NRPLUS MEMBER ARTICLE F ormer president Donald Trump is adrift in a sea of legal jeopardy, which he will have to navigate through the Republican presidential-nomination campaign — tugging the GOP and the country along for the ride.
As Rich Lowry and I discussed on our podcast this week, the debates kick off in August, precisely when Fulton County district attorney Fani Willis has asked the court to clear its decks in preparation for likely indictments against Trump and others in connection with Georgia’s 2020 presidential election. On October 3, Trump and his adult children face the start of a major civil-fraud trial brought by New York attorney general Letitia James. Meantime, a state judge in Manhattan has set March 25, 2024, as the commencement date for Trump’s criminal trial on charges brought by District Attorney Alvin Bragg that he falsified business records to conceal hush-money payments to a porn star. That’s in the middle of the primaries — just two weeks after Super Tuesday, in fact. And as this is written, reports suggest that, any day now, the Biden Justice Department’s special counsel, Jack Smith, could indict Trump for obstructing the grand jury’s investigation of his retention of classified documents at Mar-a-Lago.
There isn’t much good news on these and other legal fronts for the former president. Except, that is, for the ray of sunshine he indirectly got earlier this month when the Supreme Court threw out fraud and corruption convictions against two cronies of New York’s disgraced former governor, Andrew Cuomo. The rulings, issued the same day in the closely related cases of Joseph Percoco and Louis Ciminelli, make it significantly less likely that Trump will be indicted in connection with the event that Democrats most want him charged over: the January 6 Capitol riot that capped off his condemnable attempts to prevent Congress from ratifying now-president Joe Biden’s Electoral College victory.
Corruption Allegations against Cuomo’s Cronies
Percoco and Ciminelli were defendants in a major 2018 prosecution, popularly referred to as the “Buffalo Billion” case, brought by the U.S. attorney’s office for the Southern District of New York (SDNY), which is famously aggressive in pushing the boundaries of fraud statutes (and where, incidentally, I was a prosecutor for close to 20 years until 2003).
An intimate, influential friend of Cuomo’s, Percoco served as the then-governor’s executive deputy secretary from 2011 to 2016. There was an important eight-month hiatus during that tenure, though: In 2014, he left Cuomo’s administration (at least formally) to run the governor’s reelection campaign. As all expected, he returned to his administration post in December 2014, right after Cuomo won. During the hiatus months, however, Percoco accepted payments totaling $35,000 from a real-estate developer, Steven Aiello, to lobby a state agency so that Aiello could avoid entering a “peace agreement” with local labor unions as a precondition for scoring a profitable state contract.
Based on this, Percoco was eventually convicted of committing fraud. Prosecutors theorized that he had violated his fiduciary duty to provide others their “intangible right to honest services.” But fiduciary duty to whom? Percoco was not a public official at the time he took the payments and lobbied the state. As a private citizen, what exactly were the “honest services” that he owed?
Ciminelli ran a construction company. He schemed to rig bids for lucrative contracts in Cuomo’s Buffalo Billion upstate-development initiative. The initiative was administered by a nonprofit called the Fort Schuyler Management Corporation (FSMC). The SDNY’s investigation uncovered that Alain Kaloyeros, who was the founding president of the State University of New York’s Polytechnic Institute, had a seat on the FSMC and a prominent role in overseeing Buffalo Billion projects. That was because, every month, Kaloyeros paid $25,000 to Todd Howe, an influential lobbyist. Ciminelli’s company also paid Howe over $100,000 per year to help it get state-funded projects. As things naturally go in Albany, Ciminelli, Howe, and Kaloyeros conjured up a set of proposal standards for state contacts that were perfectly tailored to Ciminelli’s company. That guaranteed Ciminelli the inside track on jobs for which he bid (and, of course, was selected), such as the $750 million “Riverbend project” in Buffalo.
When their arrangement came to light, the SDNY indicted Ciminelli, Howe, and Kaloyeros for fraud. Yet, who was defrauded, and how? As in Percoco’s case, no victim was duped out of money or tangible property. Relying on Second Circuit jurisprudence tracing to the early 1990s, however, prosecutors pressed the theory that Ciminelli and his co-defendants had violated another intangible right, similar to the “honest services” at issue in Percoco’s case: the property owner’s supposed “right to control” its assets, which is said to be harmed when the owner is “deprived of information necessary to make discretionary economic decisions.” Under this theory, even though Ciminelli was a private contractor who was dealing with an FSMC board member (Kaloyeros), it was his duty to ensure that FSMC as an institution was informed about the bid-rigging arrangement before awarding him contracts.
Extravagant Fraud Theories
On May 11, in both Percoco’s and Ciminelli’s cases, the Supreme Court unanimously held that federal prosecutors are not at liberty to stretch the parameters of criminal statutes to, in effect, create new crimes that Congress has never codified.
For about 80 years, the lower federal courts have put their imprimatur — though not consistently and often not coherently — on prosecutorial gambits to extend the concept of fraud to all manner of deceptive conduct. Readers may recall that I’ve been a critic of this practice, particularly with respect to the crime of conspiracy to defraud the United States — that Mueller investigation go-to, which fans of that probe and other anti-Trumpers (there’s lots of overlap in that Venn diagram) today want Special Counsel Smith to dust off for an indictment of the former president over his “stop the steal” antics after the 2020 election.
The High Court has fought against this trend, particularly since the mid-eighties, when the late, great Justice Antonin Scalia was confirmed. Scalia gradually won the Court over to the textualist view that statutes must be applied consistent with their plain language, as understood at the time of enactment. As codified in several federal statutes going back to 1872, fraud is simply a deceptive scheme to obtain money or other tangible property. It is not supposed to be a pretext for criminalizing the pursuit of intangible ends by deceptive means.
Because prosecutors and lower-court judges continued to resort to fraud charges pretextually, the Court put its foot down in McNally v. United States (1987). There, the justices overturned a fraud conviction based on the theory that some connected Kentucky pols, in rigging up a fee-sharing arrangement that they’d concealed from state officials, had schemed to defraud the state’s citizens of what was framed as their intangible right to honest government.
Congress reacted to McNally the following year by attempting to clarify the meaning of fraud in federal statutes. The traditional understanding of fraud (deceptive schemes to obtain money or tangible property) was plain enough. In addition, lawmakers undertook to reinstate the narrow addition to traditional fraud that was at issue in McNally: honest government. To that end, they changed the statutory definition of fraud so that it would henceforth expressly include “a scheme or artifice to deprive another of the intangible right of honest services.”
This nod to the principle that Congress, not prosecutors and courts, must define crimes, was welcome. As we shall see, however, the term honest services remains plagued by vagueness.
Still, the post-McNally amendment was salutary. Besides honest services, there had been various other extravagant fraud theories floating around prosecutors’ offices and the lower federal courts. Yet, Congress codified only honest services as an addition to traditional fraud. Ergo, the Justice Department and judges should have deduced that lawmakers had not approved various other theories of fraud that prosecutors had concocted over the years — such as fraudulent denial of the right to honest elections and the right to privacy. That is, it should have been clear that federal criminal law covered only traditional fraud and Congress’s narrow honest-services add-on. Any other pioneering in this terrain would have to be done by the Article I branch vested with the Constitution’s lawmaking power, not by Article II executive officials (prosecutors) and Article III judges.
Nevertheless, post-McNally, the Second Circuit (which covers federal districts in New York, Connecticut, and Vermont) developed a new fraud theory based on another intangible interest: the aforementioned “right to control,” eventually relied on by SDNY prosecutors in Ciminelli’s case. The circuit reasoned (in a 1991 case called Wallach) that a defining feature of most physical property is the owner’s right to control it; according to the theory, this right is sabotaged if the owner is deprived “of information necessary to make discretionary economic decisions.”
The Supreme Court’s New Rulings
Until Ciminelli, the Second Circuit’s “right to control” theory had evaded review by the Supreme Court, even though some other circuits had rejected or questioned it. But when the SDNY prosecutors relied on it to indict Ciminelli’s bid-rigging scheme, the trial judge sustained the theory over defense objections. The judge further instructed the jury that it could convict Ciminelli based on the right-to-control theory, and the Second Circuit upheld the conviction in reliance on its relevant precedents.
Now, in an opinion written by Justice Clarence Thomas, the Court has unanimously reversed Ciminelli’s conviction. The justices emphasized that — outside of the statutory honest-services exception, which was not at issue in Ciminelli’s case — the deception targeted by fraud statutes is limited to the basic, common understanding of fraud: an artifice to acquire money or tangible property.
As for the honest-services theory codified post-McNally, which was the basis for Percoco’s SDNY conviction, it has been a source of headaches since its enactment in 1988. These were laid out in a typically memorable Scalia opinion in one of the Enron cases — the Jeffrey Skilling prosecution. Joined by Justices Thomas and Anthony Kennedy (who has since retired), Justice Scalia agreed with the Court’s majority opinion that Skilling’s fraud conviction had to be reversed, but on a different ground: Scalia argued that the honest-services statute was vague and thus violated Skilling’s Fifth Amendment due-process rights.
The divide here is intriguing and recurrent. When a statute is vague, a court has two choices: It can save the statute by a so-called limiting construction, so that the government is restricted to prosecuting conduct that is so obviously wrong the defendant should have realized it was criminal; or it can nullify the statute in its entirety, on the theory that it is up to Congress to prescribe the limits of statutes.
The Court tends to favor limiting constructions. In Skilling (2010), Justice Ruth Bader Ginsburg’s majority opinion — joined by three current justices: Sonia Sotomayor, Samuel Alito, and Chief Justice John Roberts — undertook to save the honest-services provision by limiting it to bribery and kickbacks. The majority reasoned that those were the well-known wrongs typically associated with violations of fiduciary duty, which tend to occur in the context of public service.
Scalia countered that it is not the Court’s job to rewrite statutes and thus define new federal crimes. He pointed out that the honest-services statute does not mention bribery and kickbacks. Nor is its application literally limited to people who are in public service — any fiduciaries will do . . . except when they won’t, Scalia acidly added in highlighting the inconsistencies of judicial freelancing. Moreover, Scalia wondered, exactly what fiduciary duty were Congress and the federal courts talking about? In crafting its honest-services statute, lawmakers relied on a slew of pre-McNally federal cases, but these cases did not address the nature, content, or source of a fiduciary duty that would give rise to a fraud prosecution. Indeed, Scalia observed, “The indefiniteness of the fiduciary duty is not all. Many courts held that some je-ne-sais-quoi beyond mere breach of fiduciary duty was needed to establish honest-services fraud,” but they couldn’t agree on that either. In sum, the post-McNally Congress was trying to codify a judicially developed concept, but the “pre-McNally cases provide[d] no clear indication of what constitutes a right to honest services.”
Flash forward 13 years: Today’s Supreme Court is more textualist, but in its reversal of Percoco’s honest-services fraud conviction, we find the same divide that was manifest in Skilling. Justice Alito was in the Skilling majority — he did not join Justice Scalia’s concurrence. No surprise, then, that in Percoco, he has written the majority opinion, which concludes that Percoco’s conviction must be vacated because his conduct did not fit the definition of honest services as the Court has narrowed it. That is, despite his political clout in Cuomo’s administration, Percoco’s acceptance of payments to lobby the state government when he was very temporarily out of his administration job did not amount to a bribe or kickback to a public official. In reaching that conclusion, Alito was joined by fellow Skilling majority members Roberts and Sotomayor, as well as Justices Elena Kagan, Brett Kavanaugh, Amy Coney Barrett, and Ketanji Brown Jackson. That is, the Court’s three progressives (Sotomayor, Kagan, and Jackson) and four of its six conservatives (Alito, Roberts, Kavanaugh, and Barrett) appear to favor narrowing constructions over nullification.
By contrast, taking up the Scalia torch, Justice Neil Gorsuch’s dissent, joined by Justice Thomas, trenchantly argues for scrapping the statute all together on void-for-vagueness grounds.
It Adds Up to No Prosecutable January 6 Case against Trump
What does all this mean for former president Trump?
Well, the Supreme Court has sent some clear signals to the Justice Department. These signals are not about Trump in particular: The two Cuomo-crony cases will not help him in the slightest on the Mar-a-Lago probe, which involves the illegal retention of national-defense secrets and, more significantly, obstructing the grand jury. But it is telling, I believe, that while Special Counsel Smith is reportedly poised to file charges against Trump on Mar-a-Lago, there is no indication that any January 6 charges are imminent, even though Smith has put a great deal of work into that investigation.
I suspect Smith can read the signals.
Not to belabor points I’ve made repeatedly, but the Justice Department has long made clear that it does not believe Trump can be held criminally culpable for the violence of the Capitol riot. If Trump were going to be indicted in connection with January 6, it would be on charges of obstructing Congress (Section 1512(c)(2)) and conspiracy to defraud the government (Section 371). Both charges would be based on a theory that he engaged in deceptive actions with the objective of undermining a lawful government function, to wit, Congress’s counting of electoral votes and ratification of the election winner (now-president Biden).
In essence, Smith would have to try to criminalize the eccentric legal theory of Trump adviser John Eastman that then-vice president Mike Pence had the unilateral authority to invalidate electoral votes certified by states that Trump wanted to contest, or at least to remand the votes so that the legislatures in those states could investigate Trump’s fraud claims — which would enable those state legislatures, controlled by Republicans, to void the popular vote in favor of Biden, then substitute their own vote in favor of Trump. The prosecutor’s theory of fraud would be that Trump knew both that his lawyer’s legal theory was harebrained and that his allegations of electoral fraud were unsubstantiated (and, to the extent there was a kernel of truth to them here or there, immaterial — i.e., insufficient to alter the result).
The Supreme Court’s recent jurisprudence (including not just the recent Percoco and Ciminelli rulings but, for example, its decisions nullifying the administrative state’s efforts to spread its regulatory tentacles without clear statutory authorization from Congress — see, e.g., here) is admonishing federal prosecutors not to get creative. Fraud is a rubric for prosecuting deceptive schemes to obtain money or tangible assets, period. It is not a license for federal prosecutors to criminalize deceptive schemes to obtain intangible, elusive benefits, such as political power. If people lie to government agencies in the course of such artifices, then yes, they can be charged with making false statements — a felony. But if prosecutors can’t prove such actionable lies, then it is not in their power to craft vague “fraud” crimes because suspects have been disingenuous in pursuing some malignant goal — other than acquiring money or tangible property (including by bribery or kickbacks).
Mind you, the Court is not saying that no one can legitimately criminalize such artifices. It is simply saying that this is the job of Congress. It is not within the constitutional authority of executive-branch prosecutors, or of judges. Moreover, when Congress does it, it must be done with clarity — again, the average person must be on notice regarding exactly what conduct is prohibited.
On that score, the Court is cracking down on vagueness. There is not a consensus among even conservative justices about how extensive the crackdown must be — most would narrow vague statutes to a heartland of patently criminal conduct (as “honest-services fraud” has been chopped down to bribery and kickbacks); some would nullify these statutes in every application. But there is consensus that if a statute has an ambiguous term — especially a term so sweeping that it risks criminalizing or at least chilling constitutionally protected conduct — that statute is going to be stripped down to core criminality, if not wholly voided for vagueness.
This is bad news for January 6 prosecutions that aggressively employ the aforementioned obstruction statute, Section 1512(c)(2). We’ve seen this in examining a recent, deeply divided D.C. Circuit decision in a January 6 case, which came down before Percoco and Ciminelli. The Circuit was troubled by the term corruptly.
Americans have a right to try to influence Congress or even impede it from acting. That’s why attempts to influence Congress may not be criminalized unless the defendant acted corruptly. But what does that mean? The term suffers from the same vagueness concerns we find in cases arising under extravagant fraud theories. Violent conduct that prevents Congress from convening, or traditional obstruction crimes such as witness intimidation and document tampering, are obviously corrupt; but hyper-aggressive prosecutors could potentially stretch the concept to cover such First Amendment-protected activities as heated political speech, raucous but nonviolent assembly, or even lobbying.
For some jurists, it may not be enough to say the obstruction statute needs to be cut down to size. They may find the term corruptly is so dangerously vague, so susceptible to prosecutorial abuse that intimidates people into forfeiting their core right to political expression, that the statute should be nullified in toto. After all, patently criminal obstructive conduct is covered by other statutes; the prosecutorial mischief that Section 1512(c)(2) portends may be more trouble than it’s worth.
In any event, whatever you think of Donald Trump’s actions in connection with the January 6 gambit to retain the presidency after he lost the election (and I believe they were constitutionally impeachable as well as morally repugnant), they did not constitute a fraud scheme as codified in current law. The Supreme Court has made clear that those schemes are limited to deceptive plans to obtain money or property, including bribery or kickbacks — but nothing more — in the political realm.
However corrupt you may believe Trump’s scheme to have state-certified electoral votes invalidated was, it was based on a bad legal theory — not on violence. Again, he may be politically and morally culpable for the riot (I believe he is), but that does not make him liable under the demanding tests of the criminal law. Frivolous legal theories are a dime a dozen. No one sensible has ever believed it was necessary to criminalize them in order to discourage them. Criminalizing them, moreover, would discourage lawyers — including criminal defense lawyers representing Americans presumed innocent — from making edgy arguments that, on occasion, have merit. The Supreme Court, prudently, is not going to permit obstruction or fraud statutes to be used that way.
There may be a plethora of valid legal cases against former president Trump. I believe his continuing legal jeopardy — the foolish things he’s already done and his propensity to dig himself new holes — is disqualifying as far as his candidacy is concerned. But if the special counsel’s premise is that Trump pressed for the invalidation of electoral votes on a theory that was factually unsupported and legally untenable, that is not a basis for charging him with obstruction of Congress or defrauding the United States.
It is appropriate for the special counsel to have done a thorough investigation. Indeed, he should issue a report comprehensively outlining the former president’s malevolent conduct. But the January 6 probe of Trump should be closed without criminal charges.