Allison Herren Lee and Bruce Freed oped in Forbes:
When the Cleveland Browns removed the scandal-tarnished name of FirstEnergy from their football stadium, it symbolized how far the Ohio utility’s good reputation had fallen. The name change followed guilty verdicts returned for Ohio’s former House speaker and former GOP state chair in a bribery-and-racketeering scheme fueled with almost $61 million from FirstEnergy. The company has admitted that it bribed state officials and relied on untraceable dark money to do it, in seeking a bailout for two failing nuclear plants.
FirstEnergy is the poster child of the risks and harms a company faces from failing to oversee and monitor its political spending. But corruption charges are infrequent; in today’s hyperpolarized climate, more companies run into problems when their political spending winds up in perceived conflict with their public stances. Just ask the blue-chip companies recently facing controversy over money funneled to legislators who upheld an abortion ban in North Carolina.
Corporations increasingly face risk from their political spending, and that risk is heightened when they have not charted where funds will actually go. When political spending is funneled through “dark money” groups used by candidates and officeholders or through third-party groups such as trade organizations or non-profit partisan groups, corporations (and their shareholders) often don’t know how their money will actually be spent. When discovered and spotlighted, such contributions can ultimately associate a company with controversial political figures, positions contrary to core company values and interests, or corruption.
There are proactive steps companies can and should take to mitigate the risk….
The abstract of “Percoco v. United States – Navigating Between ‘Politics As Usual’ and Sacks of Cash,” on SSRN and forthcoming in Yale L.J. Forum:
In Percoco v. United States, as in other recent cases, the Court’s interest in avoiding prosecution of “normal politics” led it to deploy broad rationales that could threaten cases against far more egregious conduct. Because, even as it reverses convictions, the Court itself suggests alternative means of pursuing the underlying conduct and lower courts – far more engaged with the facts of actual cases – are often quite ready to follow the government’s lead through the thicket of available statutes, it is far from clear that corruption prosecutions have been seriously impeded. But the Court’s message of restraint remains potent, and its consequences remain to be seen.
The Supreme Court on Thursday overturned the 2018 conviction of a former aide to New York Gov. Andrew M. Cuomo (D), once again expressing skepticism of the ways federal prosecutors combat public corruption and influence peddling.
The justices took the case to determine whether Joseph Percoco could be convicted of depriving the public of his “honest services” given thathe was working for Cuomo’s reelection campaign — rather than in his former role as an aide to the governor — when he accepted $35,000 in payments from a construction company.
Percoco made calls to state officials on the company’s behalf just before returning to government employment.
He was convicted on instructions “that required the jury to determine whether he had a ‘special relationship’ with the government and had ‘dominated and controlled’ government business,” Justice Samuel A. Alito Jr. wrote for his unanimous colleagues.
“We conclude that this is not the proper test for determining whether a private person may be convicted of honest-services fraud.”
In a separate case, the court was also unanimous in overturning the conviction of business executive Louis Ciminelli and others who won a $750 million development contract as part of Cuomo’s Buffalo Billion revitalization project.
A federal jury found both former Ohio House Speaker Larry Householder and ex-Ohio Republican Party chairman Matt Borges guilty of racketeering conspiracy Thursday – a dramatic outcome in the biggest public corruption case in state history.
The guilty verdict marks the end of Householder’s long political career in which he twice held the speaker’s gavel. He’ll be in the Ohio history books as the only speaker expelled from the Legislature and then convicted in a federal corruption case. …
A federal judge in Manhattan dismissed bribery charges against former Lt. Gov. Brian A. Benjamin of New York on Monday, saying prosecutors had not demonstrated an explicit quid pro quo in what they asserted was a scheme to funnel $50,000 in state money to a developer in exchange for campaign contributions.
In a 38-page opinion, the judge, J. Paul Oetken of Federal District Court, said that the government had a higher burden when accusing politicians like Mr. Benjamin of exchanging favors for political donations, rather than personal benefit. In Mr. Benjamin’s case, he concluded that prosecutors fell short, failing to show that the favor trading had been “clear and unambiguous” and mutually understood.
You can see the opinion in United States v. Benjamin here.
NYT: “[I]in key rulings in the past dozen years, the U.S. Supreme Court narrowed the law governing corruption, resulting in the overturning of the convictions of at least three prominent former New York lawmakers. And with the court’s announcement June 30 that it would review the high-profile 2018 convictions of two men closely identified with former Gov. Andrew M. Cuomo’s administration, legal experts say the justices may be ready to further limit what constitutes graft — and therefore what’s illegal in New York’s capital.”
The case is Roberson v. United States, a case that may well find its way to the “cert. granted” side of the docket. The issues raised in the case are:
- Whether, in a bribery prosecution based on issue-advocacy payments that would otherwise enjoy First Amendment protection, the government must prove that the payments were explicitly linked to official action.
- Whether a jury must be instructed that merely “expressing support” for a policy cannot support a conviction under the federal bribery laws.
Here’s the quote I gave Ron about the case: “Roberson looks to be just the kind of case that could interest the Justices, involving the line between political influence permissible under the First Amendment and impermissible bribery. Bribery laws stand likely to be further weakened on First Amendment grounds if the Court agrees to hear this case.”
A Supreme Court decision that threw out the fraud convictions of two political aides to former New Jersey Gov. Chris Christie is rippling through other white-collar cases, possibly buttressing appeals by other defendants who say federal prosecutors have become too aggressive in using antifraud laws to go after dishonest conduct.
In the New Jersey scandal known as Bridgegate, the high court ruled last year that a political-retribution scheme that involved crippling a town with traffic jams didn’t constitute federal fraud. The decision already has prompted the reversal of most charges in a high-profile insider-trading case, and could hurt prosecutors’ efforts to preserve convictions in a case that exposed ethical failures at one of the Big Four accounting firms.
At issue in both cases is when underhanded conduct may be considered criminal fraud. The Supreme Court affirmed in the New Jersey case that federal fraud charges apply only when a scheme seeks to obtain money or property by deceptive means.
In the insider-trading case, Manhattan federal prosecutors said on April 2 that because of the New Jersey case, most of the charges should be wiped out. They recommended to the U.S. Court of Appeals for the Second Circuit that the entire case against Christopher Worrall, one of the defendants, be dismissed. Mr. Worrall, a former technical adviser at the Centers for Medicare and Medicaid Services, was accused of sharing secrets about government-funding levels with a consultant working for a hedge fund.
In the same case, prosecutors also agreed to toss out insider-trading and theft charges against two hedge-fund traders and David Blaszczak, the political-intelligence consultant whom they allege passed on the information from Mr. Worrall.
Ciara Torres-Spelliscy has posted this draft on SSRN (forthcoming, American University Law Review). Here is the abstract:
This piece discusses how the case Kelly v. United States, which was pending before the Supreme Court when this piece was written, was likely to expand two different developments in the Roberts Court’s jurisprudence: (1) expanding the constitutional protections for lying under the First Amendment and (2) narrowing the definition of corruption. This Piece describes how lower courts ruled in the Kelly case as well as arguments deployed by Kelly’s lawyers at the Supreme Court to try to exonerate their client Bridget Anne Kelly for her role in the Bridgegate scandal.
Epilogue: As this piece was being printed, the Supreme Court decided Kelly v. United States, 590 U. S. ____ , No. 18-1059 (U.S. May. 7, 2020). As predicted by the piece, the Supreme Court in Kelly expanded the Skilling case and narrowed what counts as corruption concluding “not every corrupt act by state or local officials is a federal crime.”
A former judge of elections and Democratic committeeperson from South Philadelphia has pleaded guilty to accepting $2,500 in bribes to inflate the vote totals for three Democratic candidates for Common Pleas Court judge in 2015 and also accepted money to add votes for other candidates, U.S. Attorney William M. McSwain announced Thursday.
Domenick J. DeMuro, 73, pleaded guilty to conspiracy to deprive Philadelphia voters of their civil rights by fraudulently stuffing the ballot boxes for the judicial candidates and for other candidates seeking office in the 2014 and 2016 primary elections. And he admitted violating the Travel Act, which forbids the use of a cell phone to promote illegal activity, McSwain’s office said.
Josh Blackman and Seth Barrett Tillman for Lawfare.
A top Democratic official said the witnesses — William B. Taylor Jr., the top diplomat in Ukraine, and George P. Kent, a senior State Department official — would lay out a timeline of serious misconduct by Mr. Trump and describe how the president sought to “bribe, extort, condition or coerce” the leader of another country. The official spoke on condition of anonymity without authorization to publicly describe internal strategy, but the language echoed the definition in the Constitution of behavior that warrants impeachment and removal from office.
Representative Adam B. Schiff, the California Democrat who is chairman of the House Intelligence Committee, promised that the two witnesses, who still serve in Mr. Trump’s administration, will reveal the president’s actions to be “a corrupt undertaking that is evident from his own words.”
In a taste of the epic partisan battle to come, Republicans readied their arguments that the president did nothing wrong — and certainly nothing impeachable — and raged against a process they have denounced from the beginning as unfair and illegitimate.
“We want to make sure the truth gets out,” said Representative Kevin McCarthy of California, the minority leader. “There is no reason for the president to be in this impeachment.”
House investigators have spent seven weeks methodically assembling evidence through closed-door interviews that Mr. Trump used security aid as leverage to force President Volodymyr Zelensky of Ukraine to publicly announce investigations into former Vice President Joseph R. Biden Jr. and debunked claims that Democrats conspired with Ukraine to interfere in the 2016 election.