Defendants’ honest services fraud convictions vacated

Where defendants were charged with paying an insurance commissioner to swap the person regulating one of their companies, and the district court instructed the jury that “the removal or replacement of a senior deputy commissioner by the commissioner would constitute an official act,” but this determination should have been made by the jury and the error was not harmless, the convictions were vacated.

Background

Greg E. Lindberg and John D. Gray were convicted of honest services fraud and federal funds bribery in connection with a series of payments and offers of payment, in the form of campaign contributions made to the elected North Carolina insurance commissioner. The jury found that these payments were made in exchange for him assigning a different deputy commissioner to oversee the affairs of Lindberg’s insurance companies.

Honest services fraud

The district court instructed the jury “that the removal or replacement of a senior deputy commissioner by the commissioner would constitute an official act.” In doing so, it impermissibly took an element of the crime out of the hands of the jury and violated the defendant’s Fifth and Sixth Amendment rights.

The district court erred in interpreting the “official act” inquiry to be a pure question of law. In McDonnell v. United States, 579 U.S. 550 (2016), however, the Supreme Court was clear that “[i]t is up to the jury, under the facts of the case, to determine whether the public official agreed to perform an ‘official act’ at the time of the alleged quid pro quo.” The district court also relied on two out-of-circuit cases to support its conclusion, but both comparisons are unavailing. Since the court finds that the district court’s error is not harmless, defendants’ convictions on Count One must be vacated.

Federal funds bribery

On Count Two, the district court instructed the jury to consider whether such conduct was “in connection with any business, transaction, or series of transactions” of a government agency. After reviewing the record, the court is not “confident that [the erroneous instruction on Count One] did not play any role in the jury’s verdict” on Count Two.

The government protests that the verdict on Count Two cannot have been infected by the court’s instructions on Count One because the court “separately instructed the jury on the elements of the [federal funds] bribery offense,” and “juries are presumed to follow the judge’s instructions.” But the court’s instructions on each count were not as separate as the government contends.

Further, even aside from these overlapping instructions, the jury’s consideration of Count Two may have been infected by the erroneous “official act” instruction if the jury interpreted, as some other circuits have, the “any business” requirement to be broader than the “official act” requirement. Defendants’ convictions under Count Two are also vacated.

Official act

Defendants also argue that the district court erred because it failed to instruct the jury that an “official act,” as defined by the Supreme Court, is an element of federal funds bribery. No other circuits have found occasion to read the official act requirement of 18 U.S.C. § 201 into 18 U.S.C. § 666.

Defendants maintain that the absence of the term “official act” in the text of § 666 is irrelevant because both the Hobbs Act and the honest-services fraud statute similarly do not reference the term “official act” and yet the McDonnell court “read those statutes as including an ‘official act’ requirement.” But, first, defendants “misunderstand[] the procedural posture in McDonnell.” Second, the structure and text of the Hobbs Act and the honest services fraud statute differ fundamentally from federal funds bribery. The legislative history of § 666 also does not support defendants’ argument

Nevertheless, defendants argue that McDonnell requires this court to limit the quo in § 666 to “official acts” because a broad reading of the statute raises the same “significant constitutional concerns” identified in McDonnell. The court finds that the specter of the constitutional concerns referenced by the McDonnell court are not raised by the text of § 666.

Vacated and remanded for a new trial.

Concurring opinion

Traxler, J., concurring:

The defendants here contend that prosecutions of state and local officials under § 666 raise the same constitutional concerns identified in McDonnell and that we must therefore require the government to prove in § 666 cases that the bribe involved an “official act” as defined in McDonnell. A careful analysis of the language § 666 shows that the statute is not as broad and far-reaching as the defendants fear, and I agree that the statutory guardrails identified in Judge Gregory’s opinion are sufficient to quell the constitutional concerns raised by the defendants.

United States v. Lindberg, Case Nos. 20-4470, 20-4473, June 29, 2022. 4th Cir. (Gregory), from WDNC at Statesville (Cogburn). Howard Robert Rubin for Appellants. Amy Elizabeth Ray for Appellee. VLW 022-2-155. 43 pp.