Federal Prosecution of State and Local Corruption: From Sea to Shining Sea
This has been a busy time for the federal prosecution of state and local corruption. In Virginia, federal prosecutors recently convicted former Governor Robert McDonnell and his wife Maureen on multiple felony counts for accepting a series of extravagant gifts from businessman Jonnie Williams in exchange for using the power of the Governor’s office to help promote his company’s products. In New York, U.S. Attorney Preet Bharara has been on something of a crusade to clean up political corruption in the state legislature in Albany and has brought charges against more than a dozen legislators. This past February Sheldon Silver, the former New York State Assembly Speaker and one of the most powerful politicians in the state, was indicted for taking several million dollars in bribes and kickbacks. On the opposite coast, Oregon’s governor John Kitzhaber recently resigned amid allegations of a scandal involving his fiancé Cylvia Hayes, who served as Oregon’s honorary first lady. The U.S. Attorney in Oregon is now investigating whether Hayes and Kitzhaber accepted money from companies who hired Hayes in exchange for agreeing to promote the interests of those companies within the state. And of course the nation’s heartland is not immune. In Illinois, for example, four of the last seven governors have ended up in prison. The latest, former Governor Rod Blagojevich, was convicted in federal court in 2011 for, among other things, trying to cash in on his power to appoint the successor to former U.S. Senator Barack Obama. Federal prosecution of state and local corruption really took off in the 1970s after Watergate, and raises some interesting issues. When is it appropriate for the federal government to go after state or local government officials, rather than leaving the state to handle its own affairs? After all, the vast majority of criminal prosecutions take place at the state level in the state criminal justice systems, and each state has its own laws against bribery and other corruption. The federal government generally doesn’t prosecute a state’s typical homicides, sex crimes or burglaries – why should corruption be treated differently? There's actually a constitutional basis to argue that the federal government should pursue these cases. The Guarantee Clause of the U.S. Constitution, Article 4, Section 4, provides that the “United States shall guarantee to every state in this union a republican form of government.” If “republican form of government” is understood to mean a representative democracy with power derived from the consent of the governed, then federal prosecution of state corruption may fulfill this mandate by removing corrupt state officials who either rose to power illegitimately or are using their powers to the detriment of their citizens. The normal political and legal structures within a state may be fine for handling most crimes, but when it comes to political corruption those structures themselves may be impaired. When that's the case, there may be a role for the federal government. Nevertheless, federal prosecutions of state officials can be controversial, particularly when there is a suggestion that the conduct in question was not illegal under their own state law and was simply standard practice or part of their local political culture. In a 1987 case striking down the use of honest services fraud to prosecute state corruption, McNally v. United States, the Supreme Court noted its concern about allowing federal prosecutors to use sweeping white collar statutes to “involve the federal government in setting standards of disclosure and good government for local and state officials.” (Congress, apparently not sharing the Court's concern, reinstated the honest services fraud theory the following year by passing 18 U.S.C. § 1346, and it is still a workhorse in federal prosecutions of state and local corruption – see below.) This was a common theme in the federal prosecution of former governor McDonnell in Virginia. McDonnell’s defenders protested that under Virginia law it was legal for him to accept many of the gifts that formed the basis of the charges. Virginia is notorious for its lax ethics laws governing public officials, and many believed that McDonnell was unfairly singled out for behavior that was simply “the Virginia way.” Indeed, several former Virginia Attorneys General have filed briefs on McDonnell’s behalf, arguing they would have advised him his conduct was legal and that his federal prosecution is threatening to upend Virginia’s entire political culture. So when is it appropriate for the federal government to prosecute state or local corruption, and when should the matter be left to the states to handle on their own?
When Should the Feds Step In?
One reason federal intervention in a state corruption case might be appropriate and even welcome is the presence of a real or perceived conflict of interest among state officials. If corruption exists at a high level in the state government, those who would be charged with investigating and prosecuting it – the state attorney general, for example – may be political allies and close friends of the potential targets. If a city or state is run by a well-entrenched corrupt political “machine” (I’m lookin’ at you, Chicago) it may be unrealistic to expect the local authorities to tackle the corruption among their friends and colleagues. Indeed, the prosecuting authorities in the state may themselves be involved in the corruption. In Virginia, for example, the state Attorney General Ken Cuccinelli was McDonnell’s running mate and close political ally, and ran to succeed him as governor in 2013. It’s asking a lot to expect a politician in that position to take a dispassionate look at possible corruption and bring a case that would not only bring down his political partner but also likely damage his own chances at winning the governor’s office. Particularly given the widespread attitude in Richmond that McDonnell’s conduct was simply the “Virginia way,” there was little reason to expect that the state would prosecute. In Oregon, the state attorney general had already opened up a criminal investigation of the governor before the federal investigation began. When the U.S. Attorney in Oregon began a federal inquiry, she asked the state attorney general to put her investigation on hold. Once again, the Oregon attorney general is a political ally of the former governor and had routinely advised the governor on legal issues. Even after she opened her investigation there were some voices suggesting it would be difficult for her to investigate Kitzhaber and that an independent prosecutor should be appointed. Even where state officials might in fact be able to investigate and prosecute impartially, there is still an issue of a perceived conflict of interest. It’s important that the public have confidence that any potential corruption was investigated thoroughly and appropriately. No matter how fair the Oregon attorney general was, for example, if she were to exonerate Kitzhaber there would always be lingering questions based on the appearance of a potential conflict of interest. A federal investigation removes those concerns. Another factor in favor of federal prosecution can be the resources available to the federal government. A large-scale public corruption investigation demands a great deal of prosecutorial and investigative time and money. Many state prosecutor's offices could quickly be overwhelmed by the demands of such a case, particularly considering all of the other state matters they are tasked with handling. Federal prosecutors, with the vast investigative and prosecutorial power of the federal government behind them, are simply better equipped to tackle such a large-scale investigation than their state counterparts. Particular investigative techniques, such as wiretaps or undercover operations, may be especially useful in corruption investigations. Getting the subjects to discuss their plans on tape can be critical to proving criminal intent – just ask former Illinois Governor (and current inmate) Blagojevich. Again, these types of undercover investigations and surveillance techniques are extremely time and labor intensive and may be beyond the capabilities of state authorities. But for the FBI it’s right in their wheelhouse, and they have the money and personnel to do it. Prosecutorial resources and expertise are also an issue. Many state and local prosecutors accustomed to dealing with street crimes may have never handled a major public corruption case. Such cases raise complex legal and factual issues concerning things like proof of corrupt intent, not found in more typical state criminal law fare. The U.S. Department of Justice recognized the special nature of political corruption investigations by establishing the Public Integrity Section in 1976, with a staff of attorneys who specialize in such cases and travel the country assisting other federal prosecutors who are handling them. DOJ can bring a degree of prosecutorial firepower and experience to such investigations that is beyond the reach of most states.
The Laws Used to Prosecute State and Local Corruption
Somewhat surprisingly, there are not a lot of federal laws aimed directly at state and local corruption. The principal federal statute covering bribery and gratuities, 18 U.S.C. § 201, applies only to federal public officials. But federal prosecutors have been creative when it comes to putting other federal statutes to work in these cases. Honest services fraud – perhaps the most popular theory used to prosecute state and local corruption is honest services mail and wire fraud. The mail and wire fraud statutes (18 U.S.C. §§ 1341 and 1343) apply to use of the mail, phone lines, or wireless transmissions in furtherance of any “scheme or artifice to defraud.” The statutes are routinely applied to the more typical schemes to defraud victims of money or property, such as a Ponzi scheme. But prosecutors also use mail and wire fraud to prosecute state and local officials for corruption, on the theory that the corrupt acts defrauded the public of its intangible right to the fair and honest services of their public officials. Honest services fraud has been used to prosecute many state and local officials over the past few decades. At times it has been applied to schemes that appeared more politically sleazy or unethical than criminally corrupt, which led to controversy about the potential breadth of the theory. But in 2010 in Skilling v. United States the Supreme Court limited the statute, ruling that it only applies to conduct that amounts to bribery or kickbacks. Even with this limitation, though, it remains an important weapon for federal prosecutors attacking state or local corruption. Honest services fraud was one of the primary statutes used in the McDonnell prosecution, as well as in the prosecutions of New York state legislators. Hobbs Act Extortion – another common theory is extortion under color of official right under the Hobbs Act, 18 U.S.C. § 1951. As I have discussed elsewhere, extortion “under color of official right” has been interpreted by the Supreme Court essentially to be the equivalent of bribery. In the absence of a general federal bribery statute that applies to state and local officials, Hobbs Act extortion is a favorite of federal prosecutors looking at state and local corruption. Along with honest services fraud, Hobbs Act extortion formed the core of the indictment against the McDonnells in Virginia, and the same two statutes also were used in the recent indictment of former New York state Assembly Speaker Sheldon Silver. Federal Program Bribery – a less commonly used but very powerful law is the federal program bribery statute, 18 U.S.C. § 666. It prohibits theft or bribery by an agent of any organization or state or local government in connection with programs or agencies receiving federal funds. There are certain (and quite modest) minimum dollar requirements involved, but once those are met this statute is a potent anti-bribery tool that can apply not only to state or local government officials but to private individuals as well. RICO – the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961-1964, is a statutory behemoth primarily aimed at organized crime. Given the breadth of the statute, however, it is possible to apply it to entities such as a governor’s office, charging that state officials or others conducted the affairs of that office through a “pattern of racketeering activity.” Racketeering activity is defined to include a number of state law crimes, including bribery and extortion. Accordingly, a state law bribery scheme affecting a state or local government, while not violating the federal bribery statute, may be brought as a federal prosecution through the vehicle of RICO.
Debate over federal prosecution of state and local officials reflects fundamental tensions about the proper balance of state and federal power that have existed since the founding of the nation. There will always be some, such as Governor McDonnell’s defenders in Virginia, who will argue that the federal government should butt out and allow the states to handle their own affairs. But as discussed above, there are many reasons why federal intervention may be necessary and appropriate -- and if recent developments are any indication, federal prosecutors are not hesitating to jump in.