DOJ May Rein in Use of 'Honest Services' Statute

Law.com reports:

A key weapon in the arsenal of U.S. Attorney Patrick Fitzgerald and his prosecutors in Chicago has been a section of the federal anti-fraud statute that makes it a crime to deprive citizens or corporate shareholders of "honest services."

It's been used to convict dozens of state and local government officials, as well as newspaper magnate Conrad Black and former Gov. George Ryan of Illinois. Fitzgerald cited the honest services in the April indictment of another ex-Illinois governor, Rod Blagojevich.

But the U.S. Supreme Court's May decision to review Black's 2007 conviction may put the brakes on the honest services provision. The U.S. Department of Justice is likely to rein in use of the provision, 18 U.S.C. 1346, until the high court rules on Black's appeal next term, former federal prosecutors say. "Anytime that there's a high-profile review of a conviction, the department tends to just stop in its tracks, and this is a very high-profile review," said Matt Orwig, a partner and criminal defense attorney in the Dallas office of Sonnenschein Nath & Rosenthal and former U.S. attorney for the Eastern District of Texas. "There's going to have to be some very careful analysis of how they've approached these cases in the past."

Using the honest services section of the fraud statute allows prosecutors to charge defendants with robbing a general group of people, such as shareholders of a public company or residents of a state or city, of the honest fiduciary duties or government services they are due. It's typically used to shore up other fraud counts, but increasingly has been used as a primary count as well.

Orwig, who didn't recall using the charge when he was a U.S. attorney, said he thinks the section has been "over-used." It was the lead charge lodged by U.S. attorney offices against 79 suspects in fiscal year 2007, up from 63 in 2005 and 28 in 2000. (The Justice Department doesn't consistently track it as a secondary charge.)

Eric Holder's Justice Department at work! For more on the ethically challenged world of Eric Holder , Rod Blagojevich ,and Chicago Mob boss John "No Nose" DiFronzo.