Honest Services Fraud is a federal crime covered within the overall “Frauds and Swindles” section of the U.S. Criminal Code, 18 USC §1341. Until 1988, the federal government could not convict a defendant of committing mail or wire fraud unless the case involved a victim losing tangible property or money. But that reading of the statute did not cover an offense like a public official accepting a bribe in return for doing someone a favor.
For example, if a mayor accepted a bribe to award their friend a contract at the same price the contract would cost in any event, then no victim lost money. The Department of Justice lobbied for change.
To correct any ambiguity in the law and to ensure that the law would cover such cases of public corruption, in 1988, Congress added 18 USC §1346 to the statute to clarify their intent that:
“For the purposes of this chapter, the term ‘scheme or artifice to defraud’ includes a scheme or artifice to deprive another of the intangible right of honest services.
The new law opened public officials or employees up to prosecution for failing to act faithfully in service to their constituents. Since then, the “honest service fraud” doctrine has been extended to cover even private sector cases involving breach of someone’s official or fiduciary duty or their purported loyalty to an employer.
Most recently in the news, the California celebrity college entrance scandal included 30 indictments alleging a scheme to defraud the University of Southern California of the honest services owed to it by its coaching and admissions staff.
Defending an Honest Services Fraud Indictment
At Stechschulte Nell, our experience defending all federal criminal indictments involving alleged fraud and our aggressive approach to deconstructing every piece of evidence means that we take nothing for granted. Guarding our client’s liberty and public reputation is a responsibility we accept with solemn sincerity.
Any person working in the public or private sector who is facing federal wire fraud or mail fraud charges based on honest services fraud will benefit from an immediate consultation with us in our Tampa office. Contact Stechschulte Nell for help.
What Must Federal Prosecutors Prove in Honest Services Fraud
Like all federal and state prosecutions, it is the government that carries the entire burden of proof. To convict a defendant on wire or mail fraud based on honest services fraud, the prosecutor must present evidence to establish the following facts beyond a reasonable doubt:
- The defendant was engaged in a “scheme or artifice”i to defraud another, and
- intending to deny the other person “the intangible right of honest services,” and
- it was reasonably foreseeable the scheme or artifice might cause more than “de minimis,” monetary harm to another (no harm need actually have resulted), or
- “if a violation of the employee’s duty to disclose material information is involved”
- the mail or wires were used in the scheme or artifice.
Defending each case is a unique undertaking because every client’s life circumstance and case fact pattern is different. An experience “honest service fraud” defense lawyer begins by analyzing every aspect of the evidence determining whether the prosecution’s interpretation of events is open to challenge.
In most cases, the government’s prosecuting attorneys chose the view of evidence that favors their theory of the case. In our experience, the evidence is always open to more than one interpretation and the facts do not necessarily support the prosecution’s conclusions.
Examples of Challenges Good Defense Lawyers Assert
— The defendant had no legal duty of honest service to the alleged victim. The relationship that existed was not one giving rise to such a duty. (not a public official and no fiduciary duty)
— No bribe or illegal kickback was ever received or provided.
— The defendant acted in good faith, believed they were making truthful representations, and engaged in no fraud.
— No one suffered any harm, and no harm to anyone was reasonably foreseeable.
— Nothing alleged nor any action of the defendant involved anything meeting the “materiality test.”
— No use was made of either the mail or any wire device during the defendant’s alleged acts.
Possible Penalties for Honest Services Fraud
Congress provided for extremely serious penalties to be imposed on those convicted of committing honest services fraud in federal court. For each count of the indictment, a defendant faces up to 20 years in prison and up to a $250,000 fine. The penalty can be imposed on each count and each act of using the mail (each letter) or each use of wires (phone call) may constitute a separate count.
Typically, defendants indicted for an honest services fraud crime are also indicted for other, related offenses. For example, if more than one person were involved in the scheme and it occurred on more than one occasion, the government could bring racketeering and conspiracy charges against each defendant.
If you are named in a federal indictment alleging any of these offenses, it is undoubtedly the most desperately threatening situation you have ever experienced or are ever likely to. Reaching out for help from an experienced federal court criminal defense lawyer is urgent and choosing the right attorney to defend you can mean the difference between going home to your family or spending years in prison.
Why Does Your Criminal Defense Lawyer Need Experience?
You will probably find yourself under federal indictment only once in your life. You cannot afford to rely on a lawyer with limited federal court experience. Every opportunity to challenge evidence, to persuade the prosecutor or the federal magistrate or judge to see a fact your way and every chance to use a court rule a rule of criminal procedure must be seized; no stone can remain unturned.
You and your federal criminal defense lawyer work together, as one. Trust and communication are imperative components of your defense. At Stechschulte Nell, Attorneys at Law, our reputation for excellence in the Tampa and St. Pete community speaks to our devotion to fighting for your liberty.
If you have been charged with fraud, contact Stechschulte Nell at 813-280-1244 today. We will review your case and do our best to mitigate the charges.