The ‘Bridgegate’ Ruling Has Implications for Covid-19 Fraud (Bloomberg Law)

The U.S. Supreme Court’s recent ruling tossing the convictions in the “Bridgegate” scandal adds to a line of high court decisions narrowing the reach of federal corruption laws, writes Jones Day partner Yaakov Roth, who argued the case for one of the defendants. He says the ruling is especially timely given the vast government spending in response to Covid-19 and the inevitable allegations of fraud that may lead prosecutors to overreach.

When the U.S. Supreme Court May 7 unanimously reversed the convictions of our client Bridget Anne Kelly in the so-called “Bridgegate” case, it provided an important reminder to prosecutors: federal criminal laws should not be twisted to capture unpopular or “unethical” conduct, even in matters of significant public controversy. Due process, federalism, and fundamental fairness demand as much.

That lesson is not new, but it is timely. The Covid-19 crisis has unleashed vast federal spending, which will inevitably prompt widespread allegations of abuses that, in turn, may lead prosecutors to once again resort to overbroad interpretations of open-ended criminal statutes. If—or when—they do so, federal courts should follow the Supreme Court’s lead and hold the line on the rule of law.

By now, everyone knows the story of Bridgegate. To punish a mayor who would not endorse Gov. Chris Christie’s (R-N.J.) re-election, state officials arranged for two lanes over the George Washington Bridge to be realigned in a way that caused significant traffic jams in the mayor’s town. The resulting scandal cost Kelly her job—but federal prosecutors sought to deprive her of her freedom, too. Yielding to public outcry, the government charged Kelly on the far-fetched theory that she had committed property fraud.

Government’s Theory Would Catch Typical Political Activity

As we argued to the Supreme Court, that theory was breathtakingly broad. If misrepresenting your true motives for an official action counts as property fraud, there is no official in the nation who could not be thrown in prison by a jury that finds her to be insincere in purporting to advance the public interest.

From a governor who appoints his buddy to a cabinet post while claiming he is the most qualified, to a mayor who insists that a politically favored ward has the most urgent need for pothole repair, to a legislator who maintains that his state badly needs a “bridge to nowhere”—all would be felons.

In reality, that view is fundamentally unsound, because regulatory power is not property, and the federal fraud statutes only prohibit deceptive deprivations of property. Officials who lie about putting policy ahead of politics may be bad leaders, but they are not thieves.

The Supreme Court unanimously and emphatically agreed. Writing for the court, Justice Elena Kagan reminded the government that “not every corrupt act by state or local officials is a federal crime,” and that federal prosecutors “may not use property fraud statutes to set standards of disclosure and good government for state and local officials.”

Examples of Prosecutorial Overreach

Sadly, Kelly’s case is no outlier when it comes to prosecutorial overreach. Four years ago, the Supreme Court had to step in to reject unfounded criminal charges against another client of ours, former Virginia Gov. Robert F. McDonnell (R). The government took the position that the governor had committed federal bribery when he arranged a meeting and hosted an event for a businessman who had given him gifts—never mind that helping constituents in those ways is what public officials are supposed to do. There, too, the Supreme Court unanimously rejected the government’s view, calling it “boundless.”

The examples can be easily multiplied. It took a federal appeal to overturn the bribery convictions of Herb Vederman, a Philadelphia philanthropist, for supposedly bribing his legislator friend to recommend him for an ambassadorship.

Prosecutors tried former New York Assembly Speaker Sheldon Silver (D) twice before an appeals panel pointed out that there was no evidence he had agreed to influence any particular question or matter when a doctor referred potential mesothelioma plaintiffs to his law firm. (Disclosure: Jones Day represented both Vederman and Silver.)

And earlier this year we explained to another federal appellate court, on behalf of an energy executive convicted of hiring a state legislator to lead a grassroots advocacy campaign, that the federal bribery laws do not forbid retaining a part-time state legislator for work untethered to his official functions.

The takeaway is that, no matter how many times the Supreme Court warns them to stop, federal prosecutors will continue to advance novel and aggressive readings of federal criminal statutes to facilitate their pursuit of the villains of the day. These prosecutions won’t be limited to public officials. Given the current coronavirus crisis and resulting congressional action, tomorrow’s villains—corporate executives and their companies—may well be at risk for similarly novel and aggressive prosecutions.

Massive Stimulus Package Provides Potential Targets

The CARES Act has opened the spigots for a torrent of federal spending. It created a $500 billion federal stimulus program for companies in distressed sectors; authorized $650 billion in federal loans under the Paycheck Protection Program; broadly expanded eligibility for unemployment benefits during the crisis; and committed a $100 billion fund to reimburse hospitals and health-care providers for costs attributable to the pandemic.

Spending on this scale will inevitably generate allegations of abuse, and calls for those “abuses” to be prosecuted. There will be abundant second-guessing of corporate certifications of the need for federal support, and of officials’ allocations of these valuable resources—all, of course, after the confusion, uncertainty, and tumult of this crisis has dissipated.

Federal prosecutors will be presented with ample opportunities to pursue high-profile targets in the private as well as the public sector. Some bad actors will surely deserve prosecution—but in many cases, the blame will truly lie with poorly designed programs, rushed implementation, ambiguous guidelines, or good-faith errors made at the height of a national emergency.

Needless to say, prosecutors should proceed judiciously and refrain from turning political scandals or policy misjudgments into federal criminal cases by adopting implausible readings of federal fraud and corruption statutes. But our experience shows that such restraint is often in short supply. Courts must therefore continue to act as the last line of defense against lawless prosecutions.

Reproduced with permission. Published May 22, 2020. Copyright 2020 by The Bureau of National Affairs, Inc. (800-372-1033) http://www.bna.com