The Supreme Court seemed receptive on Nov. 28 to arguments that federal prosecutors had gone too far in public corruption cases involving Joe Percoco, formerly a longtime aide to former New York Gov. Andrew Cuomo, and a man in a related Cuomo-era fraud case.
The case is important because the high court could decide to curb prosecutorial powers in cases brought under the federal honest-services fraud statute, which some lawyers and civil libertarians say is vague and overbroad.
Percoco argues he should not have been convicted for taking payments to influence government policy because, at the relevant time, he maintains he was only a lobbyist who held informal influence over government decision-making.
In 2018, Percoco was convicted of two counts of conspiracy to commit honest-services fraud for taking in upwards of $300,000 from companies that hoped to gain influence with the Cuomo administration. He was sentenced to six years in prison but was released two years early in 2021. Cuomo, a Democrat, resigned in 2021 over sexual harassment allegations.
Percoco had been executive deputy secretary in the governor’s office, but at the time of the payments that the government characterized as bribes, he had temporarily stepped down from the position to run Cuomo’s reelection campaign.
The Biden administration argues that despite formally leaving state employment, Percoco’s non-employee excuse was a sham because he continued to use his telephone and desk in the governor’s office and made it clear that he was assured a position with Cuomo’s administration after the election.
Percoco claims innocence, arguing that because he was not a government official at the time he accepted the funds, no corruption was involved. Percoco attacks the idea of honest-services fraud.
Federal law makes it a crime to engage in honest-services fraud, which it defines as “a scheme or artifice to deprive another of the intangible right of honest services.” Although the law was created to combat government corruption, its application isn’t limited just to government officials and can cover private citizens. The phrase “honest services” is not defined, which has allowed the courts to decide on the law’s reach.
For honest-services fraud to take place, someone must pay a bribe and someone must be harmed by it. The thinking behind the law is that the person accepting the bribe owes a duty to someone else, such as the citizenry.
Percoco’s attorney, Jacob M. Roth, told the justices during oral arguments that his client is not guilty of accepting a bribe.
The concept of bribery, which “presupposes an agent who exercises some authority on behalf of a principal,” does not apply to Percoco because “at all relevant times … [he] was a private citizen,” received no government salary, and had “no legal authority to bind the state or make decisions for it,” Roth said.
Although Percoco did have “influence drawn from years of public service, from a close relationship to the Cuomo family, and from his senior campaign role,” none of that created a fiduciary duty to the public that can serve as the basis for a bribery conviction, the lawyer said.
By trying to “stretch Section 1346,” the honest-services fraud statute, the government “strolls recklessly into a constitutional mine field.” One lower court judge “was right to call the government’s theory a catch-all political crime which has no use but misuse,” Roth said.
Justice Neil Gorsuch said that extending the concept of the legal duty was dangerous because “if you allow fiduciary duty to do this kind of work, if we write that into the statute, the concept of fiduciary duty or agency is nearly boundless.”
“I’m wondering what the limiting principle is. If … we were to reject your bright-line test of … selling services while in office, what would you have us do?”
“Is the statute constitutional in those circumstances, or is there some constitutional application we could still save … or what?” Gorsuch asked.
Justice Elena Kagan suggested that Roth’s interpretation of the law could invite people to game the system by turning off, then on, their status as government employees in order to evade the law.
“You can spin lots of different versions on it … up to the point where a public official … resigns his office every time he wants to take a bribe and then picks up his office again when he’s completed the bribe,” Kagan said.
“And there has to be something wrong with that,” she said.
Justice Ketanji Brown Jackson seemed to tell U.S. Department of Justice attorney Nicole Reaves that the government’s approach in the case was arbitrary.
“But how do you distinguish that person from a lobbyist? Lots of people leave their former employment, maybe their key card hasn’t been turned off yet, they continue to engage in relations with people that they formerly worked with,” Jackson said.
In another oral argument the same day, a lawyer for Louis Ciminelli, who was involved in the scandal-plagued “Buffalo Billion” development plan in Upstate New York when Cuomo was governor, told the justices his client was wrongly convicted.
The case grew out of the ambitious Buffalo Billion Investment Development Plan, which envisioned the construction of a solar panel factory, among other projects, and was aimed at attracting more than $8 billion in investments for Buffalo and the rest of western New York, creating nearly 14,000 jobs.
Prosecutors claimed Ciminelli and others rigged bids for state contracts worth hundreds of millions of dollars. They were convicted of conspiracy to commit wire fraud and other charges by a federal court in Manhattan in 2018.
Ciminelli claims that the right-to-control theory of fraud the government argued and the U.S. Court of Appeals for the 2nd Circuit upheld in the case, is invalid. The theory holds that the deprivation of complete and accurate information a person needs to make an economic decision constitutes property fraud.
Ciminelli attorney Michael Dreeben said the government’s theory of the case overreaches by dispensing “with a quintessential requirement of common law fraud, harm to a traditional property interest if the scheme succeeds.”
The theory “would radically expand federal law, violate federalism principles, and end-run limits on honest services fraud,” Dreeben said.
When questioned by Chief Justice John Roberts, Deputy U.S. Solicitor General Eric J. Feigin said Ciminelli’s conviction should be upheld because “the right-to-control theory … as it was applied in this case does identify cases that are traditional property fraud.”
The two cases are Percoco v. United States, court file 21-1158, and Ciminelli v. United States, court file 21-1170.
