State prosecutors have been handing off their corruption investigations to the feds for decades—willingly and unwillingly. The U.S. Department of Justice (DOJ), with its broad subpoena power, can take fully-developed investigations away from local prosecutors, often with the blessing of federal judges. The rationale for having the DOJ—rather than local district attorneys and attorneys general—prosecute local corruption has been, in a nutshell, that elected state prosecutors are less likely to vigorously prosecute corrupt cronies who may have helped them get elected, and that, for the same reason, elected state judges are less likely to conduct fair proceedings. Regional U.S. attorney's offices, the thinking has gone, are more independent and better resourced.

Events of the past decade, however, have begun to dismantle this assumption. According to one scholarly corruption law blog, this is due to three factors: (1) the depletion of DOJ resources and consequent federal inattention to "too small" local corruption cases; (2) the U.S. Supreme Court's increasingly narrow interpretation of key federal corruption statutes; and (3) the injection of political considerations into the DOJ's anti-corruption work—the very concern the DOJ has historically used to justify appropriating cases from local prosecutors. See Jason Kohn, The Case for State-Level Anticorruption Prosecutions in the U.S., The Global Anti-Corruption Blog, Jan. 14, 2019.

At the same time that the DOJ's primacy in prosecuting corruption has been diminishing, New York's has been ascending. Indeed, local prosecutors have taken on more such prosecutions, and when their cases reach the New York Court of Appeals, the court has expansively interpreted New York's corruption statute.

This article will survey several recent Supreme Court decisions narrowly interpreting federal corruption statutes and Court of Appeals decisions expansively interpreting New York's statutory counterpart. A comparison of these rulings reflects that New York prosecutors are, today, in a better position than the DOJ to prosecute local corruption and that the assumptions of the past no longer hold true.

The Federal Landscape

For four days in September 2013, traffic ground to a halt in Fort Lee New Jersey. The cause was an unannounced realignment of 12 toll lanes leading to the George Washington Bridge…. The public officials who ordered that change claimed they were reducing the number of dedicated lanes to conduct a traffic study. In fact, they did so for a political reason—to punish the mayor of Fort Lee for refusing to support the New Jersey governor's re-election bid.

Thus begins the U.S. Supreme Court's opinion in Kelly v. United States, 140 S. Ct. 1565 (2020), decided in May. But despite this withering assessment, and the pronouncement that the evidence "no doubt show[ed] wrongdoing—deception, corruption, abuse of power," the court unanimously determined that the conduct did not violate the federal wire fraud or program-fraud statutes. Id. at 1568 (construing 18 U.S.C. §§1343, 666(a)(1)(A)). It reasoned that the realignment of the toll lanes was an exercise of regulatory power, not an effort to obtain money or property as required under both statutes.

And it further found that the Port Authority's employee labor costs associated with the realignment were incidental and not the object of the regulation. In so ruling, the court relied on its determinations in McNally v. United States, 483 U.S. 350 (1987), that the wire and property fraud statutes proscribe only schemes to deprive victims of property or money, and in Cleveland v. United States, 531 U.S. 12 (2000), that such property or money must be the object of the fraud. Kelly, 140 S. Ct. at 1571-74.

The court's parsimonious construction of these federal corruption statutes in Kelly was unsurprising. Four years earlier, in McDonnell v. United States, 136 S. Ct. 2355 (2016), it had narrowly construed the federal bribery statute's "official act" element in reversing the conviction of the former governor of Virginia. The governor had accepted $175,000 from a businessman in exchange for arranging meetings with state university officials who, the businessman hoped, would conduct research on a nutritional supplement his company had developed.

Arranging a meeting, talking to another official, or agreeing to organize an event, the court found, was not an "official act," which it defined as a "decision or action" on a specific and focused pending "question, matter, cause, suit, proceeding, or controversy"—i.e., a formal exercise of governmental power. Id. at 2369-72 (construing 18 U.S.C. §§201(a)(3)). Moreover, that conduct did not constitute the type of quid pro quo corruption that had been read into the statute to allay constitutional fair notice concerns. Id. at 2372-73.

A quid pro quo construction of another federal corruption statute had been adopted by the Supreme Court six years before McDonnell. In Skilling v. United States, 561 U.S. 358 (2010), the former CEO of Enron was prosecuted for defrauding shareholders by misrepresenting the company's fiscal health and thereby artificially inflating its stock prices. The CEO was charged with conspiracy to commit honest services wire fraud under a fledgling statute enacted to redress the court's restriction of the wire and property fraud statutes in McNally to schemes to deprive victims of only tangible assets. The honest services fraud statute defined the "scheme or artifice to defraud" clause of the mail and wire fraud statutes (see 18 U.S.C. §§1341, 1343) to encompass a deprivation of "the intangible right of honest services." 18 U.S.C. §1346. Applying a limiting construction to this statute as well, the court held in Skilling that it criminalized only bribes and kickbacks, and not undisclosed self-dealing by a public official or private employee. 561 U.S. at 409-10.

The court's holdings in Skilling and McDonnell have made it considerably more difficult for the federal government to prosecute local government pay-to-play schemes that seldom involve distinct quid pro quos. Only a year after McDonnell was decided, its narrow definition of "official act" triggered the vacatur of federal pay-to-play fraud convictions of New York's two most powerful lawmakers based on defective jury instructions. See United States v. Silver, 864 F.3d 102 (2d Cir. 2017); United States v. Skelos, 707 Fed.Appx. 733 (2d Cir. 2017). [1]

"The upshot" of all of these rulings, the Supreme Court itself observed in Kelly, "is that federal fraud law leaves much public corruption to the States…to rectify." Kelly, 140 S. Ct. at 1571. Indeed, federalism concerns seem to have animated the rulings. As the court reasoned in McDonnell, state sovereignty "includes the prerogative to regulate the permissible scope of interactions between state officials and their constituents." A limited interpretation of "official act" prevents the federal government from "'setting standards' of 'good government for local and state officials.'" 136 S. Ct. 2373 (quoting McNally, 483 U.S. at 360); see also Elkan Abramowitz and Jonathan S. Sack, A Bridge Too Far? Federalism and the 'Bridgegate' Prosecution, N.Y. Law Journal, Jan. 2, 2020.

Court-watchers agree. They have commented, in this publication, that the Kelly "ruling means fewer tools are available to federal prosecutors to rein in corruption and abuse of power by public officials" and that "[b]etween this decision and McDonnell, it is apparent that the current legal regime is insufficient to meet the societal problem of public corruption." Charles Toutant, Justices Unanimously Overturn Bridgegate Convictions, Ruling Against Feds, N.Y. Law Journal, May 7, 2020 (referencing two former federal prosecutors/white collar crime experts); see also Nick Corasaniti, Why the Bridgegate Scandal Could Backfire on Prosecutors, N.Y. Times, July 3, 2019 (quoting law professor as saying that "[t]here has been this stream of cases coming from the Supreme Court that has continued to limit prosecutorial discretion and prosecutorial authority when it comes to corruption cases").

The New York Landscape

Just as the Supreme Court was disapproving federal corruption prosecutions, New York's high court was blessing state ones. In two recent decisions—People v. Flanagan, 28 N.Y.3d 644 (2017), and People v. Middleton, 35 N.Y.3d 952, 2020 WL 2066741 (Apr. 30, 2020)—the Court of Appeals unanimously sanctioned the use of New York's key public corruption statute to prosecute a deputy police commissioner and a correctional facility counselor for inappropriately conferring public benefits on individuals who had cozied up to them. The statute, known as official misconduct (Penal Law §195.00), identifies two categories of corruption: misconduct by malfeasance and misconduct by nonfeasance.

Malfeasance is when with intent to obtain or confer a benefit, a public servant "commits an act relating to his office but constituting an unauthorized exercise of his official functions, knowing that such act is unauthorized." Nonfeasance is when with the same intent, a public servant "knowingly refrains from performing a duty which is…clearly inherent in the nature of his office." "Benefit" is defined in Penal Law section 10.00(17) as "any gain or advantage to the beneficiary." It need not be monetary—or even tangible.

The legislative history of section 195.00 reflects that it was enacted in 1965 to replace some thirty Penal Law provisions defining "very narrow" crimes of absolute liability. These crimes were condensed into a single "comprehensive" offense—requiring for the first time a specific mens rea—"directed at every type of malfeasance and nonfeasance by any public servant." Staff Notes of Temporary State Commission on Revision of the Penal Law and Criminal Code, Proposed N.Y. Penal Law §200.00 (now §195.00) (Edward Thompson Co. 1964) at 370; Richard G. Denzer and Peter McQuillan, Practice Commentary to Penal Law §195.00, McKinney's Cons. Laws of N.Y. (1967) at 634. The broad statutory language, however, has invited challenges to the scope of its reach.

The Flanagan case involved one such challenge. It arose from the successive thefts of over $11,000 of electronic equipment from a Long Island high school by a graduating senior. That student happened to be the son of Gary Parker, a wealthy benefactor of the Nassau County Police Department (NCPD) "who regularly entertained high-ranking members of the department." 28 N.Y.3d at 648-49. Not surprisingly, when all evidence of the thefts pointed to his son, Parker pulled every string he had at the NCPD. This included seeking the intervention of one of the department's highest-ranking members: Second Deputy Police Commissioner William Flanagan.

Flanagan came through for Parker. By "put[ting] a couple of pieces in motion," he orchestrated the return to the school of some of the stolen property that was in NCPD custody. And he quashed the NCPD's investigation of the student, against whom the Department had rapidly acquired strong evidence of felony-level guilt. Ultimately, the case was closed with a false notation that the school did not want the student arrested. Id. at 652-53.

The Nassau County district attorney charged Flanagan with misconduct by malfeasance for directing the return of the stolen property while the felony investigation was still open to justify the student's nonarrest. It charged him with misconduct by nonfeasance for breach of the duty to arrest the student despite the strength of the evidence and the school's arrest request. The charges raised two legal questions: (1) could the performance of an inherently authorized act—like returning stolen property to its rightful owner—constitute an unauthorized exercise of an official function so as to support a malfeasance charge; and (2) could the breach of a discretionary duty—like arrest—support a nonfeasance charge? The Court of Appeals answered "yes" to both.

As to the malfeasance issue, the court explained: "The same act may be authorized in some cases, but unauthorized in others, based on a consideration of all the surrounding circumstances," including the manner in which it was undertaken, the governing guidelines, rules, and protocols, and the actor's motive. Id. at 657. As to the nonfeasance issue, the court held that inaction may be criminal even when the official's duty is couched with discretion because nonperformance of a duty "so obviously fundamental to accomplishing the goals of the public servant's office" is not an exercise of discretion, but rather an abdication of it.

The court explained: "It is not the mandatory or discretionary nature of the failure to act that satisfies the duty element of nonfeasance, but rather the causal connection of the failure to a flagrant and intentional abuse of authority by those empowered to enforce the law." Id. at 660-61. In expansively construing section 195.00, the Court of Appeals relied on New York's "'statutory mandate with respect to interpretation'" (id. at 660)—that provisions of the Penal Law are not to be strictly construed, but "must be construed according to the fair import of their terms to promote justice and effect the objects of the law." Penal Law §5.00; accord Comment, McKinney's Cons. Laws of New York, Statutes §276. [2]

In Middleton, the Court of Appeals also generously construed the official misconduct statute by finding a vaguely worded information jurisdictionally sufficient. The information alleged that the defendant, an alcohol and substance abuse counselor at a state prison, had printed paperwork about an "unusual incident" at the facility and left it on her desk for an inmate to find, in violation of an employee manual. These allegations, the court held, sufficed to establish prima facie that the counselor knowingly committed an unauthorized act relating to her office. 2020 WL 2066741, at *1.

But the more notable ruling concerned whether the information had adequately alleged that the defendant had done this with intent to obtain or confer a benefit. The information and supporting deposition—a statement from the counselor—recited that the counselor had engaged in inappropriate contact with and done favors for several inmates. This permitted the inference that the counselor had disclosed the unusual report "with the intent to benefit herself or the inmate involved." Significantly, the court ruled that "the People were not required to specify in the information whether defendant intended to benefit herself or the inmates, because either or both would satisfy this element of the statute and both theories are supported by defendant's statement to the police." Id.

The Flanagan and Middleton decisions signal that New York prosecutors have some flexibility in how they charge and prove official misconduct. A district attorney can move forward with a corruption prosecution—by accusatory instrument or grand jury presentation—before having a perfectly packaged theory of whom the misconduct was intended to benefit, so long as one or more theory is supported by the evidence and allegations in the accusatory instrument. And the Court of Appeals will endeavor to interpret section 195.00 to promote justice and effect its object—criminalizing abuse or abdication of official power.

NY Law Applied to Federal Cases

Consider how the Bridgegate prosecution might have fared under section 195.00. Instead of straining to prove that the realignment of the toll lanes was an effort to obtain money or property, the prosecution would only have had to establish that it was undertaken to benefit the defendants—by putting them in the New Jersey governor's good graces for punishing a political antagonist—or the governor himself. And the accusatory instrument would not have had to identify which theory would be proved at trial because both would have been sustainable.

Consider, too, how the McDonnell prosecution might have fared. Rather than having to prove a quid pro quo agreement involving a decision or action on a specific pending matter, it might have sufficed to show that by arranging a meeting between the businessman and state university officials, the governor breached an ethics rule or protocol for the purpose of enriching himself. And while arranging that meeting might not have been inherently unauthorized, it could have become unauthorized based on circumstances such as "the manner in which it was undertaken, the governing guidelines, rules, & protocols, and the actor's motive." Flanagan, 28 N.Y.3d at 657. Indeed, the main distinction between Flanagan and McDonnell is that the nonarrest objective was achieved in the former while the research objective was not achieved in the latter. And while that may have made for a more compelling case in Flanagan, nothing in New York's official misconduct statute requires that the objective of the misconduct be achieved.

Conclusion

Where future corruption prosecutions of New York public officials will be brought remains to be seen. But one thing is certain: state prosecutors have effective tools in their arsenal to commence these cases. And federal prosecutors should think twice before taking over state corruption investigations. Indeed, regional U.S. Attorney's offices in New York may deem it advisable to pass off their own investigations to state prosecutors. That would serve the dual objective of improving case outcomes and satisfying federalism concerns. In New York, independently elected local prosecutors are well-equipped to police local politics.

Yael Levy is Deputy Chief of the Appeals Bureau at the Nassau County District Attorney's Office and an adjunct professor of New York Criminal Practice at St. John's University School of Law. She prosecuted the 'Flanagan' appeal discussed in this article.

ENDNOTES:

[1] Both Silver and Skelos were retried and convicted anew.

[2] There appears to be no equivalent mandate in the United States Code, although federal courts apply the common law "rule of lenity" in construing penal statutes only when they contain "a grievous ambiguity or uncertainty." Shaw v. United States, 137 S. Ct. 462, 469 (2016) (citations and quotation marks omitted); Huddleston v. United States, 415 U.S. 814, 831 (1974).