- Mar 26, 2005
Well it's not intuitively obvious (similar to many legal concepts) so here's the short version.I need some more explanation because I've read the links and I still don't understand it. How is the public the victim? I get the notion of "right to honest services" but the pool of young men with the requisite "resume" to get offered a scholarship to play basketball is tiny --- that's not the public. Is the argument that the kids not getting paid are the victims?
Bank and wire fraud are criminal offenses. We have a pretty good handle on bank and wire fraud. Traditionally, this means when someone defrauds you of something tangible, like money. Or property. Or jewelry. Etc.
However, there are a bunch of instances (as we’re about to see) where that’s not broad enough. So post-WWII, federal prosecutors tried to incorporate intangible harms into the fraud statute, the most important of which for our purposes is the “intangible right to honest services.”
This culminated in a case called McNally. In this case, the Chair of KY Democratic Party and two accomplices received a $200K kickback for directing the state’s workers comp insurance to a specific agency. The three defendants were indicted on charges of mail fraud for “defrauding the citizens of Kentucky of 'their right to have the Commonwealth's business and its affairs conducted honestly, impartially, free from corruption, bias, dishonesty, deceit, official misconduct, and fraud,' and of 'money and other things of value,' using the United States mail.”
The Chair pled guilty. Subsequently, the accomplices were convicted of conspiracy and fraud. (The fraud statute encompasses both the actual fraud and a “scheme or artifice.”) Upon appeal, SCOTUS ruled that the fraud statute only applied to tangible property and threw out their convictions.
In response, Congress within a year passed Section 1346, which expressly overruled McNally and added a clause prohibiting “a scheme or artifice to defraud another of the intangible right of honest services.” Congress left the term “honest services” undefined.
So federal prosecutors have seized on this to prosecute not only bribery and kickbacks but other self-dealing or conflict of interest cases such as basketball coaches who helped athletes cheat by providing answers to exams, attorneys who paid insurance adjusters to expedite claims, and a purchasing agent who was secretly paid by the company’s suppliers. In the public sector, convictions have been obtained for city employees who doled out government jobs to loyal footsoldiers in mayoral campaigns. (Cite). And while SCOTUS limited the statute somewhat in the Skilling case (to bribery and kickbacks), defense attorneys still argue that those 28 words are unconstitutionally vague.
TL;dr: If you skipped the above, here's the takeaway. The law is currently settled that the public has a right to "fair and honest representation by public officials." In the public official context (which this case is), bribery and kickbacks can violate those rights leading to federal charges. The victim is the public and the injury is the loss of fair and honest representation.
Hope this helps.