The Menendez Trial and the Future of Bribery
The prosecution has finished presenting its case in the trial of New Jersey Senator Bob Menendez. Menendez and his co-defendant, Dr. Salomon Melgen, are facing multiple counts of bribery and related charges. The government alleges that in exchange for gifts from Melgen including private jet trips, luxury vacations, and large political donations, Menendez interceded on Melgen’s behalf in various disputes he was having with the federal government. (A more detailed analysis of the indictment is available here.)
Senator Robert Menendez When the government rested last week, the judge made some comments that appeared to question whether the bribery case could survive the Supreme Court’s 2016 decision in McDonnell v. United States. This led to widespread speculation that the judge might dismiss many of the charges. But on Monday the judge ruled there was enough evidence to go to the jury. The defense is now putting on its case. Menendez makes two primary types of claims concerning the bribery charges. The first is that the things he agreed to do for Melgen did not qualify as “official acts” under McDonnell and thus could not support a bribery conviction. The second is that, even if Menendez did perform official acts, they were not in response to any gifts from Melgen but were simply done out of friendship or as part of Menendez’s routine Senate responsibilities. The McDonnell case has been looming over the Menendez prosecution from the beginning. If the Senator is convicted, I think there is a good chance that at least some of the bribery charges will indeed be overturned on appeal. But I believe it will be based primarily not on McDonnell but on a different Supreme Court case decided almost two decades ago.
McDonnell and “Official Acts”
The Supreme Court in McDonnell held that in any federal bribery case the prosecution must prove the public official agreed to be influenced in the performance of an “official act” as defined in 18 U.S.C. 201, the federal bribery statute. The Court concluded that Governor McDonnell’s actions -- making phone calls, arranging meetings, and holding an event at the Governor’s mansion -- did not rise to the level of “official acts” and could not support a bribery conviction. (For a critique of McDonnell and its “official act” holding, you can see my posts here and here.) The “official act” argument says, in effect, that even if there were a deal or quid pro quo, what the public official did – the quo – was not substantial enough to justify a bribery charge. The official can admit there was a link between his actions and the gifts he received, but argue that those actions were trivial or were simply routine political courtesies. The McDonnell opinion has already resulted in some high-profile convictions being thrown out, including that of former New York State Assembly Speaker Sheldon Silver. Senator Menendez has argued from the beginning of his case that the things he did for Dr. Melgen did not amount to official acts, and the judge has repeatedly rejected his arguments. As I wrote here, I think the judge is correct. If Menendez is convicted and those convictions are later overturned, I don’t expect it to be on the McDonnell “official act” ground.
Dr. Salomon Melgen
Quid Pro Quo and the “Stream of Benefits” Theory
Assuming Menendez did perform official acts, to be bribery those acts still needed to be done in exchange for the gifts he received from Melgen. This is the requirement of a quid pro quo, or corrupt intent. This is Menendez’s other main line of defense: he says that anything he did for Melgen was either out of friendship or was part of his general oversight and policy duties as a Senator, not in response to the gifts he received. Some counts of the indictment related to Melgen's hefty political contributions to Menendez allege a direct quid pro quo (Counts 9-14). They charge that in exchange for a particular donation, Menendez took a particular identified official act, such as advocating on Melgen’s behalf before the State Department or Department of Health and Human Services. But a number of the charges (Counts 2-8) rely on a different bribery theory, known as “stream of benefits.” These counts charge that Menendez accepted gifts such as trips on Melgen’s private jet in exchange for “being influenced in the performance of official acts, as opportunities arose.” The specific official acts are not identified in the individual bribery counts, although a large number of official acts are described in the indictment as a whole. Prosecutors use this “steam of benefits” theory in cases where the bribe payer essentially has the public official on retainer. In exchange for a series of gifts over time, the public official agrees do things to benefit the bribe payer when opportunities arise. It might not be possible to prove a direct link between any particular gift and any particular official act; what is charged is the continuing corrupt relationship, a sort of ongoing “you scratch my back and I’ll scratch yours” theory. The Supreme Court has never weighed in on this stream of benefits theory. It has been widely accepted in the lower courts, including those in the Third Circuit where Menendez is on trial. But Menendez’s attorneys claim that McDonnell has changed the legal landscape here as well. The trial judge made some comments last week suggesting he might find that the stream of benefits theory did not survive McDonnell. In the end, though, he agreed with the government that McDonnell’s requirement that an official act be specific and focused does not mean the act has to be identified at the time of the corrupt agreement. In other words, the deal may be, “I’ll give you a stream of benefits over time, and in exchange you agree to do things for me, as the opportunities arise, that qualify as official acts.” The parties have to agree that the public official will perform official acts, but they don’t have to agree up front what the precise official acts might be. As far as the impact of McDonnell itself is concerned, that seems like the right answer. McDonnell did not discuss the stream of benefits theory and there’s no particular reason to believe that the “official act” requirement, standing alone, would invalidate that theory. But I think the Supreme Court’s overall approach in McDonnell does suggest the Court might well reject the stream of benefits bribery theory if given the opportunity. That rejection would primarily be based not on the holding of McDonnell, but on the language of the federal bribery statute itself and the reasoning of a 1999 Supreme Court case, United States v. Sun-Diamond Growers of California.
The Sun-Diamond Decision
In Sun-Diamond the defendant, a large agricultural cooperative, was charged with giving illegal gratuities to the Secretary of Agriculture, Mike Espy. The crime of gratuities, 18 U.S.C. 201(c), appears in the same statute as federal bribery, 18 U.S.C. 201(b). It prohibits giving a public official a thing of value “for or because of any official act.” It differs from bribery in that no corrupt intent to influence the official is required; a gratuity can be a mere “thank you” for an official act that has already been performed. Sun-Diamond was prosecuted on what was sometimes called a “status gratuity” theory. The government didn’t identify any particular official acts by Espy to which the gifts were linked. Instead, it argued it was enough that the gifts were based on Espy’s official position and were made with the hope of building up a reservoir of goodwill with Espy, perhaps to influence or reward some unspecified official act in the future. The Supreme Court rejected this theory. It was not enough, the Court held, to charge Sun-Diamond with paying gratuities to Espy based on his status or for official acts not named in the indictment. The Court found that section 201(c)’s requirement that a gratuity be “for or because of any official act” means a specific official act must be identified. The Court particularly focused on the phrase “any official act,” holding that this language “seems pregnant with the requirement that some particular official act be identified and proved.” It specifically rejected the alternative, broader interpretation that "any official act" meant any one of the universe of potential official acts "without specification as to which one."
Did the Stream of Benefits Bribery Theory Survive Sun-Diamond?
Sun-Diamond rejected a gratuity prosecution based on a stream of gifts not linked to any particular official acts. But in the wake of Sun-Diamond, lower courts have continued to uphold the stream of benefits theory in bribery prosecutions. Courts have held that the reasoning of Sun-Diamond does not apply to bribery cases because bribery requires proof of a higher level of intent, a corrupt quid pro quo. That’s true, but as one of my old law professors liked to say, is that a difference that makes a difference? The language of the gratuities and bribery statutes is strikingly similar. The bribery statute in section 201(b)(2)(A) prohibits a public official from accepting anything of value in exchange for agreeing to be “influenced in the performance of any official act.” That phrase – “any official act” – is precisely the language that the Court in Sun-Diamond said required a particular official act to be identified and proved. It’s not clear to me how the different levels of intent required for the two crimes makes any difference at all when it comes to interpreting this statutory language. For either a gratuity or a bribe, the statute and reasoning of Sun-Diamond appear to require a link to a particular, identifiable official act. There is another reason to be suspicious of lower court decisions upholding the stream of benefits theory after Sun-Diamond: most of those cases involved prosecutions for honest services fraud or Hobbs Act extortion, not section 201 bribery. Courts in those cases typically were applying general bribery law principles, not parsing the precise statutory language of 18 U.S.C. 201. One of the leading “stream of benefits” decisions, a 2007 case from the U.S. Court of Appeals for the Second Circuit called United States v. Ganim (authored by now-Justice Sotomayor when she was on the appeals court) made precisely that point. Judge Sotomayor noted that Sun-Diamond hinged on the precise wording of section 201 and that the same reasoning did not necessarily apply to other corruption statutes, including the Hobbs Act charges at issue in Ganim. Menendez is also charged with honest services fraud, but the bulk of the bribery charges in his indictment are under 18 U.S.C. 201. McDonnell and Sun-Diamond make it clear that when interpreting section 201 the Supreme Court will not look to common-law bribery principles but will strictly interpret the precise statutory language. As a result, lower court cases upholding the “stream of benefits” theory in honest services fraud or Hobbs Act cases are of limited value when considering how the Supreme Court would rule in Menendez’s case. And McDonnell suggests that however the Court ends up defining bribery for purposes of section 201, it will apply that same bribery definition to honest services fraud and the Hobbs Act as well. The Menendez defense argues that the stream of benefits theory does not survive McDonnell. I think the better argument is that it actually did not survive Sun-Diamond and the Supreme Court just has not yet had a chance to say so. The Court’s approach to statutory interpretation in McDonnell simply further highlights why it is unlikely to buy the stream of benefits theory for bribery.
The Defense: Playing the Long Game
The trial judge is likely to let the jury decide the Menendez charges. Even if the judge thinks some of the bribery theories may be invalid, he will likely feel constrained by Third Circuit precedent to let the case go to the jury. Senator Menendez is in part playing a long game, hoping that even if he is convicted he ultimately will prevail on appeal. Don’t forget that Governor McDonnell was convicted at trial and his conviction was affirmed by a unanimous Court of Appeals before the Supreme Court ultimately took the case and unanimously reversed. If the Menendez case ever were to reach the Supreme Court, I think there’s a good chance the Court would reject the stream of benefits bribery theory. A number of counts against Menendez and Melgen would remain, so that alone would not mean they would walk free. But it would represent yet another step by the Court to further narrow the scope of federal public corruption law – a process that began nearly twenty years ago in Sun-Diamond. Update: On November 16, 2017, the Menendez trial ended in a hung jury. Update 2: On January 19, 2018, prosecutors announced they would re-try Menendez and Melgen. Update 3: On January 31, 2018, after the judge acquitted the defendants on seven counts, prosecutors announced they would not re-try the case and dismissed all charges.
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