Justice Scalia: What Is Honest Services Fraud?

April 26, 2009
By Gregory E. Tomczak, Esq. on April 26, 2009 6:06 PM |

On February 23, 2009, U.S. Supreme Court Justice Scalia issued a somewhat scathing dissenting opinion to the Court's declining to hear a case involving the controversial offense of "honest services" fraud, which is a derivative of the mail and wire fraud statute. This provision of the federal mail and wire fraud statute has been historically utilized by prosecutors as a catch-all offense to criminalize conduct that may not otherwise violate the law.

Back in 1987, the Court held that "the mail fraud statue clearly protects property rights...it does not refer to the intangible right citizenry to good government." The Court invalidated the theory that official corruption and misconduct, by depriving citizens of their intangible right to honest and impartial services of government, constituted fraud. The Court refused to "construe the statute in a manner that leaves its outer boundaries ambiguous and involves the Federal Government in setting standards of disclosure and good government for local and state officials" and left it to the legislature to clarify the nature and extent of "honest services" fraud. The legislature "clarified" its intention by stating that a defendant can be charged with fraud if he/she conducts a scheme or artifice to deprive another of the intangible right of honest services." 18 U.S.C. § 1346.

Justice Scalia recognizes that the "honest services" theory, broadly interpreted, would require officeholders and employees to act in the best interests of their constituents and employees and criminalize such acts as a "salaried employee's phoning in sick to go to a ball game" or a mayor's attempt to use the prestige of his office to obtain a restaurant table without a reservation." Justice Scalia's examples, although extreme, illustrate the ambiguity of exactly what conduct would constitute "honest services" fraud. In other words, defendants may be charged without knowing if their conduct violates the law. Such a result violates the constitutional tenet that a criminal statute must give fair warning of the conduct that it makes a crime.

Justice Scalia seeks certification because "In light of the conflicts among the Circuits, the longstanding confusion over the scope of the statute; and the serious due process and federalism interests affected by the expansion of criminal liability that this case exemplifies, I would grant the petition for certiorari and squarely confront both the meaning and the constitutionality of § 1346. Indeed, it seems to me quite irresponsible to let the current chaos prevail."

In the meantime, there exists a real potential for overzealous prosecutions for "honest services" fraud wherein the alleged conduct is outside the scope of what conduct the legislature has sought to criminalize. For now, the chaos will prevail.