Defending Against Federal Honest Services Fraud Charges: What You Need to Know
The complex world of “honest services fraud” (18 U.S.C. § 1346) has garnered headlines in recent years through high-profile cases such as the “Varsity Blues” college admission scandal and the “FIFA Case” involving corruption in international soccer. Although the Supreme Court has reversed a number of public corruption convictions in recent years (see, e.g., Percoco v. United States, 598 U.S. 319 (2023), Kelly v. United States, 590 U.S. 391 (2020), McDonnell v. United States, 579 U.S. 550 (2016)), the honest services fraud legal minefield continues to trip up countless executives, politicians, and public officials.
Honest services fraud is a serious charge that can have devastating consequences for your career and personal life. But with the right defense strategy, you can protect yourself and your reputation. McKenzie Scott’s experienced honest services fraud lawyers are here to help you navigate these legal issues. Let’s examine the intricacies of honest services fraud defense and explore how you can safeguard your interests.
For a free consultation with a California honest services fraud defense Lawyer, call (619) 794-0451.
What is honest services fraud? Before we talk defense, let’s break down what these specific charges entail. In short, these charges are brought by federal officials when they suspect someone of depriving another of their right to honest services through bribery or kickback schemes. This often involves public officials or corporate executives who allegedly abuse their positions for personal gain.
Violating Section § 1346 can involve a number of alleged scenarios:
- Breaching a fiduciary duty to provide honest services via a scheme or in exchange for a bribe/kickback;
- A third-party providing a bribe or kickback to an offender who is not deceived by a specific scheme;
- An individual or entity harmed by a scheme resulting in the denial of their right to receive the offender’s honest services.
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Some common examples of honest services fraud might include:
- A politician accepting bribes to perform official acts;
- An elected official accepting a bribe in exchange for awarding a public contract;
- A CEO making decisions that benefit them personally at the expense of shareholders;
- A government employee steering contracts to friends or family members in exchange for kickbacks.
The Evolution of Honest Services Fraud Law
The concept of honest services fraud has a complex legal history. It emerged as a way to prosecute public corruption and corporate misconduct that didn’t necessarily involve direct financial loss to victims. Over time, courts have grappled with defining the boundaries of this crime, leading to significant legal debates and landmark decisions. In 2010, the Supreme Court’s decision in Skilling v. United States narrowed the scope of honest services fraud. The Court limited its application to cases involving bribery and kickback schemes, excluding other forms of undisclosed self-dealing. This ruling has had a profound impact on how prosecutors approach these cases and how defense attorneys analyze the alleged wrongdoing. That said, countless individuals continue to be hit with honest services fraud charges every year.
If you’re facing honest services fraud charges, there are several effective strategies that McKenzie Scott’s elite and proven criminal defense attorneys can employ:
1. Challenging the Evidence
Prosecutors must prove their case beyond a reasonable doubt, they’ll argue that:
- A fiduciary duty was owed (e.g., to the public by an elected official, to an employer by an employee, to the shareholders by a corporation, etc.); and
- The defendant knowingly devised or participated in a scheme to defraud – a scheme that is intended to deceive and cheat another and to deprive another of the intangible right to honest services through bribery or kickbacks; and
- The defendant did so with the intent to defraud; and
- The scheme to defraud involved a materially false or fraudulent pretense, representation, or promise, which may include an omission or the concealment of material information – information capable of influencing the decision of others.
McKenzie Scott’s defense team diligently analyzes the government’s purported evidence, steadfastly questioning its reliability or relevance. This typically involves scrutinizing financial records, communication logs, or witness testimonies to identify inconsistencies or alternative explanations.
2. Proving Lack of Intent
Honest services fraud requires intent to deceive and cheat. If you can show that your actions were made in good faith or due to a misunderstanding, you may have a strong defense. Our team of aggressive attorneys will independently investigate all aspects of your case, demonstrating the legitimate and lawful decision-making behind your conduct or demonstrating that you reasonably relied on what appeared to be sound legal advice before taking the disputed actions.
3. Demonstrating No Material Misrepresentation
The prosecution must prove that the alleged fraud involved a material misrepresentation. If the “deception” was trivial or inconsequential, it may not meet the legal threshold for fraud. Your team of defense attorneys at McKenzie Scott can work to demonstrate that the alleged misrepresentation had no significant impact on the alleged victim’s decision-making process.
4. Statute of Limitations
Honest services fraud charges must be brought within a certain timeframe. Our attorneys can investigate whether the statute of limitations has expired. This defense requires a careful examination of when the alleged fraudulent acts supposedly occurred and when the government became aware of them.
5. Constitutional Challenges
In some cases, our attorneys might challenge the constitutionality of the honest services fraud statute as applied to your specific situation. This could involve arguing that the law is too vague or that it violates your due process rights.
Contact A California honest fraud services defense lawyer: (619) 794-0451.
Corporate Fraud Defense: Protecting Your Company
For businesses, the best defense against honest services fraud allegations is a good offense. Implementing robust compliance programs and conducting regular internal audits can help protect your business and demonstrate good faith if issues do arise.
If your company becomes the target of an investigation, it’s critical to:
- Secure the assistance of an experienced defense attorney to consult and advise you during the process;
- Conduct a thorough internal investigation;
- Take swift action to address and remedy any identified issues;
- Work with the proven white-collar crime defense attorneys from McKenzie Scott to navigate the legal process and interact with law enforcement on your behalf.
Developing a Strong Compliance Culture
Creating a culture of compliance within your organization can be key to preventing honest services fraud. This often involves more than just having a written policy; it requires ongoing training, clear communication of ethical standards, and a system for employees to report concerns without fear of retaliation.
CEOs and businesses may consider implementing certain measures to protect against honest services fraud charges:
- Regular ethics training for all employees, especially those in positions of trust;
- A whistleblower hotline or other anonymous reporting mechanism;
- Periodic review and updating of conflict of interest policies;
- Clear guidelines for gift acceptance and business entertainment.
Navigating Federal Fraud Defense Processes
Honest services fraud cases are typically prosecuted at the federal level, which means you’ll be dealing with federal courts and prosecutors. Federal prosecutors commonly tout a 95% conviction rate. Accordingly, which criminal defense attorney you choose to handle your case is critical.
Federal charges and ensuing trials can be a daunting process, but understanding what to expect can help. Keep in mind that:
- Federal cases may move slower than state cases;
- The discovery process can be extensive and complex;
- Plea negotiations may take place over an extended period;
- If your case goes to trial, expect it to last several weeks or even months.
Working with McKenzie Scott’s criminal defense attorneys, who have extensive experience in federal court, is crucial. Our team understands the nuances of federal procedures and how to effectively navigate this complex system.
The Role of Sentencing Guidelines
If convicted of honest services fraud, the Federal Sentencing Guidelines play a significant role in determining the punishment. These guidelines take into account factors such as the amount of loss, the defendant’s role in the offense, and any prior criminal history. Our defense attorneys are well-versed in these guidelines and able to argue for the most favorable interpretation of your case.
What Are the Penalties for Honest Services Fraud?
A conviction under 18 U.S.C. § 1346 carries a maximum sentence of 20 years in prison and fines of up to $250,000.
However, the prison sentence can increase to 30 years and the fine to $1,000,000, if the Section 1346 violation:
- Occurs in relation to, or involving any benefit authorized, transported, transmitted, transferred, disbursed, or paid in connection with, a presidentially declared major disaster or emergency (as defined by the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. § 5122); or
- affects a financial institution.
Sentencing enhancements or increases may be considered if the defendant is deemed to be an “organizer or leader” in the alleged honest services fraud crimes. The amount of loss, the number of victims who were impacted by financial hardship, the risk of death or seriously bodily injury, and other factors can result in a further increase to an honest services fraud sentence. This is one of the many factors which make having the best honest services fraud lawyer fighting in your corner so important.
Recent Developments in Honest Services Fraud Law
The legal landscape surrounding honest services fraud is constantly changing. Recent Supreme Court decisions and Appellate Court decisions have clarified the scope of the law, making it more challenging for prosecutors to secure convictions. In fact, although honest services fraud charges continue to be brought against countless individuals, the Supreme Court and other Appellate Courts have recently reversed a number of convictions, including:
Supreme Court Reversed Honest Services Fraud Decisions:
- Skilling v. United States
- Percoco v. United States
- Ciminelli v. United States
In Skilling v. United States, the Supreme Court made clear that the honest services fraud statute addressed at its core only schemes to defraud involving bribes and kickbacks. If the statute were not so limited, it would encounter serious vagueness problems.
Pending Supreme Court Honest Services Fraud Cases:
Additionally, the Supreme Court is considering another important honest services fraud case – Kousisis v. United States. This case focuses on whether deception to induce a commercial exchange can constitute mail or wire fraud even if inflicting economic harm on the alleged victim was not the target of the alleged scheme. The Court could potentially further limit the reach of federal mail and wire fraud statutes in honest services cases.
First Circuit Court of Appeals Reversed Honest Services Fraud Decisions:
- United States v. Abdelaziz (Varsity Blues college admissions scandal case)
- United States v. Wilson (Varsity Blues college admissions scandal case)
Lower courts continue to hear-and reverse-challenges to honest services convictions. In spite of such reversals, the Department of Justice continues to aggressively pursue these cases, often using expansive alternative theories to criminalize broad categories of conduct.
Such legal developments can have a significant impact on your defense strategy, and McKenzie Scott’s team always remains vigilant in staying abreast of current caselaw as well as crafting our own novel challenges on behalf of our clients.
The Impact of Technology on Fraud Investigations
Advancements in technology have significantly changed how honest services fraud is investigated and prosecuted. Digital forensics now play a major role in these cases, with investigators combing through emails, text messages, and financial records to build their case. On the flip side, this technology also provides new opportunities for defense teams to challenge the prosecution’s evidence and present alternative narratives.
Remember, facing honest services fraud charges doesn’t mean “game over.” With the right legal team and defense strategy, you can fight these allegations and protect your rights. Don’t hesitate – if you’re under investigation or facing charges, seek legal counsel immediately by calling McKenzie Scott’s San Diego federal criminal defense lawyers at 619-794-0451. Your freedom and your future may depend on it.
The Importance of Media Management
In high-profile honest services fraud cases, managing public perception can be almost as important as the legal defense itself. Negative media coverage can damage your reputation and potentially influence the jury pool. Your defense team at McKenzie Scott includes experienced professionals who can handle media relations and help shape the narrative surrounding your case.
Some key strategies for managing media during a fraud case include:
- Designating a single spokesperson to handle all media inquiries;
- Carefully crafting public statements to mitigate and avoid further damage;
- Proactively sharing positive information about your character and contributions;
- Monitoring social media and addressing misinformation quickly.
Remember, what you say outside the courtroom can have a significant impact on your case. Always consult with your attorney before making any public statements about the charges against you.
Schedule Your Honest Services Fraud Attorney Consultation
If you’re facing honest services fraud charges, acting immediately can help improve your chances of establishing a successful defense strategy. McKenzie Scott’s criminal defense lawyers have a depth of experience that is unparalleled. Our dedicated team has successfully handled numerous honest services fraud cases on behalf of clients like you.
Reach our proven defense lawyers today to discuss your case by calling 619-794-0451.
Frequently Asked Questions About Honest Services Fraud
Call McKenzie Scott, Honest Services Fraud Attorney : (619) 794-0451.
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