Supreme Court decision weakens federal corruption enforcement on local officials

The U.S. Supreme Court’s recent decision in Snyder v. United States is the latest in a series of decisions protecting white-collar defendants and narrowing federal statutes used in such prosecutions. In 2020, in Kelly v. United States, the so-called “Bridgegate” case involving the closing down of highway lanes to punish a political rival in New Jersey, Justice Elana Kagan wrote, in finding the defendant’s conduct outside the scope of the criminal statute, that the “evidence the jury heard no doubt shows wrongdoing – deception, corruption, abuse of power. But the federal fraud statutes at issue do not criminalize all such conduct.” This reflects a major theme of the Supreme Court’s recent decisions in high-profile white-collar cases in which the Court has been highly protective of white-collar defendants in consistently ruling that conduct, even when it seems clearly wrongful, falls outside the scope of federal criminal law.

The most recent example of this trend was the Court’s decision last month in Snyder, which created a potentially significant gap in federal corruption enforcement against local and state officials. In Snyder, the Court ruled that the federal antibribery law did not bar a local official from receiving a gratuity, meaning a payment to the public official after an official act, as a token of appreciation or reward.

The Snyder case involved a local trucking company that wrote a check for $13,000 to the mayor of Portage, Indiana, after the town awarded two trucking contracts to the company. Although the mayor, James Snyder, claimed that the money was for consulting services, a federal jury disagreed and convicted him, under 18 U.S.C. 666(a)(1)(B), which criminalizes any official who “corruptly solicits or demands for the benefit of any person, or accepts or agrees to accept, anything of value from any person, intending to be influenced or rewarded in connection with any business, transaction, or series of transactions of such organization, government, or agency involving any thing of value of $5,000 or more.” The federal district court judge sentenced Snyder to a year and nine months in prison. The Seventh Circuit affirmed Snyder’s conviction.

Snyder appealed to the Supreme Court, arguing that the statute criminalized only bribes, meaning payments before the official acts in order to influence the public official, but did not criminalize gratuities, meaning payments after the official acts, so long as there is no quid pro quo. The Supreme Court, with Justice Brett Kavanaugh delivering the majority opinion in a 6-3 decision, ruled that the statute did not criminalize gratuities to state and local officials that may be given as a “token of appreciation after the official act.” The Court ruled that the law did not create such federal criminal liability, although the states and local governments could still regulate and punish such gratuities.

Justice Ketanji Jackson, joined by Justices Sonia Sotomayor and Kagan, dissented from the majority opinion in Snyder. Justice Jackson’s dissent explained that “[o]fficials who use their public positions for private gain threaten the integrity of our most important institutions” and strongly disagreed with the majority’s narrow reading of the statute. The dissent asserted that the plain language of the statute criminalizes “local officials who corruptly solicit, accept, or agree to accept rewards in connection with official business worth over a certain amount.” Indicative of this broader trend in white-collar cases, the final section of the dissent argues “the real bone the majority has to pick with [the statute] is its concern about overregulation.”

Although there remain robust bribery federal statutes on the books, and a gratuity for a federal official remains criminal under a separate federal statute, the Supreme Court’s decision in Snyder effectively eliminates federal criminal liability for such gratuities to state and local officials. The Snyder case involved a gift of $13,000. But there is nothing under federal law to stop entities and individuals from giving even larger gifts, for example, multiples of that amount, to show their “appreciation” for official acts. So long as there is no agreement in advance, even very large gratuities would not violate federal law.

The Snyder case is the latest in a trend in which the Supreme Court has been a hospitable place for, and very protective of, white-collar defendants, specifically, in drawing lines between conduct that may be wrongful but that is not criminal.

For example, in 2010, in Skilling v. United States, the Supreme Court narrowed the scope of the Honest Services Fraud statute, holding the conduct of the former CEO of Enron Corporation outside the scope of the statute, which the Court narrowed to include only bribes and kickbacks, but not fraud. In Kelly (the Bridgegate case), the Supreme Court vacated convictions under the wire fraud and federal program fraud statutes for two New Jersey officials, holding their conduct was outside the scope of the statute because their object was not to obtain money or property.

Finally, in 2016, in McDonnell v. United States, the Court vacated the bribery convictions for the former governor of Virginia, narrowing the meaning of an “official act” under the bribery statute, so that it did not include actions such as setting up a meeting, calling another public official, or hosting an event.

Each of these cases, along with Snyder, show the Court narrowing the scope of federal criminal liability. Next term, the Supreme Court will hear another white-collar case, Kousisis v. United States, which involves the scope of the fraudulent inducement theory of mail fraud and wire fraud statutes. If Snyder and the other recent cases are of any predictive value, it seems that the Court would be poised to narrow the scope of that statute as well.