SCOTUS continues to curtail prosecutors

On June 26, 2024, the Supreme Court of the United States (SCOTUS) held in Snyder v. United States that 18 U.S.C. § 666 does not apply to gratuities—even those that raise eyebrows and ethical concerns. The federal statute prohibits public officials, including most state and local officials, from "corruptly" soliciting, accepting or agreeing to accept "anything of value from any person, intending to be influenced or rewarded" in connection with an official business or transaction worth US$5,000 or more. 18 U.S.C. § 666(a)(1)(B) and (b). Indisputably, § 666 prohibits public officials from accepting bribes, that is “payments made or agreed to before an official act in order to influence the official with respect to that future official act.” Courts had long been split regarding whether § 666 applied to gratuities—“payments made to an official after an official act as a token of appreciation.” But SCOTUS has now determined that federal prosecution of gratuity payments was an inappropriate application of § 666 because it would leave many—mailman receiving a family’s holiday tip or a public school teacher accepting a gift basket from a student's parents—wondering whether the federal law applied to their conduct. SCOTUS emphasized, yet again, that when imposing criminal repercussions, a defendant should never be left in doubt. 

Snyder involved a former city mayor in Indiana who, while mayor, was involved in awarding two contracts to a local truck company, and ultimately, the city purchased five trash trucks for about US$1.1 million. The following year, the truck company cut the then-mayor a check for US$13,000. The mayor argued that he received the check for "consulting services" performed for the trucking company, but federal prosecutors alleged that the payment was a § 666-prohibited gratuity. The mayor was convicted and sentenced to one year and nine months in prison. On appeal, the mayor argued that § 666 criminalizes only bribes, not gratuities. SCOTUS agreed for the following six reasons:

1. Statutory text: The Court found that § 666 is more aligned with federal bribery statutes, which have a similar state of mind requirement, than federal gratuity statutes, which as discussed further below, carries a much lower maximum sentence.
2. Statutory history: Two years after Congress enacted § 666, it enacted an amendment to ensure there was no "possible application to acceptable commercial and business practices." The Court interpreted Congress's amendment as an intention to change the law and thereby model it on the bribery prohibition for federal officials, rather than on the gratuity prohibition for federal officials.
3. Statutory structure: § 666 lacks a separate gratuities provision and is, therefore, a bribery statute rather than "a two-for-one bribery-and-gratuities statute."
4. Statutory punishments: The Court noted the disparity in punishments between the bribery prohibition for federal officials and the gratuity prohibition for federal officials. The bribery prohibition makes acceptance of a bribe by a federal official punishable by up to 15 years in prison, whereas the gratuity prohibition makes acceptance of an illegal gratuity by such official punishable by only a maximum of two years' imprisonment. Violation of § 666 is punishable by up to ten years in prison. Sentencing under § 666 is more in line with the bribery rather than the gratuity statute for federal officials.
5. Federalism: Interpretation of § 666 as a gratuities statute "would significantly infringe on bedrock federalism principles." State and local governments have long enjoyed the ability to adopt their own approach to the regulation of state and local officials' acceptance of gratuities.
6. Fair notice: The Court worried about the lack of guidance between gratuities that are "innocuous" and the more-serious criminal gratuity. Without guidance on how to distinguish between the two, the Court refused to interpret § 666 as a gratuities statute to "create traps" for officials.

The Court highlighted the importance of the timing of the agreement, not the payment. Under § 666, an official is still prevented from skirting punishment by making an agreement before the act to be “rewarded,” but accepting payment after the act claiming it as a gratuity.

In a concurring opinion, Justice Gorsuch underscored that “any fair reader of this statute would be left with a reasonable doubt about whether it covers the defendant’s charged conduct.” When that happens, he continued, “judges are bound by the ancient rule of lenity” to decide “not for the prosecutor, but for the presumptively free individual.” In other words, when in doubt don’t charge.

Takeaways

Snyder follows a recent trend towards curtailing federal prosecutors broad interpretations of federal anti-corruption laws, which is running parallel with the curtailment of the almost unfettered powers of federal agencies in decision like SEC v. Jarkesy, 603 U.S. __ (2024) (limiting SEC powers) and Loper v. Raimondo, 603 U.S. __ (2024) (overruling the Chevron doctrine, which had Courts give deference to federal agencies previously considered “experts” in their respective fields). The last session of SCOTUS also brought a pair of unanimous decisions vacating the federal fraud and corruption conviction of two New York State political operatives and limiting the scope of honest-services wire fraud. Ciminelli v. United States, 598 U.S. 306 (2023), and Percoco v. United States, 598 U.S. 319 (2023). In Percoco, the Court rejected the idea that a private citizen who may have some control or domination over decisions of government officials can violate “the intangible right of honest services” in the federal wire fraud statute. Similarly, in Ciminelli, the Supreme Court rejected an expansive property-deprivation theory of wire-fraud liability.

A few years prior, in 2020, in a unanimous decision, SCOTUS overturned the convictions of two defendants in the “Bridgegate” scandal involving the shutdown of the George Washington Bridge to punish a political opponent in an adjacent town. In Kelly v. United States, 590 U.S. 391 (2020), the Court found that, while perhaps there was an abuse of power, the defendant’s actions were not a federal crime, and the defendants’ convictions were overturned.

The Court’s messaging is clear: where federal statutes do not expressly prohibit conduct, it is not up to federal prosecutors to fill the gaps. It remains to be seen if the Department of Justice will recalibrate some of its more ambitious corruption prosecutions, having seen its theories repeatedly rebuked by the Court. An important caveat to Snyder (and the other decisions) is that state and local governments still have the right to regulate gratuities and state and local officials should remain mindful of state and local regulations.

A special thanks to New York Associate Sarah Perlin for contributions to this legal update.