require disclosure.

In a federal criminal case originating in Atlanta, Georgia, the Eleventh Circuit Court of Appeals affirmed substantial sentence reductions for two executives who were convicted of public corruption charges. In the lower court, the two defendants faced sentencing ranges under the United States Sentencing Guidelines of 41 to 51 months. Based on a variety of factors, however, the lower court varied from that guideline range and imposed custodial sentences of thirteen months, and seven months, respectively.

In its third appeal to the Eleventh Circuit, the Government attacked the downward variances on a number of grounds. Among other arguments, the Government claimed that the defendants’s sentences were unreasonably low given the nature of the crimes. The Court of Appeals rejected this argument, stating that “whether we agree or not with the disrict court’s rationale for the downward variances or its characterization of the crimes, we cannot say that the sentences imposed in consideration of the factors delineated in 18 U.S.C. section 3553(a) were unreasonable.”

Unlike most of the decisions that come out of the Court of Appeals, the decision in this case was not unanimous. In dissent, Judge Carnes stated that the sentences imposed should be vacated, because in calculating the guidelines ranges the court violated the law of the case doctrine.