I was reading a White Collar Crime Prof Blog's summary here of the two "honest services" cases argued before the Supreme Court today and was struck by the report that the Justices' concerns are so strikingly similar to concerns expressed by courts as to the amorphous reach of the tax obstruction crimes (§ 7212(a) and the Klein / Defraud Conspiracy in 18 USC § 371. In part material, the WCCPB summary includes the following:
4. Two primary concerns stand out from today's argument: (1) all justices expressed unease with identifying what sort of "bad conduct" is covered by the statute in the absence of any meaningful guidance from Congress; and (2) the Solicitor General's proposed test is not going to sufficiently narrow the statute. No one, in fact, seemed particularly inclined to adopt the SG's interpretation of the statute. At one point, Justice Breyer suggested that 140,000,000 people throughout the country had probably violated the honest services law as the SG described it, by fibbing to an employer in order to do something his or her boss wouldn't like. Justice Scalia described a similar scenario in which an employee tells the boss he is going to work hard all afternoon if the boss leaves him alone, but makes this misstatement so the boss will go away and he can sit at his desk and read the racing form. The government had a very hard time explaining why this conduct would not fall within the statute as it had defined it, and ultimately suggested that prosecutors wouldn't bring those sort of cases and/or jurors wouldn't convict. That answer did not engender a positive response. No one seemed comfortable with leaving such broad, undefined discretion in the hands of prosecutors and juries.
I discuss this genre of concern in my article on the tax obstruction crimes -- John A. Townsend, Tax Obstruction Crimes: Is Making the IRS's Job Harder Enough?, 9 Hous. Bus. & Tax L.J. 260 (2009). The article may be reviewed or downloaded here, and the related online appendix may be reviewed or downloaded here. Two prominent cases discuss this concern in the context of the defraud conspiracy (the Klein conspiracy in a tax setting): Hammerschmidt v. United States, 265 U.S. 182 (1924) and United States v. Caldwell, 989 F.2d 1056, 1058 (9th Cir. 1993). If this concern continues into the decisions in the pending Supreme Court cases, we might see some real and very helpful restrictions on the Government's imagination as to the expansive scope of the tax obstruction crimes. Stay tuned!
Update on 12/12/2009: I refer readers to Tom Kirkendall's Houston Clear Thinkers discussion here of Jeff Skilling (Enron fame) SCOTUS brief on honest services fraud and recommend readers with the inclination substitute Tax Obstructions Statutes for the Honest Services Statute. Frightening!
4. Two primary concerns stand out from today's argument: (1) all justices expressed unease with identifying what sort of "bad conduct" is covered by the statute in the absence of any meaningful guidance from Congress; and (2) the Solicitor General's proposed test is not going to sufficiently narrow the statute. No one, in fact, seemed particularly inclined to adopt the SG's interpretation of the statute. At one point, Justice Breyer suggested that 140,000,000 people throughout the country had probably violated the honest services law as the SG described it, by fibbing to an employer in order to do something his or her boss wouldn't like. Justice Scalia described a similar scenario in which an employee tells the boss he is going to work hard all afternoon if the boss leaves him alone, but makes this misstatement so the boss will go away and he can sit at his desk and read the racing form. The government had a very hard time explaining why this conduct would not fall within the statute as it had defined it, and ultimately suggested that prosecutors wouldn't bring those sort of cases and/or jurors wouldn't convict. That answer did not engender a positive response. No one seemed comfortable with leaving such broad, undefined discretion in the hands of prosecutors and juries.
I discuss this genre of concern in my article on the tax obstruction crimes -- John A. Townsend, Tax Obstruction Crimes: Is Making the IRS's Job Harder Enough?, 9 Hous. Bus. & Tax L.J. 260 (2009). The article may be reviewed or downloaded here, and the related online appendix may be reviewed or downloaded here. Two prominent cases discuss this concern in the context of the defraud conspiracy (the Klein conspiracy in a tax setting): Hammerschmidt v. United States, 265 U.S. 182 (1924) and United States v. Caldwell, 989 F.2d 1056, 1058 (9th Cir. 1993). If this concern continues into the decisions in the pending Supreme Court cases, we might see some real and very helpful restrictions on the Government's imagination as to the expansive scope of the tax obstruction crimes. Stay tuned!
Update on 12/12/2009: I refer readers to Tom Kirkendall's Houston Clear Thinkers discussion here of Jeff Skilling (Enron fame) SCOTUS brief on honest services fraud and recommend readers with the inclination substitute Tax Obstructions Statutes for the Honest Services Statute. Frightening!
Source : http://federaltaxcrimes.blogspot.com/2009/12/honest-services-supreme-court-cases.html
Posted by : Jack Townsend
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