Reframing the Right: Using Theories of Intangible Property to Target Honest Services Fraud After Skilling

By: Brette M. Tannenbaum

 

Few federal criminal statutes have been as widely charged—and widely criticized—as the honest services statute, 18 U.S.C. § 1346. Primarily, this is because federal prosecutors have used the statute to charge corrupt officials with mail or wire fraud for denying citizens the intangible right to their fair and impartial services, regardless of whether those citizens suffered any financial or proprietary loss—-an element typically required under the traditional mail and wire fraud statutes. Recently, in Skilling v. United States,the Supreme Court dealt a blow to the honest services theory when it interpreted § 1346 to reach only bribery or kickback schemes. Scholars and commentators predict the decision will mark the end of federal prosecutions for more inchoate forms of fraud, such as undisclosed self-dealing and hidden conflicts of interest. Fearing as much, members of Congress have proposed legislation to criminalize undisclosed self-dealing expressly and thereby retain the full anticorruption enforcement power of the mail and wire fraud statutes. In response, this Note argues that initial reactions to Skilling have overstated the extent to which federal prosecutors are now hindered in their ability to prosecute honest services misconduct. Just as they have done for decades, prosecutors can and should continue to target honest services misconduct using the traditional mail and wire fraud statutes, 18 U.S.C. §§ 1341 and 1343, by reframing the misconduct as a deprivation of intangible property. This Note provides a framework for how prosecutors can do so while largely replicating the sweep and targets of pre-Skilling § 1346 honest services prosecutions and concludes that such an exercise of prosecutorial discretion is both appropriate and desirable.

 

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