The Supreme Court unanimously overturned the public corruption conviction of Joe Percoco, formerly a longtime aide to former New York Gov. Andrew Cuomo, in a May 11 ruling.
The new decision, a defeat for the Biden administration, is a blow to prosecutors and the federal honest-services fraud statute, which some lawyers and civil libertarians say is vague and overbroad.
In recent years the court has been willing to overturn corruption convictions that involve public officials doing things that some think of as normal political activities.
In May 2020, the court overturned the convictions of two former political operatives who as allies of the then-Republican governor of New Jersey, Chris Christie, orchestrated the George Washington Bridge lane closure scandal—the “Bridgegate” traffic-congestion scandal of 2013.
Before that, in 2016, the court reversed the conviction of the former Republican governor of Virginia, Bob McConnell, for taking gifts from a benefactor without actually taking action to benefit that person.
Federal law makes it a crime to engage in honest-services fraud, which it defines as “a scheme or artifice to deprive another of the intangible right of honest services.” Although the law was created to combat government corruption, its application isn’t limited just to government officials and can cover private citizens. The phrase “honest services” is not defined, which has allowed the courts to decide on the law’s reach.
For honest-services fraud to take place, someone must pay a bribe and someone must be harmed by it. The thinking behind the law is that the person accepting the bribe owes a duty to someone else, such as the citizenry.
In 2018, Percoco was convicted of two counts of conspiracy to commit honest-services fraud for taking money from companies that hoped to gain influence with the Cuomo administration. He was sentenced to six years in prison but was released two years early in 2021. Cuomo, a Democrat, resigned in 2021 over sexual harassment allegations.
Percoco had been executive deputy secretary in the governor’s office, but at the time of the payments that the federal government characterized as bribes, he had temporarily stepped down from the position to run Cuomo’s reelection campaign.
Percoco argued he should not have been convicted for taking payments to influence government policy because, at the relevant time, he maintains he was merely a lobbyist who held only informal influence over government decision-making. In other words, Percoco said that because he was not a government official at the time he accepted the funds, no corruption was involved.
The Biden administration argued that despite formally leaving state employment, Percoco’s non-employee excuse was a sham because he continued to use his telephone and desk in the governor’s office and made it clear that he was assured a position with Cuomo’s administration after the election.
The case goes back to 2014 when a state agency known as Empire State Development, advised developer Steven Aiello that his real estate business, COR Development, “needed to enter into a ‘Labor Peace Agreement’ with local unions if he wished to receive state funding for a lucrative project,” Justice Samuel Alito wrote in the court’s opinion (pdf).
“Interested in avoiding the costs of such an agreement, Aiello reached out to Percoco through an intermediary so that Percoco could ‘help us with this issue while he is off the 2nd floor,’ i.e., the floor that housed the Governor’s office.
“Percoco agreed and received two payments totaling $35,000 from Aiello’s company in August and October 2014. On December 3, mere days before returning to his old job, Percoco called a senior official at ESD and urged him to drop the labor-peace requirement. ESD promptly reversed course the next day and informed Aiello that the agreement was not necessary.”
The problem, Alito wrote, is that Percoco was “convicted of this offense based on instructions that required the jury to determine whether he had a ‘special relationship’ with the government and had ‘dominated and controlled’ government business.” In addition, the jury’s instructions were “too vague.”
“We conclude that this is not the proper test for determining whether a private person may be convicted of honest-services fraud, and we therefore reverse and remand for further proceedings.”
Justice Neil Gorsuch filed an opinion concurring in the court’s opinion. Justice Clarence Thomas joined Gorsuch’s opinion.
“To this day, no one knows what ‘honest-services fraud’ encompasses,” wrote Gorsuch. “And the Constitution’s promise of due process does not tolerate that kind of uncertainty in our laws—especially when criminal sanctions loom.”
“‘Vague laws’ impermissibly ‘hand off the legislature’s responsibility for defining criminal behavior to unelected prosecutors and judges, and they leave people with no sure way to know what consequences will attach to their conduct,” Gorsuch wrote, quoting the 2019 Supreme Court decision in United States v. Davis.
Also on May 11, the Supreme Court unanimously overturned the conviction of Louis Ciminelli in a separate but related case. Thomas wrote the court’s opinion (pdf) in Ciminelli v. United States, court file 21-1170.
Ciminelli was involved in the scandal-plagued “Buffalo Billion” development plan in upstate New York when Cuomo was governor. The plan envisioned the construction of a solar panel factory, among other projects, and was aimed at attracting more than $8 billion in investments for Buffalo and the rest of western New York, creating nearly 14,000 jobs.
Prosecutors claimed Ciminelli and others rigged bids for state contracts worth hundreds of millions of dollars. They were convicted of conspiracy to commit wire fraud and other charges by a federal court in Manhattan in 2018.
Ciminelli claimed that the right-to-control theory of fraud the government argued and the U.S. Court of Appeals for the 2nd Circuit upheld in the case, was invalid. The theory holds that the deprivation of complete and accurate information a person needs to make an economic decision constitutes property fraud.
The Supreme Court rejects the right to control theory under which “a defendant is guilty of wire fraud if he schemes to deprive the victim of ‘potentially valuable economic information’ ‘necessary to make discretionary economic decisions,” Thomas wrote, citing a 2nd Circuit ruling in the Percoco case.
“We have held, however, that the federal fraud statutes criminalize only schemes to deprive people of traditional property interests,” the justice added.
This article by Matthew Vadum appeared May 11, 2023, in The Epoch Times.
Photo: Supreme Court Justice Samuel Alito