This is the second in a series of posts in which I use the George Ryan trial to illustrate the unfairness of federal mail fraud and RICO prosecutions.
The Mail Fraud statute, enacted in 1872, forbids “devis[ing] any scheme or artifice to defraud” and then placing something in the mail for the purpose of executing this scheme. The 1872 statute incorporated the common law concept of fraud, which consists of depriving someone of property by lying.
Federal prosecutors in the 1970s sought to use the statute to convict people who had not deprived anyone of property. They persuaded lower federal courts to hold that the statute outlawed deprivations of “the intangible right to honest services.” One of the earliest cases was the prosecution of a former governor of Illinois, Otto Kerner, by a United States Attorney who became Illinois’ longest serving governor himself, James Thompson. The Supreme Court ultimately rejected the prosecutors’ gambit, concluding that the mail fraud statute did not outlaw deprivations of an ill-defined intangible right to honest services.
The Department of Justice then complained that the Court’s decision had deprived it of an important tool in its fight against government corruption. Although the Department could have asked Congress to enact a straightforward statute outlawing state and local bribery, it urged Congress to restore the prosecutors’ gimmick instead. Congress (which in the area of criminal justice nearly always lets the Department do its work for it) responded by adding a new section to the mail fraud statute declaring that a scheme or artifice to defraud includes a scheme “to deprive another of the intangible right to honest services.”
No one knows what this language means. A three-judge panel of the Second Circuit held it too vague to give fair notice to defendants, but the en banc Second Circuit set this ruling aside, offering its own unique definition of the term “honest services.” The Seventh Circuit similarly rejected a claim that the statutory language was unconstitutionally vague, and it provided a different, equally distinctive definition. In the Seventh Circuit (and nowhere else), the “intangible rights doctrine” encompasses every breach of a fiduciary duty for personal gain. Other circuits’ definitions also emphasize the breach of a fiduciary duty.
What, then, is a fiduciary duty? Again, no one knows, but the courts seem to treat every legal duty of a public official as “fiduciary.” Five pages of the 91-page Ryan indictment are devoted to setting forth the “Laws, Duties, Policies and Procedures Applicable to” the defendants. None of the laws listed in this section are federal laws. They include provisions of the Illinois State Constitution, state criminal laws, non-criminal state regulations, a policy memorandum of the Illinois Secretary of State’s office, and George Ryan’s announced personal policy of not accepting gifts worth more than $50. With occasional exceptions, the indictment’s later allegations of wrongdoing make no effort to specify which of the asserted state law duties the defendants violated.
In the Ryan case and others, prosecutors have used the intangible rights doctrine to stand federalism on its head. In effect, federal prosecutors prosecute state officials and private individuals for state crimes in the federal courts. Worse, they use the mail fraud statute to bootstrap minor state crimes and violations of non-criminal regulations into 20-year federal felonies.
In the Ryan case, the prosecutors may transform even the violation of Ryan’s announced personal policy into a 20-year felony. If Ryan pledged not to accept gifts worth more than $50 and then did so despite his pledge, did he deprive the people of Illinois of the intangible right to his honest services? Does every broken promise by a politician (“read my lips”) now constitute mail fraud? Most of the “sweetheart deals” at the heart of the Ryan case do not appear to meet the legal definition of bribery. Nevertheless, the Ryan jury probably will be instructed to determine without substantial guidance whether these transactions deprived the state of the intangible right to Ryan’s honest services.