In addition to providing regular updates and insights relating to the Foreign Corrupt Practices Act and anti-corruption laws in foreign jurisdictions, we want to inform our readers of significant developments regarding U.S. domestic bribery laws. Today’s blog post discusses one such development.
In 2011, Hector Maldonado, a former Puerto Rican Senator, and Juan Fernandez, the former head of a Puerto Rican private security firm, were convicted for federal programs bribery, after a jury found Fernandez had paid for a trip to watch a championship boxing match in Las Vegas in exchange for Maldonado’s assistance to usher in two Senate bills that would benefit Fernandez’s business interests. Both men were subsequently sentenced to 4 years in prison. Last month, however, the First Circuit reversed both convictions, on grounds that the trial court’s instructions and government’s closing arguments suggested that the jury could convict based on a theory of illegal gratuities rather than bribery. In reaching that conclusion, the First Circuit became the first appellate court to hold that the federal programs bribery statute, 18 U.S.C. § 666, criminalizes only bribes and not illegal gratuities. All other appellate courts to address this issue – including the Second, Seventh, and Eighth Circuits – have interpreted that § 666 applies to both bribes and illegal gratuities.
The distinction between a bribe and an illegal gratuity is the intent of the payment. Bribery requires intent “to influence” an official act or “to be influenced” in an official act, whereas an illegal gratuity requires only that it be given or accepted “for or because of” an official act. Put another way, bribery requires evidence of a quid pro quo – a specific intent to give or receive something of value in exchange for an official act. An illegal gratuity, on the other, may constitute merely a reward for some future act that the official will take or for a past action that he has already taken.
The core federal statute that criminalizes bribery of federal public officials, 18 U.S.C. § 201, specifically prohibits bribes and illegal gratuities in separately-enumerated subsections. The federal statute that criminalizes bribery of state and local officials, 18 U.S.C. § 666, however, does not address bribes and illegal gratuities separately. Rather, § 666 prohibits “corruptly solicit[ing] or demand[ing] . . . anything of value from any person . . . intending to be influenced or rewarded in connection with any business, transaction, or series of transactions of . . . [a] government or agency involving anything of value of $5,000 or more.”
Every prior appellate court to have addressed the bribery/gratuity distinction with respect to § 666 has pointed to the statute’s use of the phrase “or rewarded” to hold that the statute prohibits illegal gratuities as well as bribes. The Fernandez court, however, rebutted that interpretation by noting that the phrase “or rewarded” could be meant not to create a separate gratuity offense, but merely to clarify that a bribe can be promised before, but paid after, the official’s action on the payor’s behalf.
The Fernandez court cited three additional reasons for its decision. First, it noted that § 666 uses the word “corruptly,” which is used in § 201’s bribery subsection, but not in § 201’s gratuity subsection. Second, it held that the maximum penalty associated with violating § 666, 10 years, is more consistent with the penalty under § 201’s bribery provision (15 years) than under the gratuity provision (2 years). And third, it concluded that if § 666 had indeed been meant to apply to both bribes and illegal gratuities, Congress would have discussed those in separate subsections, as it did in § 201.
It remains to be seen whether the Justice Department intends to seek en banc review or to appeal to the Supreme Court to address this split in authority. However, the implication of the decision – that a lower standard of conduct is to be applied for state and local officials than to federal officials – would seem to contradict any Congress whose intent was to curtail public corruption.