Federal Prosecutors Push Boundaries of Illegal Gratuities Statute

 Justice Scalia’s opinion for a unanimous Court in U.S. v. Sun-Diamond Growers, 526 U.S. 398 (1999), begins dryly with the observation: “Talmudic sages believed that judges who accepted bribes would be punished by eventually losing all knowledge of the divine law.  The Federal Government, dealing with many public officials who are not judges, and with at least some judges for whom this sanction holds no terror, has constructed a framework of human laws and regulations defining various sorts of impermissible gifts, and punishing those who give or receive them with administrative sanctions, fines and incarceration.” 

Sun-Diamond involved a trade association which was convicted of having provided former Secretary of Agriculture Mike Espy “approximately $5,900 in illegal gratuities,” including tickets to the U.S. Open tennis tournament, luggage, meals and a crystal bowl.  These gifts were alleged to have violated the illegal gratuities statute, which prohibits giving anything of value to a public official “for or because of any official act performed or to be performed by such public official.” 

The Supreme Court reversed the conviction.  Although the indictment alleged that there were two matters in which the trade association had an interest pending before Espy at the time the gifts were given, there was no allegation of a specific connection between either of them and the gifts.  Instead, the instructions permitted the jury to convict if it found merely that the gifts were because of Espy’s official position.  As the Court noted, these instructions would permit conviction if the jury found the gifts were designed “to build a reservoir of goodwill that might ultimately affect one or more of a multitude of unspecified acts, now and in the future.”  Moreover, the prosecution’s theory would lead to ridiculous results, such as “criminalize[ing] a high school principal’s gift of a school baseball cap to the Secretary of Education, by reason of his office, on the occasion of the latter’s visit to the school.”  The Court therefore rejected the government’s position in favor of a narrow reading of the statute.  

After Sun-Diamond, prosecutors could only charge under the illegal gratuities statute if they could prove a link between a thing of value conferred on a public official and a specific “official act” for or because of which it was given.  Combined with a subsequent decision of the D.C. Circuit, Valdes v. United States, 475 F.3d 1319 (D.C. Cir. 2007) (en banc), which narrowed the definition of “official act” to mean only formal actions connected to a “class of questions or matters whose answer or disposition is determined by the government,” Sun-Diamond made it extremely difficult to prosecute under the illegal gratuities statute.  Indeed, the Campaign Legal Center recently described the law as “toothless.” 

One consequence of these judicial decisions is that prosecutors have increasingly turned to “honest services fraud” as an alternative to charging illegal gratuities.  Without getting into the details of an honest services case (a controversial issue which may be the subject of a future post), an honest services count will typically allege that a public official received a stream of things of value in order to deprive the public of its right to the honest services of that official.  For example, last year’s indictment of Abramoff associate Kevin Ring alleged that Ring and other Abramoff conspirators “attempted to groom . . . public officials by offering and providing things of value with the intent of making those public officials more receptive to requests for official actions on behalf of their clients in the future.”  In other words, the honest services charge can be used to accomplish exactly what the Supreme Court said in Sun-Diamond could not be accomplished with the illegal gratuities statute. 

However, last week’s indictment of former congressional staffer named Frasier Verrusio, who worked for Representative Don Young as the Policy Director of the House Transportation Committee, contains no honest fraud count.  Perhaps this is because Verrusio is not alleged to have received a stream of things of value over time.  All of the gifts that Verrusio is alleged to have received were in the course of one all-expenses paid trip to New York for Game One of the 2003 World Series.   The indictment charges instead that Verrusio violated the illegal gratuities statute by accepting these gifts.

The indictment alleges that on October 17, 2003, Verrusio accepted an invitation from James Hirni, a lobbyist, to attend the World Series game.Hirni arranged for Verrusio to fly to New York on October 18 (cost $228.50), attend the game (cost $110) and stay overnight at a hotel (cost $300).During this trip, Verrusio and a Senate staffer named Trevor Blackann were entertained by Hirni and one of Hirni’s clients, an official from an unidentified “Equipment Rental Company” which had an interest in the Federal Highway Bill then pending before Verrusio’s committee.They were transported in a chauffeured SUV (cost $275 per person), taken to dinner ($115 per person) and a strip club ($150 per person), and Verrusio received a souvenir baseball jersey ($130).The indictment values all of the gifts received by Verrusio at about $1,300.


So how does the indictment establish that these gifts were “for or because of” an official act by Verrusio?The answer is somewhat murky.Equipment Rental Company had hired Hirni and his firm to seek three amendments to the Federal Highway Bill in August 2003, but the fact that Verrusio’s committee had a matter pending before it in which Equipment Rental Company had an interest does not make this case any different than Sun-Diamond.Indeed, it is not even clear from the indictment that Verrusio knew of this interest prior to accepting the invitation to the World Series game.The indictment does not allege any communication to Verrusio about the matter prior to the dinner in New York on October 18, when Verrusio, Blackann, Hirni, and the Equipment Rental official “discussed the Federal Highway Bill and Equipment Rental Company.”The indictment does not allege, however, that Verrusio was asked to take any particular action at that time.

To be sure, a reasonable person can infer from the circumstances that the gifts to Verrusio were for one or more of the following purposes: (1) to gain access to Verrusio (and Blackann) during the trip so that the interests of Equipment Rental Company could be discussed; (2) to build goodwill on Verrusio’s part toward Hirni and Equipment Rental Company; and (3) to encourage Verrusio to take favorable actions on the amendments desired by Equipment Rental Company during consideration of the Federal Highway Bill.However, none of these purposes (and certainly not the first two) appear to be sufficient under Sun-Diamond to violate the gratuities law.

Moreover, the allegations regarding Verrusio’s actions after the trip do not tend to establish any connection between the trip and a specific official act.The indictment alleges that on October 22, “Hirni emailed to [Verrusio] information about the three amendments that Equipment Rental Company was seeking to insert in the Federal Highway Bill.”On October 27, Verrusio replied, “apologizing for not responding sooner to Hirni’s October 22 email . . . [and] telling him that the amendments needed more work ‘for anyone to be able to help with progress . . . .’”This sounds more like a polite blow-off than anything else.

The indictment does not suggest that Verrusio ever did “help with progress” on the amendments.The three amendments were inserted into the Senate version of the Federal Highway Bill, but Verrusio, according to the indictment, did not play a role in this.The indictment does allege that Verrusio played a role in “protecting” the amendments after they had been inserted, but the only acts attributed to Verrusio in this regard was that he “suggested” to Hirni and his lobbying partner that they organize a letter writing campaign to counter the efforts of a rival industry group to strip the amendments out of the bill. It seems highly dubious that this “suggestion” qualifies as an “official act” under Valdes or that the gifts received by Verrusio were “for or because of” this act within the meaning of Sun-Diamond.

Legal analysis aside, there is something troubling about Verrusio’s prosecution here.There can be no question that Verrusio exercised extremely poor judgment, at best, in deciding to accept Hirni’s offer of a trip to the World Series.But in the absence of any evidence that Verrusio was asked to perform any official acts in connection with the gifts, or that he actually did perform any official acts for the benefit of Hirni or Equipment Rental Company, it seems hard to understand why prosecutors would treat this single incident as a criminal matter.

As Justice Scalia recognized in Sun-Diamondfederal law provides an intricate set of rules regarding permissible and impermissible gifts, and it would be contrary to this scheme to construe the illegal gratuities statute so broadly as to subsume all of these rules within it.Moreover, a broad reading of the statute would mean that nothing but the government’s discretion would prevent prosecutions of any Member of Congress or staff who received a gift from persons with interests in legislation before them.

As federal prosecutors have no special knowledge of the divine law, it is best not to tempt them with such discretion.