“You might not have robbed a bank or stolen anything . . . but I can guarantee that you are ‘guilty’ of ‘honest services fraud'” says William L. Anderson, Ph.D., a teacher at Frostburg State University in Maryland.
“Have you ever taken a longer lunch break than what you are supposed to do? Have you ever made a personal phone call at work or done personal business on your employer’s computer? Have you ever had a contract dispute with an employer or a client? An enterprising federal prosecutor can criminalize all of those things.
If you’re an attorney and signed forms even though you haven’t read every word (for example, the standard closing documents for real estate), you’ve committed ‘honest services fraud.'” 1
The honest-services fraud statute has been gaining attention. In its 2009-2010 term, the US Supreme Court will hear three cases challenging the constitutionality of the honest services fraud statute.
What Is Honest-Services Fraud?
The honest-services fraud law was passed in 1988 as part of the mail and wire fraud laws passed that year. The law makes it a crime for executives and government officials to deny the people they serve the “intangible right to honest services.” This strangely worded phrase divides juries and has led to criticism for a string of baseless prosecutions.
There are two categories: public and private honest-services fraud. The public version includes elected or appointed public officials. The second version involves private citizens who fail to provide honest services to others. As a result, private honest-services fraud can be a universal crime that almost every person is guilty of.
Violating the honest-services fraud statute is a federal felony. It’s punishable by five years in prison, a $250,000 fine, or both.
Many people are critical of the honest-services law and argue that it has two main flaws.
- It allows federal prosecutors too much discretion “to go after people they don’t like or people they disagree with politically.” 2
- Prosecutions of state officials under the federal law may violate principles of federalism because “It represents a federal judgment that you can’t trust to the states.” 3
Supreme Court Justice Scalia is critical of this law. According to Scalia, the courts haven’t defined what separates “the criminal breaches, conflicts and misstatements from the obnoxious but lawful ones.” The honest services law “invites abuse by headline-grabbing prosecutors in pursuit of local officials, state legislators and corporate CEO’s who engage in any manner of unappealing or ethically questionable conduct.”4
Recognizing the problem, Scalia promises that “it seems to me quite irresponsible to let the current chaos prevail.”5 As a result, there will be more clarification on the honest-services law by the end of this Supreme Court term.
Most federal prosecutors support this law. Public officials have a duty to make decisions in the best interest of the people who elect them. When they make decisions based on personal interests, they’re defrauding the public and need to be punished.