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Christopher M. Choate
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Honest Services Fraud PDF Print E-mail

Honest Services Fraud, like mortgage fraud, is not really a specific "crime" in that there isn't a statute that explicitly lays out what sort of behavior is proscribed by the federal government regarding the deprivation of honest services.

Instead, honest services fraud is defined in 18 U.S.C. § 1346, the actual text of which is:

For the purposes of this chapter, the term “scheme or artifice to defraud” includes a scheme or artifice to deprive another of the intangible right of honest services.

This statute is a great example of Congress enacting a law to directly counter an unsatisfactory decision by the Supreme Court of the United States.  In 1987, the Supreme Court declared that the mail fraud statute "protects property rights, but does not refer to the intangible right of the citizenry to good government."  McNally v. United States, 483 U.S. 350, 356 (1987).  As the Ninth Circuit has pointed out, "The legislative history accompanying § 1346 specifically refers to the intention of Congress to overrule McNally."  United States v. Frega, 179 F.3d 793, 802 (9th Cir. 1999).  As Senator Biden stated in introducing section 1346 as part of the Anti-Corruption Act of 1988:

Mr. President, I am pleased today to join with my colleagues in introducing the Anti-Corruption Act of 1988. . . . This bill will make it possible, once again, to prosecute and send to prison those public officials who corrupt their offices and betray the trust placed in them. It reverses the McNally case by creating a new public corruption statute that will be used to bring charges against anyone who attempts to deprive the citizens of the United States or of any State of the honest services of a public official, or against anyone who attempts to corrupt the election process. It also amends the existing mail and wire fraud statutes to make clear that notwithstanding the holding in McNally, it is a crime to deprive any organization - such as a corporation or a labor union - of the loyal services of its employees. This will restore the power of prosecutors to attack white-collar crime involving bribes and kickbacks.

Frega, 179 F.3d at 802, n.7 quoting 134 Cong. Rec. S12581-04 (daily ed. Sept. 16, 1988) (statement of Sen. Biden) (emphasis added by Frega court).

There is still a good deal of sniping around the edges of whether the statute, as written, is unconstitutionally vague, just what the elements of the crime actually are, and other contentious matters.  That's why an individual facing honest services fraud charges needs an attorney who is experienced in federal criminal defense in jurisdictions across the country.

 

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