Legal rulings coming soon from the U.S. Supreme Court could cut to the heart of a federal probe into a powerful Maryland state senator and affect the years-old convictions of top state lobbyists.
If the court overturns a federal mail fraud statute often used in public corruption cases, investigations under way in Maryland and across the country could be tossed, and previous convictions could be overturned. Many legal observers who watch the court closely believe that, at the very least, new limits on how the law may be used are forthcoming.
At issue is a 1988 addition to the federal mail fraud statute known as "honest services," a broad theory that says officials are legally bound to act in their constituents' best interests. The statute is appealing to prosecutors because they do not have to show that money or goods were stolen to prove wrongdoing; they need only show that a person's behavior denied citizens or employers the "intangible right of honest services."
The theory has been successfully used in recent years against former Connecticut Gov. John G. Rowland and former Illinois Gov. George Ryan, both Republicans. It has also been applied in the private sector, with prosecutors using it to convict lobbyist Jack Abramoff and former Enron chief executive Jeffrey K. Skilling.
In Maryland, it was used to convict prominent lobbyists Bruce C. Bereano and Gerard E. Evans, both of whom have made comebacks in Annapolis. It is thought to be at the center of a probe into state Sen. Ulysses Currie, being investigated for using his influence to help a supermarket company who hired him and failing to disclose the relationship.
"It has become the principal federal statute in economic crimes and for public corruption cases," said Peter J. Henning, a law professor at Wayne State University in Detroit who specializes in white-collar crime. "It is very flexible."
The flexibility is exactly what some on the court find troubling. Supreme Court Justice Antonin Scalia wrote recently that honest services is "an expansive phrase" that "invites abuse by headline-grabbing prosecutors."
The law, Scalia wrote, has been used to make illegal "a staggeringly broad swath of behavior." Scalia suggested it could criminalize a lawmaker's decision to vote for a bill favored only by a small but powerful group in a district, a mayor who uses pull to secure a table at a restaurant and even "a salaried employee's calling in sick to go to a ball game."
The law was written by Congress in direct response to a 1987 Supreme Court decision that the mail fraud statute should be applied narrowly to cases that involve theft of money or goods. Congress immediately said that "honest services" were tangible items that should be considered in mail fraud cases.
The statute has never been tested by the Supreme Court, but the panel is now considering three cases that touch on honest services, including examining the constitutionality of Skilling's conviction on a charge that he deceived investors by drawing a falsely rosy picture of Enron's finances. The court is also looking at a case where an Alaska lawmaker helped an oil company with the promise that he would be given future legal work for the firm. The third case focuses on the private sector, examining whether the statute was too broadly used as part of a theft-related conviction against media mogul Conrad Black.
The court "could do anything from blowing it out of the water to nothing," said Henning. "The most likely outcome is they will limit its scope or limit the types of cases in which it could be used."
Maryland U.S. Attorney Rod J. Rosenstein said the statute is not frequently used in the state and rarely is the only offense charged. "The mail fraud statute traditionally has been at the center of a lot of federal fraud and corruption cases, but not all of them are based on the honest-services theory," he said. "Most of our mail fraud cases, the charge is that the victim was cheated out of money."
But there are three high-profile examples in Maryland, including the probe into Currie's dealings with the Shoppers Food and Pharmacy chain based in his Prince George's County district. In that instance, federal investigators said in an affidavit for a search warrant that the lawmaker denied "honest services" to constituents by failing to disclose that he was being paid by the company while promoting legislation on Shoppers' behalf.
While Rosenstein would not comment on the Currie investigation, he indicated that the Supreme Court rulings would affect how he pursues corruption cases.
Speaking in general terms, he said that "in any area of the law where there is any ambiguity, we try to be sure we have a theory that is not ambiguous."
Rosenstein said it would be "rare" for a case to be brought against a prominent figure with an "honest services" violation as the only charge.
In 1994, Bereano, a top Maryland lobbyist, was convicted of mail fraud for billing four clients for legislative entertainment as a way of funneling campaign contributions to candidates. In that case, he was found guilty only on the honest-services charge. He declined to be interviewed for this article.
Evans was found guilty of an honest-services charge related to bilking his clients by fabricating a phony threat of harmful legislation.
The statute is of particular interest to Maryland lawyers because former Gov. Marvin Mandel, a Democrat, was convicted under an earlier version of the theory. Mandel's conviction was overturned shortly after the Supreme Court ruled in 1987 that any case involving mail fraud should be connected to theft of money or property. Justices said at the time that the mail fraud statute "does not refer to the intangible right of the citizenry to good government."
The court's review is also being watched by the lawyers working on perhaps the country's highest-profile political corruption case, against former Democratic Illinois Gov. Rod Blagojevich.
Blagojevich's lawyers recently requested more time to prepare their defense in his corruption trial, pointing to the Supreme Court's examination of the statute and saying it was "unfair" and "silly" to go to trial before the justices make their determination. Blagojevich has been accused, among other offenses, of conspiring to sell Barack Obama's former U.S. Senate seat.
Prosecutors re-indicted Blagojevich in February, adding eight counts that contained no new information but shifted the alleged violations to racketeering statutes instead of the honest services statute. That would allow prosecutors to continue the case regardless of the Supreme Court's action.