I recently wrote this letter to a judge who will be sentencing a man who recently was convicted of “honest services fraud,” which is based upon a “law” that I believe is unjust and immoral. (I have written about this “law” here.) The names of the judge and the man being sentenced have been omitted.
I am writing in connection with the recent conviction of "Mr. X" on the charges of "honest services fraud" and "money laundering." While I am an economist (I am an associate professor of economics at Frostburg State University in Maryland), I also have spent many years writing specifically on federal criminal law and especially so-called white-collar crime. My work has been published in academic journals and magazines such as Reason.
First, I need to say that any conviction for "honest services fraud" troubles me. If there is a vague criminal statute on the books, this is it. If there is a criminal statute on the books that is, de facto, an ex post facto law, this is it. About a week ago, "Mr. X," after reading some of my work on "honest services fraud," emailed me and asked if I would write this letter. I’m not receiving a penny of compensation for this, but am doing it, instead, because I am fully convinced that any conviction under "honest services fraud" is unjust and is an affront to our Constitution and the rule of law.
I say this because there is no real hard and fast definition of "honest services fraud." For example, I am writing this letter in my university office on a university computer. I am using my university stationery and letterhead, and one can argue this falls into the scope of what I do, given I have published academic articles on the subject of federal law. A prosecutor who wished to indict me for "honest services fraud" could jump on this and say that I am providing "dishonest services" to my employer.
Have you ever made a personal call while at work? Have you "surfed" the Internet while at your desk to find sports scores or to purchase something for your private use? If so, an enterprising federal prosecutor could try to indict you, although I doubt that would be the case.
For that matter, I highly doubt that your representative in Congress has fully read any of the bills on which he or she has voted, yet I have seen people indicted and convicted for "honest services fraud" because those people had not read every word in every legal document they had signed. Why is no one from Congress indicted? Let’s call it, "professional courtesy."
Second, the U.S. Supreme Court has decided to hear an "honest services fraud" case (involving Conrad Black), and at least some of the justices have publicly said they are troubled by the implications of this very, very vague law (if we can call it "law," as it goes against every principle for which people like William Blackstone stood).
In other words, "Mr. X" very well might have been convicted of a law that really is not a law and might be struck down by the court, which should trouble everyone involved. (Of course, the "money laundering" statutes automatically kick in when there is a "fraud" case involving money. The idea that the feds pile one law upon another for a single act also troubles me and I believe such actions also are affronts to the Constitution and everything for which the rule of law once stood.)
All too often, federal criminal law is little more than a conviction awaiting someone to be charged. As the economy tanks, we now see federal prosecutors effectively criminalizing business failure when, in reality, much of what we see in many cases such as that of "Mr. X" is a situation in which the financial risks that might have made sense when taken in a financial boom turn into huge liabilities in a downturn. An economist already has testified to you that as much as anything, "Mr. X’s" business failure was more due to the general economy than any "fraud" on his part — if there was any fraud at all.
When recessions happen, unfortunately, enterprising federal prosecutors are all-too-eager to claim that a normal business failure really was the result of fraud, and because they have "laws" that permit them to criminalize just about anything, they usually win what I believe are unjust convictions in court. Thus, a case in which people were up front about their finances suddenly turns into "fraud," not because real-live fraud was committed, but rather because the failure was more spectacular.
Now, let me give you another example. This past year, my pension, which is run by administrators in charge of our pension system, lost 25 percent of its value. Now, this is a major loss to many of us in the Maryland university system, yet I don’t see any federal prosecutors hauling our pension administrators off in handcuffs and chains. Substantively, there really is no difference between our pension losses and the losses suffered by "Mr. X" and others in this particular set of business deals. Both sets of losses were due to the steep economic downturn.
So why do prosecutors go after one person and not another? It is that modern phenomenon we know as "selective prosecution." As one trained in the law for many years, you know that historically, "selective prosecution" has been looked down upon by those people who truly cared about rule of law. As a layperson, all I can say is that a regime of "selective prosecution" is an immoral regime. It is not right; it goes against everything we have been taught in our lives about rightness and fairness and the law itself.
Yes, I know that when "Mr. X" was doing well, he spent a lot of money, drove nice cars, and went to Las Vegas. Yet, college professors also go to conferences in Las Vegas and spend university money. (I have gone to a couple conferences there, myself.) Does traveling to Las Vegas make someone a criminal or somehow demonstrates that a person who did so should be sentenced to a long prison term? As far as I am concerned, what "Mr. X" did with the money he made in previous deals is a non sequitur when it comes to dealing with the issues at hand, even if the press makes a big deal out of it.
As I have stated before, I do not know “Mr. X,” nor is he paying me to write this letter. I am doing it because I do not want to see one human being going to prison after being convicted of breaking a law that is so vague and so expansive that every one of us could be put in the dock for violating it.
The great civil libertarian and attorney Harvey Silverglate recently published a new book, Three Felonies a Day, and if you have not read it, I would highly recommend it to you. Mr. Silverglate is a friend and has been a mentor to me for many years, and he takes a very jaundiced view of "honest services fraud" and all that it entails, which means that I have some very wise company in expressing my views against this unjust law.
Thank you for taking time to read this letter. I do hope that it will influence you as you face the very difficult task of sending "Mr. X" to prison.