Federal Criminal Lawyer Blog
On January 14, 2020, the Supreme Court will hear argument in Kelly v. United States (No. 18-1059), coined the Bridgegate case. We are eager to see how the Court resolves this appeal because it raises important issues relating to the scope of money-or-property fraud prosecutions.
The material facts in the case are largely undisputed: in 2013, senior officials for the Port Authority of New York and New Jersey (Port Authority) reallocated lanes over the George Washington Bridge. Of the twelve lanes on the upper level of the bridge, three were generally reserved for drivers coming from local Fort Lee, New Jersey streets (“Local Access Lanes”) and the remaining nine were reserved for drivers traveling on various highways, including I-95 (“Main Line”). The reallocation reduced the number of Local Access Lanes to one and increased the number of Main Line lanes to eleven. Unsurprisingly, the reallocation caused massive gridlock in Fort Lee and expedited traffic flow on the Main Line.
The stated reason for the lane reallocation—issued to Port Authority employees by David Wildstein, Chief of Staff to William E. Baroni, Jr., Deputy Executive Director of the Port Authority—was to study traffic patterns and determine whether the Port Authority would continue to reserve three Local Access Lanes for Fort Lee going forward. In reality, the government alleged, the traffic study was a sham justification used to conceal the true purpose for the reallocation; according to the government, Baroni and Bridget Anne Kelly, Deputy Chief of Staff to erstwhile Governor Chris Christie, hatched the lane reallocation strategy as retribution for Fort Lee’s mayor refusing to endorse Governor Christie’s reelection.
A federal grand jury charged Baroni and Kelly with wire fraud (18 U.S.C. § 1343), federal-program fraud (18 U.S.C. § 666(a)), related conspiracy offenses, and civil rights offenses. Wildstein separately pleaded guilty to two conspiracy counts. On appeal, only the fraud counts and related conspiracy counts are relevant.
Before a jury in the United States District Court for the District of New Jersey, the government argued that Defendants Baroni and Kelly fraudulently deprived the Port Authority of intangible property rights. As to fraud, the government argued that the given reason for the lane reallocation (traffic study) was inconsistent with the actual reason (political payback). As to deprivation, the government contended the Defendants’ deception deprived the Port Authority of property, namely public employees’ labor (e.g., toll collectors needed for the reallocation, the labor of the staff who conducted the study, and the Defendants’ time working on the realignment), and control over the lanes. Without the Defendants’ deception, the government argued, other Port Authority officials may have rejected the lane reallocation. Thus, the government alleged that the deception was the vehicle for the deprivation of the Port Authority’s property. The jury convicted the Defendants as to the wire fraud, federal-program fraud, and related conspiracy counts. The Third Circuit affirmed.
The issue before the Supreme Court is whether a public official ‘defraud[s]’ the government of its property by advancing a ‘public policy reason’ for an official decision that is not her subjective ‘real reason’ for making the decision.
The Defendants contend the government’s fraud theory turns routine politics into serious felonies. According to the Defendants, this case is indistinguishable from a mayor directing trucks to repair potholes in a neighborhood she publicly says is most needy, even though her real reason is that the neighborhood voted for her. The government disagrees, saying this case shows quintessential fraud. The pothole example can be distinguished, the government says, because mayors have unilateral authority to allocate scarce resources, meaning they do not need to lie in directing resources, and so would not cause a deprivation of property by means of the hypothetical deception. By contrast, the government points out, the officials here lied about the traffic study to ensure they were not overruled by other Port Authority officials. In doing so, their deception acted as the means to deprive. Additionally, the government argues that pothole repair is a legitimate public interest but the traffic study at issue was a sham.
More fundamentally, this case may turn on whether the Supreme Court is sympathetic to the Defendants’ argument that the government is once again overreaching and attempting to use vague federal criminal laws to “set[] standards of disclosure and good government for local and state officials.” McNally v. United States, 483 U.S. 350, 360 (1987); see also Skilling v. United States, 561 U.S. 358 (2010); McDonnell v. United States, 136 S. Ct. 2355 (2016). If the Court views Kelly as an opportunity to extend the constraints and limiting principles outlined in McNally, Skilling, and McDonnell, then the Defendants are likely to win on appeal.
Whatever the outcome, this case will likely have significant consequences for future money-or-property fraud prosecutions, which are one type of case we regularly handle in our federal criminal defense practice.