High Court Skeptical Of Anti-Fraud Law

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The U.S. Supreme Court hears arguments Tuesday in a case that tests the constitutionality of a federal anti-corruption law that makes it a crime to deprive shareholders of honest services. The law has been used to prosecute public officials and corporate executives. Opponents argue that the law is too broad.

ROBERT SIEGEL, host:

From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.

MICHELE NORRIS, host:

And I'm Michele Norris.

At the Supreme Court today, the justices heard arguments in two cases testing a federal anti-corruption law. It is a brief statute, just 28 words, dealing with what are called honest services. The law makes it a crime for a government official to deprive citizens of honest services or for a corporate officer to deprive shareholders of the same.

NPR legal affairs correspondent, Nina Totenberg, explains.

NINA TOTENBERG: Prosecutors view the honest services law as an essential tool in going after public officials who accept money, free tickets or jobs for themselves or relatives. Among those prosecuted under the law were of late, lobbyist Jack Abramoff, Enron executives and two former Illinois governors, to name just a few.

Today's cases involved Conrad Black, a Canadian media mogul convicted of defrauding his shareholders and Alaska state legislator Bruce Weyhrauch, who failed to disclose that while he was voting on legislation that aided an oil production company, he was negotiating with the company's CEO for a job. Lawyers for the two men claim, among other things, that the law is unconstitutionally vague.

Here's Miguel Estrada, the lawyer for Conrad Black, speaking on the steps of the Supreme Court today.

Mr. MIGUEL ESTRADA (Attorney): A core principle of law in this country is that a citizen ought to be able to know by simply looking at the law whether his conduct is in or out. And this law flunks that by a country mile.

TOTENBERG: Inside the courtroom, Estrada and Donald Ayer, the lawyer for the Alaska legislator, had a relatively easy time. Estrada was challenged when he asserted that the law gives prosecutors too much discretionary power to target anyone they please. Justice Sotomayor: I don't know what's so discretionary about a bribery or a kickback case. Justice Scalia: The problem with the bribe or a kickback explanation is that there's nothing in the text of the statue that would enable you to limit it to kickbacks and bribes.

In both cases, it fell to Deputy Solicitor General Michael Dreeben to defend the statute against a barrage of questions from both liberal and conservative justices. The honest services statute, he observed, was enacted by Congress in 1988 to overturn a Supreme Court decision the prior year that limited the basic federal fraud statute to schemes involving property.

After that ruling, Congress, he said, came back and made explicit what had been incorporated by prior court rulings, that it's a crime to engage in any scheme that deprive citizens of the honest services of government officials and corporate executives. Honest services, he maintained, has long been a term of art recognized by the courts. Justice Ginsburg asked for a definition of the term. Answer: The right of loyal and honest services, she said, means no divided loyalties.

Justice Breyer: I think there are perhaps 150 million workers in the United States and possibly 140 million of them would flunk your test. Suppose the boss comes into the room and asks, do you like my hat? The worker replies, oh, I love your hat. Why? So the boss will leave the room so the worker can continue to read the racing form. Explain to me how your test does not make the statute potentially criminalizing 150 million workers in the United States. Answer: The statue covers bribes, kickbacks and undisclosed conflicts of interest by a government official or executive who has a legal duty to the people he represents. Justice Sotomayor: Where do we draw the line on what information needs to be disclosed? Answer: The line is personal conflicting financial interests of the individual. Justice Breyer: So, what about my racing form? Is he acting for himself and not his employer? Answer: The government would be very foolish to prosecute that.

Justice Breyer: It may be you would never prosecute it. It may be a jury would never convict. But that isn't the basis for having a statute that picks up 80 or 100 million people. Justice Scalia: What we're looking for here is something that separates reading the racing form from really harming the employer, something that's a substantial crime.

When Deputy Solicitor General Dreeben said the answer lies in the body of law laid down in past court decisions, Scalia responded, you speak as though it's up to us to write the statue. But that's not our job. Turning to the specifics of the Alaska case involving the legislator who did not disclose his job negotiations, Dreeben conceded that Alaska state law does not require disclosure. But he contended that when the legislator voted on a bill that would have benefitted the company he was negotiating with, the legislator deprived the citizenry of his honest services under the federal law.

Justice Ginsburg: And this is supposed to be something that the average citizen who works there just knows all about? Answer: The government must show that the defendant sought to deceive the legislature and the citizens about his conflict of interest. Chief Justice Roberts: Suppose there was an ethics code but it only involved penalties of six months in jail and a $500 fine, it's a light sentence under state law. But then the federal prosecutor comes along and says, you're going away for 20 years because this violates the federal law. Answer: We live in a dual system in which citizens are held accountable by both their states and the federal government. Justice Ginsburg: The problem is that this statute is open to a high degree of interpretation. And, suggested the chief justice, if a person is not able to understand what is legal and what is not, the law is invalid.

Nina Totenberg, NPR News, Washington.

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