A key weapon in the arsenal of U.S. Attorney Patrick Fitzgerald and his prosecutors in Chicago has been a section of the federal anti-fraud statute that makes it a crime to deprive citizens or corporate shareholders of "honest services."
It's been used to convict dozens of state and local government officials, as well as newspaper magnate Conrad Black and former Gov. George Ryan of Illinois. Fitzgerald cited the honest services in the April indictment of another ex-Illinois governor, Rod Blagojevich.
But the U.S. Supreme Court's May decision to review Black's 2007 conviction may put the brakes on the honest services provision. The U.S. Department of Justice is likely to rein in use of the provision, 18 U.S.C. 1346, until the high court rules on Black's appeal next term, former federal prosecutors say. "Anytime that there's a high-profile review of a conviction, the department tends to just stop in its tracks, and this is a very high-profile review," said Matt Orwig, a partner and criminal defense attorney in the Dallas office of Sonnenschein Nath & Rosenthal and former U.S. attorney for the Eastern District of Texas. "There's going to have to be some very careful analysis of how they've approached these cases in the past."
Using the honest services section of the fraud statute allows prosecutors to charge defendants with robbing a general group of people, such as shareholders of a public company or residents of a state or city, of the honest fiduciary duties or government services they are due. It's typically used to shore up other fraud counts, but increasingly has been used as a primary count as well.
Orwig, who didn't recall using the charge when he was a U.S. attorney, said he thinks the section has been "over-used." It was the lead charge lodged by U.S. attorney offices against 79 suspects in fiscal year 2007, up from 63 in 2005 and 28 in 2000. (The Justice Department doesn't consistently track it as a secondary charge.)
Fitzgerald, the special counsel who won a conviction against vice presidential aide I. Lewis Libby Jr., so far is bucking the usual turnover for U.S. attorneys and is extending his eight-year stint in Chicago from the Republican Bush administration into the Democratic Obama administration.
Former federal prosecutors-turned-criminal defense lawyers in the Northern District of Illinois said they believe Fitzgerald's office has been among the most aggressive in using the honest services charge. Although statistics show that his office used the law only twice in fiscal year 2007 as a lead charge, the office has often used the statute as a secondary allegation in cases targeting Illinois and Chicago officials for political corruption.
"The Northern District has argued for an aggressive interpretation of this statute on many occasions," said Robert Kent, a partner in the Chicago office of Baker & McKenzie who was formerly chief of the complex fraud section in the U.S. attorney's office there.
The office has met with success, posting an overall conviction rate for fiscal year 2008 of 96 percent, compared to the national rate of 92 percent. Randall Samborn, a spokesman for the office, declined to comment on use of the charge or the Black case.
The criminal defense lawyers said the Supreme Court is likely to focus on the second question presented by the Black petitioners: whether the law "applies to the conduct of a private individual whose alleged 'scheme to defraud' did not contemplate economic or other property harm to the private party to whom honest services were owed."
Black's Supreme Court counsel, Miguel Estrada of the Washington office of Gibson, Dunn & Crutcher, didn't return calls seeking comment, but argued in the petition that the "vagueness" of Section 1346 and differing appellate courts' interpretation of the law call out for Supreme Court clarification.
Solicitor General Elena Kagan contends in response that the law is clear: The government need not show that a defendant intended to deprive a victim of property or money, and the appellate courts differ only slightly in determining whether a given honest services fraud is "material."
The court's decision to grant certiorari in the Black case led to a release from prison of one of Black's three co-defendants, John Boultbee, and Black may resubmit a request for release in the Northern District of Illinois after Justice John Paul Stevens denied his request for release on bail on June 11.