• Ferraris, Rolexes, and Ball Gowns: Essential Holdings and Implications for Public Corruption Prosecutions in the Wake of McDonnell v. United States*
  • August 17, 2016 | Author: Laurel Brandstetter
  • Law Firm: Leech Tishman - Pittsburgh Office
  • On June 27, 2016, the United States Supreme Court, by unanimous decision, vacated the convictions of Virginia Governor Robert McDonnell and his wife, Maureen McDonnell. The decision provides important lessons and guidance for public corruption investigations and prosecutions. This update provides a summary of the case and identifies its important holdings.

    Summary

    On September 4, 2014, former Virginia Governor Robert McDonnell and his wife, Maureen McDonnell, were convicted by a jury of honest services fraud and Hobbs Act extortion charges for their acceptance of $175,000 in gifts, loans, and other benefits from businessman Jonnie Williams. While Governor McDonnell was in office, Williams sought assistance from McDonnell in an effort to convince Virginia’s public universities to perform research studies on a compound used in a product developed by Williams’ company.

    In order to secure convictions of McDonnell and his wife, the Government was required to prove that McDonnell committed or agreed to commit an “official act” in exchange for the loans and gifts. An “official act” is defined as “any decision or action on any question, matter, cause, suite, proceeding or controversy, which may at any time be pending, or which may by law be brought before any public official, in such official’s official capacity, or in such official’s place of trust or profit.”**

    The Government alleged that McDonnell engaged in at least five “official acts,” including:

    I. Arranging meetings;
    II. Hosting events;
    III. Contacting other government officials concerning the research studies;
    IV. Promoting Williams’ products and facilitating relationships; and
    V. Recommending that senior government officials meet with Williams’ executives to discuss his company’s products.

    At the conclusion of the testimony, the District Court instructed the jury that an “official act” includes “acts that a public official customarily performs ... in furtherance of longer-term goals ... or in a series of steps to exercise influence or achieve an end.”*** McDonnell requested that the court further instruct the jury that “merely arranging a meeting, attending an event, hosting a reception, or making a speech are not, standing alone, ‘official acts.’” The District Court declined to give McDonnell’s requested instruction.****

    McDonnell moved to vacate his convictions on the grounds that:

    I. The definition of “official act” in the jury instructions was in error;
    II. There was insufficient evidence to convict him; and
    III. The Hobbs Act and honest services statute were unconstitutionally vague. The District Court denied McDonnell’s motions and the Fourth Circuit affirmed.

    The Supreme Court held as follows:
    • The Court adopted a “bounded interpretation” of an “official act” and rejected the Government’s broad reading of the statute.
    • Setting up a meeting, talking to another official, or organizing an event - without more- is not an “official act.”
    • A typical meeting, call, or event is not itself “a cause, matter, or question” under the relevant statute.
    • Once a “cause, matter, or question” has been identified, there must be evidence that the public official made a decision or took action on the question or matter or agreed to do so.
    Factual Basis

    Because public corruption investigations and prosecutions often turn on critical facts, which serve to move conduct from the political grey area to identifiable prohibited conduct, it is critical to understand the essential facts at play in the McDonnell prosecution.

    Governor McDonnell was elected based upon his “Bob’s for Jobs” campaign and his focus on promoting business development in Virginia. To fulfill that campaign promise, McDonnell spoke about economic development on a daily basis and referred thousands of constituents to meetings with members of his staff and other governmental officials. McDonnell had more events at the Virginia Governor’s Mansion to promote Virginia business “than had occurred in any other administration.”*****

    McDonnell met Jonnie Williams during his campaign. Once elected, McDonnell met with Williams. During their initial meeting, Williams requested an introduction to someone who could assist in moving forward with research studies at state universities. McDonnell arranged a meeting with Virginia’s Secretary of Health and Human Resources. The meeting was unsuccessful because the Secretary was skeptical of the science behind the compound.

    Six months later, McDonnell’s wife agreed to seat Williams next to McDonnell at a political rally. Thereafter, Williams bought McDonnell’s wife $20,000 worth of designer clothing.

    Following a dinner at the Governor’s mansion, McDonnell’s wife agreed to assist Williams with his compound and requested financial assistance from Williams. Maureen McDonnell requested a $50,000 loan from Williams and $15,000 as a gift to assist with their daughter’s wedding. Williams agreed. In a subsequent telephone conversation, the Governor thanked Williams for his help.

    The McDonnells hosted a lunch for Williams’ company. Williams claimed that the purpose of the lunch was to launch his product. McDonnell’s gubernatorial counsel claimed that “it was just lunch.”^ During the lunch, Williams asked the Governor if he would support funding for the research studies. McDonnell replied, “I have limited decision-making power in this area.”^^

    Five months later, the Governor and his wife requested an additional $50,000 loan from Williams. McDonnell’s wife emailed gubernatorial counsel and questioned the status of the research studies. McDonnell alleged that his wife acted without his knowledge or permission and that he never made the statements attributed to him.

    During a meeting to discuss Virginia’s health plan for state employees, the Governor disclosed that he was taking Williams’ product and that it was working well for him. There was no meeting or follow up to this discussion. Virginia’s health plan does not cover nutritional supplements.

    Two months later, McDonnell requested an additional $20,000 loan from Williams. Williams also paid for several rounds of golf for the Governor and his children, took the McDonnell’s on a weekend trip, and gave $10,000 as a wedding gift to one of the McDonnell’s daughters. Williams provided over $175,000 in gifts and loans.

    Analysis

    The singular issue analyzed by the Supreme Court was the proper interpretation of the term “official act.”

    The Government’s theory underlying the honest services fraud and Hobbs Act extortion charges was that McDonnell accepted bribes from Williams. The parties agreed that honest services fraud would be defined by reference to the federal bribery statue.^^^ The bribery statute criminalizes a public official’s “directly or indirectly, corruptly” demanding, seeking, receiving, accepting, or agreeing “to receive or accept anything of value” in exchange for being “influenced in the performance of any official act.”^^^^

    An “official act” is a decision or action on a question, matter, cause, suit, proceeding or controversy. That question or controversy must involve a formal exercise of governmental power, and must also be something specific and focused that is pending or may by law be brought before a public official.

    There are two requirements for an “official act.” The Government must identify both a question, matter or cause that may come before an elected official and that the public official made a decision or took action (or agreed to take action) on that question, matter, or cause.

    The District Court determined that the relevant matter in this case was “Virginia business and economic development.” The Court rejected this determination and concluded that the “pertinent ‘question, matter, cause, suit, proceeding or controversy’ must be more focused and concrete.’”

    While a public university initiating a study, a Commission allocating grant money for studying a compound, and evaluating whether a state health plan would cover a particular compound qualify as “questions or matters” under the statute, the public official must do something more than set up a meeting, host an event, or call other officials.

    Setting up a meeting, hosting an event, or making a phone call may not always be innocent or irrelevant to public corruption investigations or prosecutions. The Court concluded that,

    If an official sets up a meeting, hosts an event, or makes a phone call on a question or matter that is or could be pending before another official, that could serve as evidence of an agreement to take an official act. A jury could conclude, for example, that the official was attempting to pressure or advise another official on a pending matter. And if the official agreed to exert that pressure or give that advice in exchange for a thing of value, that would be illegal.

    The Government’s broad interpretation of an “official act” raised significant constitutional concerns for the Court. Namely, “conscientious public officials arrange meetings for constituents, contact other officials on their behalf, and include them in events all the time. Representative government assumes that public officials will hear from their constituents and act appropriately on their concerns. The Government’s position could cast a pall of potential prosecution over these relationships.”

    The Court concluded further that the jury instruction given did not adequately explain to the jury how to identify the “question, matter, cause, suit, proceeding, or controversy” at issue. A proper jury instruction should have instructed the jury to first identify “’a question, matter, cause, suit, proceeding or controversy’ involving the formal exercise of governmental power.”

    Additionally, the jury instructions should have informed the jury that the “question, matter, cause, suit, proceeding or controversy” must be specific and focused and more than a broad policy objective. More specifically, the District Court should have instructed the jury “that the pertinent ‘question, matter, cause, suit, proceeding or controversy’ must be something specific and focused that is ‘pending’ or ‘may by law be brought before any public official’ such as the question whether to initiate research studies.”

    Lastly, the District Court should have instructed the jury that it had to find that McDonnell made a decision or took an action (or agreed to do so) on the identified “question, matter, cause, suit, proceeding or controversy.”

    In closing, the Court remarked that “There is no doubt that this case is distasteful; it may be worse than that. But our concern is not with tawdry tales of Ferraris, Rolexes, and ball gowns. It is instead with the interpretation of the federal bribery statute.”

    Important Take-Aways
    • The Court’s decision applies to public officials. The charges pending against McDonnell’s wife were the subject of a separate appeal.
    • The Court’s decision does not apply to vendors or other non-public employees who may seek to influence official action.
    • The Government must identify a “question, matter, cause, suit, proceeding or controversy” that is specific and focused and more than a broad policy objective.
    • Setting up a meeting, hosting and event, or making a phone call could serve as evidence of an agreement to take an official action, especially if there is evidence that the public official was attempting to pressure or advise another official on a pending matter.
    • That conduct becomes illegal if it is done in exchange for a thing of value.
    • Criminal defense counsel must seek the appropriate jury instructions to ensure that defendants are not convicted for conduct that is lawful.
    • Public officials and public entities should take immediate steps to educate themselves about the Court’s decision and the parameters of proper conduct.
    *McDonnell v. United States, 579 U.S. &under;&under;&under;&under;&under; (2016), No. 15-474. Argued April 27, 2016 - Decided June 27, 2016.
    **18 U.S.C. § 201(a)(3).
    ***Supp. App. 69-70.
    ****792 F.3d 478, 513.
    *****App. 4093.
    ^App. 3229-3231.
    ^^App. 3927.
    ^^^18 U.S.C. § 201.
    ^^^^18 U.S.C. § 201(b)(2).