Opposition Brief — Bereano v. United States

No. 98-1165

In the Supreme Court of the Gnited States

OCTOBER TERM, 1998

LUCE C. BEREANO, PETITIONER

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI!

TO THE UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

SETH P. WAXMA

Sol 0) (; rhe

("4 ys l of R

2% _

}AMI nw. NOB!

‘ j 4

sid ti i

QUESTIONS PRESENTED

1. Whether the criminal prohibition against schemes

to defraud victims of “the intangible right of honest

services,” under 18 U.S.C. 1346, applies to private

persons as well as public officials.

2. Whether the government must show a source in

state law for a “right to honest services” under Section

1346.

3. Whether a defendant must contemplate harm to

the victim to be guilty of mail fraud.

(I)

TABLE OF CONTENTS

Page

RENEE ELT ACR ON AIONE SAT OMI 1

RRR CSN eae a PTR At OSE Saal de MON SR

RN SO a NI A Rc RO sc 2

Argument dibipidaandienhiiaiiaintbeigtereaie 7

Conclusion Sadat 17

TABLE OF AUTHORITIES

Cases:

Badders v. United States, 240 U.S. 391 (1916) ................ 12

Buckley v. Valeo, 424 U.S. 1 (1976) .......ccccocecessersvscoveseserseee 11-12

Chapman v. United States, 500 U.S. 453 (1991) .........00+ 11

Congo v. United States, 119 S. Ct. 41 (1998) ........eccccecsseeee 8

Frost v. United States, 119 S, Ct. 40 (1998) .......cccccccsesesees ~

Griffin v. United States, 502 U.S. 46 (1991) .....ccccccecesseseeee 7

McNally v. United States, 483 U.S. 350 (1987) ............ 5, 9, 10

Parker v. Levy, 417 U.S. T83 (1974) ....c.ccscccocseerescesvesvseesees 11

Parr v. United States, 363 U.S. 370 (1960) .....ccccccseseseceeee 12

Potter v. United States, 119 S. Ct. 41 (1998) oo... &

Sullivan v. Louisiana, 508 U.S. 275 (1998) ...cecccseccceseseee 7-8

Turner v. United States, 119 S. Ct. 41 (1998) .......ccceseee 8

United States v. Baker, 78 F.3d 1241 (7th Cir.

1996), cert. denied, 520 U.S. 1222 (1997) .......cccccecseeeceeeeees 8

United States v. Bohonus, 628 F.2d 1167 (9th Cir.),

cert. denied, 447 U.S. 928 (1980) 0.......cccsccccessssscesesescerereeees 9

United States v. Brumley, 116 F.3d 728 (5th Cir.

1997), cert. denied, 118 S. Ct. 625 (1998) ............ 12-13, 14, 15

United States v. Bryan, 58 F.3d 933 (4th Cir.

a ieclabotnanaboubaas 15

United States v. Bush, 522 F.2d 641 (7th Cir. 1975),

cert. denied, 424 U.S. 977 (1976) .......cscsccccccessesssesssseceseeserees 15

United States v. Cochran, 109 F.3d 660 (10th Cir.

1997) ........ sbhiandieanenetiiaierptteninnseandainnaptebinianiatibenntiddenssedionnannuetsenunes 1]

(III)

IV

Cases—Continued: Page

United States v. D’Amato, 39 F.3d 1249 (2d Cir.

1994) 16

United States v. Dial, 757 F.2d 163 (7th Cir.),

cert. denied, 474 U.S. 838 (1985) 9

United States v. Dixon, 536 F.2d 1388 (2d Cir.

1976) 7

United States v. Edwards, 458 F.2d 875 (5th Cir.),

cert. denied, 409 U.S. 891 (1972) 15

United States v. Frost, 123 F.3d 346 (6th Cir. 1997),

cert. denied, 119 S. Ct. 40 (1998) 9-10, 11

United States v. Gray, 790 F.2d 1290 (6th Cir.

1986), rev'd sub nom. McNally v. United States,

483 U.S. 350 (1987) 9

United States v. Jain, 99 F.3d 436 (8th Cir. 1996),

cert. denied, 520 U.S. 1273 (1997) 10-11

United States v. Lemire, 720 F.2d 1327 (D.C. Cir.

1983), cert. denied, 467 U.S. 1226 (1984) 9

United States v. Lopez, 100 F.3d 98 (9th Cir.

1996), cert. denied, 520 U.S. 1231 (1997) 8

United States v. Mandel, 591 F.2d 1347, aff’d, 602

F.2d 653 (4th Cir. 1979), cert. denied, 445 U.S. 961

(1980) 15

United States v. Margiotta, 688 F.2d 108 (2d Cir.

1982), cert. denied, 461 U.S. 913 (1983) 15

United States v. Mazurie, 419 U.S. 544 (1975) «0... 11

United States v. McCracken, 581 F.2d 719 (8th Cir.

1978) 9

United States v. Perholtz, 842 F.2d 343 (D.C. Cir.),

cert. denied, 488 U.S. 821 (1988) 7

United States v. Pimentel, 83 F.3d 55 (2d Cir.

1996) ...c.cccccerecsecsccessesereessaserecsesorenssssncnsenecevesvosersnsensnsenessensssoasoss 8

United States v. Runnels, 877 F.2d 481 (6th Cir.

1989) ; 9

United States v. Sawyer, 85 F.3d 713 (1st Cir.

1996) 15

Vv

Cases—Continued: Page

United States v. Siegel, 717 F.2d 9 (2d Cir. 1983) ............ 9

United States v. Starr, 816 F.2d 94 (2d Cir. 1987) ........... 16

United States v. Sun-Diamond Growers of

Calif., 138 F.3d 961 (D.C. Cir.), cert. granted on

other grounds, 119 S. Ct. 402 (1998) 11

United States v. Von Barta, 635 F.2d 999 (2d Cir.

1980), cert. denied, 450 U.S. 998 (1981) 15

United States v. Webster, 639 F.2d 174 (4th Cir.),

cert. denied, 454 U.S. 857 (1981) 7

United States v. Wells, 519 U.S. 482 (1997) 10

United States v. Williams, 504 U.S. 36 (1992) .........ss20 14

Yates v. United States, 354 U.S. 298 (1957) 7

Constitution and statutes:

U.S. Const.:

Art. I:

§ 8, Cl. 3 (Commerce Clause) .......-ssesersssssnesserensensersesenes 12

§ 8, Cl. 7 (Postal Clause) secccinsiniidagiaiineatosseeacnts 12

Amend. I . 12

Anti-Drug Abuse Act of 1988, Pub. L. No. 100-690,

§ 7603, 102 Stat. 4508 ; 10

18 U.S.C. 1341 RE A SF REET ESE 2,3,5

YS UES. BBG rcciccccscssnsocasasesnscesnnesonsrssnavencovssonecscsennensetesoini passim

Miscellaneous:

134 Cong. Rec. 33,297 (1988) .....cscsssesessesnsesesssssrssssnssnsanernssnes 10

Jn the Supreme Court of the Gnited States

OCTOBER TERM, 1998

No. 98-1165

BRUCE C. BEREANO, PETITIONER

v,

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

OPINIONS BELOW

The opinion of the court of appeals (Pet. App. la-43a)

is unpublished, but the judgment is noted at 161 F.3d 3

(Table). The opinions of the district court (Pet. App.

44a-47a, 50a-61a) are unreported.

JURISDICTION

The judgment of the court of appeals was entered on

August 28, 1998. A petition for rehearing was denied

on October 22, 1998. Pet. App. 64a-65a. The petition

for a writ of certiorari was filed on January 20, 1999.

The jurisdiction of this Court is invoked under

28 U.S.C. 1254(1).

(1)

STATEMENT

Following a jury trial in the United States District

Court for the District of Maryland, petitioner was

convicted of seven counts of mail fraud, in violation of

18 U.S.C. 1341.’ He was sentenced to five years’ pro-

bation and fined $20,000. The court of :ppeals affirmed

petitioner’s convictions but remanded for resentencing.

Pet. App. la-438a.

1. Petitioner was an attorney and a registered

Maryland lobbyist. From May 1990 to June 1991, he

asked employees of his law firm and various family

members to write checks for political contributions,

which were then distributed to candidates directly or

through petitioner’s political action committee. The

employees and family members received reimburse-

ments through checks from petitioner’s law firm. Peti-

tioner billed his lobbying clients for those campaign

contributions on a pro rata basis, describing the nomi-

nee contribution expenses as “legislative entertain-

ment.” Petitioner’s retainer agreements did not au-

thorize him to bill his clients for such contributions.

Rather, the lobbying clients had agreed to pay

petitioner a fixed retainer, as well as “reasonable and

necessary expenses” including “legislative entertain-

ment,” defined by petitioner as meals and entertain-

ment. Pet. App. 3a-4a.

Petitioner was charged with eight counts of mail

fraud under 18 U.S.C. 1341 and 1346. The indictment

set out two theories of prosecution. It alleged that peti-

tioner had engaged in a scheme (1) to defraud clients of

money and property by submitting bills that included

! One mail fraud count was dismissed pursuant to petitioner’s

motion for a judgment of acquittal. See Pet. App. 3a n.1.

>

o

false statements of expenses incurred, and (2) to de-

fraud clients of their right to petitioner’s honest and

loyal services. Pet. App. 3a-4a.”

2. Before trial, both petitioner and the government

sought rulings in limine concerning the admissibility of

evidence relating to Maryland election laws. The dis-

trict court determined that a violation of Maryland

election laws was both unnecessary and insufficient to

establish mail fraud violations, and the court therefore

did not allow petitioner to prove and argue his compli-

ance with those laws. The court, however, permitted

the government to introduce into evidence a letter to a

client in which petitioner had explained the Maryland

election laws as he understood them, as well as the

copies of the Maryland election statutes that petitioner

had attached to the letter. The district court instructed

the jury that the evidence was relevant only to peti-

tioner’s motive and intent. Pet. App. 4a-5a, 19a-21a,

46a-47a.

At trial, the clients who had been billed for the

campaign contributions testified that they had per-

ceived no fraud either when they paid their bills or at

the time of the trial. They also testified, however, that

they had not authorized petitioner to make political

contributions and had not agreed to pay them. Pet.

App. 6a, lla.

3. The court of appeals affirmed petitioner’s con-

victions in an unpublished decision. Pet. App. la-43a.”

* The federal mail fraud statute prohibits the use of the mails in

furtherance of “any scheme or artifice to defraud.” 18 U.S.C. 1341.

Section 1346 provides that “[fJor the purposes of this chapter, the

term ‘scheme or artifice to defraud’ includes a scheme or artifice to

deprive another of the intangible right of honest services.” 18

U.S.C. 1346.

4

a. The court of appeals first held that the evidence

introduced at trial was sufficient to sustain the mail

fraud convictions. Pet. App. 8a-12a. The court stated

that the circuits are divided on the question whether

the mail fraud statute requires proof that the defendant

contemplated the prospect of harm to the victim. Jd. at

8a-9a. The court concluded, however, that it need not

resolve the question because “contemplated harm is

present in this case. The contemplated harm is [peti-

tioner’s] fraudulent transfer to his clients of his cost of

doing business which cost took the form of political

contributions.” Jd. at 10a.

Petitioner contended that no contemplated harm was

present in this case because the victims of the scheme

had testified that they were satisfied with petitioner’s

services. The court of appeals rejected that claim,

holding that the victims’ perception was irrelevant to

the question whether petitioner had devised a scheme

or had acted with the requisite intent to defraud. Pet.

App. 10a-1la. The court also observed that “while [pe-

titioner’s] clients argue that they were satisfied with

[petitioner’s] services, they also testified that they did

not authorize and would not have knowingly paid for

the political contributions [petitioner] made.” Jd. at

lla. Explaining that “(slending a false bill to a third

party through the mails with the necessary criminal

intent is a classic violation of the mail fraud statute,”

ibid., the court concluded that “the totality of the evi-

8 The court of appeals remanded for resentencing, holding that

the district court had relied on impermissible reasons in granting a

downward departure from the Guidelines sentencing range. Pet.

App. 34a-41a. That aspect of the court of appeals’ ruling is not at

issue in this Court. On remand, petitioner was sentenced to five

r.onths’ imprisonment, to be followed by a three-year term of

supervised release. See 12/4/98 Amended Judgment 2-3.

5

dence presented is sufficient to support a finding that

[petitioner] had a specific intent to defraud, including

contemplating harm to his clients,” id. at 1la-12a.

b. The court of appeals rejected petitioner’s claim

that 18 U.S.C. 1346, which defines the term “scheme or

artifice to defraud” to include “a scheme or artifice to

deprive another of the intangible right of honest ser-

vices,” applies only to public officials. The court noted

that “[t]he plain language of the statute does not re-

strict its application to public officials.” Pet. App. 13a.

The court also explained that Section 1346 was in-

tended te restore the state of the law that had existed

before this Court’s decision in McNally v. United

States, 483 U.S. 350 (1987). Pet. App. 14a. The court

observed that “[iJn addition to the right to honest Gov-

ernment, pre-McNally cases held that the intangible

rights covered [by 18 U.S.C. 1341] included an em-

ployer’s or other principal’s right to the honest, faithful

and disinterested services of its employees or agents.”

Id. at 18a.

The court also held that the indictment described the

alleged offenses with adequate particularity. Because

the indictment described the fiduciary duty owed by

petitioner to his clients, as well as the scheme to bill

those clients for expenses they had not authorized, it

sufficiently apprised petitioner of the charges against

him. Pet. App. 16a-18a. The court also found that, even

if the indictment lacked sufficient particularity as to

Section 1346, or there was insufficient evidence to

uphold a conviction for mail fraud under Section 1346

based on a deprivation of honest services, there was

sufficient evidence to sustain a conviction for mail fraud

under Section 1341 based on petitioner’s scheme to

deprive his clients of money or property. Jd. at 18a.

6

ce. The court of appeals rejected petitioner’s argu-

ment that evidence of Maryland election laws was

improperly admitted at trial. Pet. App. 19a-2la. It

noted that a conviction for mail fraud does not require

proof of any violation of state law. Jd. at 19a-20a. The

court found, however, that the district court had prop-

erly allowed the government to introduce evidence

concerning those laws in order to establish petitioner’s

knowledge and intent. Because “[petitioner’s] under-

standing of the election laws arguably explains his

motive and intent for choosing the particular scheme

which he utilized,” the court explained, the contested

evidence was “probative of bad motive or intent as

opposed to good faith.” Jd. at 21a.

The court of appeals also held that the prosecutor’s

references in closing argument to the state election

laws “were made within the context of [petitioner]

sending the statutes to his clients, allegedly showing

what his understanding of the law was.” Pet. App. 20a.

The court emphasized that statements by the prosecu-

tor implying that petitioner had actually violated the

election laws “represented a minor portion of an

extensive argument,” and that the district court had

instructed the jury that Maryland election laws were

relevant only to petitioner’s motive and intent. Jd. at

20a; see also id. at 21la-26a (rejecting claim of prose-

cutorial misconduct based on prosecutor’s references to

state election laws).’

4 The court of appeals also rejected petitioner’s claims that the

indictment had been improperly amended (Pet. App. 26a-28a); that

the district court had erred in denying petitioner’s motion for

individualized voir dire (id. at 28a-3la); and that the district court

had improperly allowed the government to rely in its closing

argument on grand jury testimony that had not been introduced

into evidence (id. at 3la-34a). Petitioner does not press those

7

ARGUMENT

Petitioner contends that 18 U.S.C. 1346 applies only

to public officials; that under Section 1346 the victim’s

right to honest services must be defined by state law;

and that a defendant must contemplate the prospect of

harm to the victim in order to violate the mail fraud

statute. Those claims lack merit and do not warrant

this Court’s review.

1. As an initial matter, this case would be an inap-

propriate vehicle for resolving petitioner’s claims re-

garding the proper application of Section 1346. This

case was presented to the jury both on an “honest

services” theory and on the theory that petitioner’s

scheme defrauded his clients of money and property.

Petitioner correctly notes (Pet. 23 n.19) that a guilty

verdict generally cannot stand when a case is submitted

to the jury on alternative theories and one of the

theories is invalid as a matter of law. See Griffin v.

United States, 502 U.S. 46 (1991); Yates v. United

States, 354 U.S. 298, 312 (1957). Reversal is not re-

quired, however, when the jury’s verdict necessarily

encompasses findings as to all elements of the offense

under the valid theory of prosecution. See, e.g., United

States v. Perholtz, 842 F.2d 343, 365-367 (D.C. Cir.),

cert. denied, 488 U.S. 821 (1988); United States v.

Webster, 639 F.2d 174, 181 (4th Cir.), cert. denied, 454

U.S. 857 (1981); United States v. Dixon, 536 F.2d 1388,

1402 (2d Cir. 1976). Compare Sullivan v. Louisiana,

508 U.S. 275, 281 (1993) (instructional error is harmless

when the findings on which the jury’s verdict necessar-

claims in this Court. Judge Wilson agreed with the majority’s

disposition of all issues except for the prosecutor’s use of the grand

jury testimony, but would have reversed petitioner’s convictions

on that ground. Jd. at 41a-43a.

8

ily rests are “functionally equivalent” to a finding of

guilt under a proper instruction).

That principle applies here. The gravamen of the

“honest services” theory of prosecution in this case was

that petitioner had deprived his clients of their right to

his honest services by billing them for “entertainment

expenses” that he did not incur. Because the jury’s ver-

dict necessarily reflected its determination that peti-

tioner fraudulently deprived his clients of money, the

court of appeals’ affirmance of his convictions would be

proper regardless of whether Section 1346 applies to his

conduct. See United States v. Lopez, 100 F.3d 98, 102-

104 (9th Cir. 1996), cert. denied, 520 U.S. 1231 (1997);

United States v. Pimentel, 83 F.3d 55, 60 (2d Cir. 1996);

United States v. Baker, 78 F.3d 1241, 1247-1248 (7th

Cir. 1996), cert. denied, 520 U.S. 1222 (1997).

2. Petitioner contends (Pet. 14-23) that 18 U.S.C.

1346 applies only to the “services” of public officials or

persons with fiduciary duties to the public. This Court

recently denied four petitions for certiorari (arising

from a single court of appeals decision) presenting the

same question. See Frost v. United States, 1198. Ct. 40

(1998) (No. 97-1549); Turner v. United States, 119 S. Ct.

41 (1998) (No. 97-8295); Potter v. United States, 119 S.

Ct. 41 (1998) (No. 97-8305); Congo v. United States, 119

S. Ct. 41 (1998) (No. 97-8328). There is no reason for a

different result here.

a. The text of Section 1346 does not distinguish

between public officials and private actors, like peti-

tioner, who owe a duty of loyalty to clients or employ-

ers. Section 1346 defines the term “scheme or artifice

to defraud,” for purposes of the mail fraud statute, to

include “a scheme or artifice to deprive another of the

intangible right of honest services.” As the court of

appeais recognized, “[t]he plain language of the statute

9

does not restrict its application to public officials.” Pet.

App. 18a.

b. The history of Section 1346 likewise provides no

support for petitioner’s position. Before this Court’s

decision in McNally v. United States, 483 U.S. 350

(1987), the courts of appeals had consistently construed

the mail and wire fraud statutes to apply to schemes

intended to deprive citizens of their right to honest

services from public officials. In addition, numerous

pre-McNally cases held that the intangible rights

covered by the statute included the right of a private

employer or other principal to the honest and faithful

services of its employees or agents. See, e.g., United

States v. Dial, 757 F.2d 163, 168-170 (7th Cir.), cert.

denied, 474 U.S. 838 (1985); United States v. Lemire,

720 F.2d 1327, 1335-1336 (D.C. Cir. 1983), cert. denied,

467 U.S. 1226 (1984); United States v. Siegel, 717 F.2d 9,

14 (2d Cir. 1983); United States v. Bohonus, 628 F.2d

1167, 1171-1172 (9th Cir.), cert. denied, 447 U.S. 928

(1980); United States v. McCracken, 581 F.2d 719, 722-

723 (8th Cir. 1978).°

5 Relying on United States v. Gray, 790 F.2d 1290, 1295 (6th

Cir. 1986), rev’d sub nom. McNally v. United States, 483 U.S. 350

(1987), petitioner claims (Pet. 18-19 & n.13) that pre-McNally case

law limited the “intangible rights” doctrine to schemes involving

the services of public officials. Although the court in Gray sug-

gested that the mail fraud statute, as lower courts had construed it

before McNally, did not apply to schemes by private fiduciaries to

defraud private parties of their right to honest services, the Sixth

Circuit, sitting en banc, subsequently rejected that suggestion.

See United States v. Runnels, 877 F.2d 481, 483-484 (6th Cir. 1989)

(en banc) (“The trial judge, correctly in our opinion, read Gray to

have no effect on the doctrine that the intangible rights theory was

‘applicable to non-public officials where a fiduciary duty is

involved.’”). In United States v. Frost, 125 F.3d 346, 366 (1997),

cert. denied, 119 S. Ct. 40, 41 (1998), the Sixth Circuit reviewed the

~

10

In McNally, this Court held that the mail fraud

statute is “limited in scope to the protection of property

rights.” 483 U.S. at 360. The Court stated that Con-

gress “must speak more clearly than it has” in order to

criminalize a broader range of fraudulent conduct. Ibid.

The following year, Congress amended the federal

fraud statutes to add Section 1346. See Anti-Drug

Abuse Act of 1988, Pub. L. No. 100-690, § 7603, 102

Stat. 4508. The sponsor of the amendment explained

that Section 1346 “restores the mail fraud provision to

where that provision was before the McNally decision.”

134 Cong. Rec. 33,297 (1988) (statement of Rep. Con-

yers). Because pre-McNally case law had applied the

mail fraud statute to private-sector deprivations of the

right to “honest services,” the history of Section 1346

reinforces the conclusion that such deprivations are

covered by the statute in its current form.

c. No decision of a court of appeals has held that

private-sector frauds fall outside of Section 1346. As

petitioner correctly notes (Pet. 3-4, 14), some courts of

appeals have expressed concern about “defin{ing] the

outer limits of the private sector rights to ‘honest

pre-McNally law and concluded that “private individuals * * *

may commit mail fraud by breaching a fiduciary duty and thereby

depriving the person or entity to which the duty is owed of the

intangible right to the honest services of that individual.”

® Petitioner argues (Pet. 21) that the rule of lenity bars applica-

tion of Section 1346 to private-sector relationships. The rule of

lenity, however, is a maxim of construction that applies “only if,

after seizing everything from which aid can be derived, [the Court]

can make no more than a guess as to what Congress intended.”

United States v. Wells, 519 U.S. 482, 499 (1997) (citations, ellipsis,

and internal quotation marks omitted). Here, the text of Section

1346 unambiguously encompasses private-sector deprivations of

the right to honest services, and the statute’s history reinforces

that interpretation.

11

services’ that are now protected by § 1346.” United

States v. Jain, 93 F.3d 436, 442 (8th Cir. 1996), cert.

denied, 520 U.S. 1273 (1997); see also Frost, 125 F.3d at

365; United States v. Cochran, 109 F.3d 660, 667 (10th

Cir. 1997); United States v. Sun-Diamond Growers of

California, 138 F.3d 961, 973 (D.C. Cir.), cert. granted

on other grounds, 119 S. Ct. 402 (1998). Petitioner,

however, cites no decision holding that Section 1346 is

limited to schemes involving the services of public

officials, and we are aware of none. Thus, contrary to

petitioner’s suggestion (Pet. 18-19), there is no conflict

among the circuits on the question presented.

d. Contrary to petiticner’s contention (Pet. 21-23),

application of Section 1346 to private-sector relation-

ships in general, and to petitioner’s conduct in particu-

lar, raises no serious constitutional concerns. Petitioner

cannot succeed in his vagueness challenge (Pet. 21) by

demonstrating that hypothetical situations may exist in

which application of the statute would-be ambiguous.

Rather, he must show that the statute failed to provide

clear warning that his own conduct was proscribed. See

Chapman v. United States, 500 U.S. 453, 467 (1991)

(“First Amendment freedoms are not infringed * * *,

so the vagueness claim must be evaluated as the statute

is applied to the facts of this case.”); United States v.

Mazurie, 419 U.S. 544, 550 (1975) (“[V Jagueness chal-

lenges to statutes which do not involve First Amend-

ment freedoms must be examined in the light of the

facts of the case at hand.”); Parker v. Levy, 417 U.S.

733, 756 (1974) (“One to whose conduct a statute clearly

applies may not successfully challenge it for vague-

ness.”). Petitioner, who owed a fiduciary duty to his

clients, engaved in an intentional scheme to bill them

for campaign contributions that they did not authorize.

Because a “person of ordinary intelligence,” Buckley v.

12

Valeo, 424 U.S. 1, 77 (1976) (per curiam), would know

that such conduct deprived the clients of their right to

petitioner’s honest services, application of Section 1346

did not violate due process.

There is likewise no merit to petitioner’s contention

that application of Section 1346 to private-sector rela-

tionships would “violate core principles of federalism”

(Pet. 21) or exceed the authority of Congress (Pet. 22).

Because conviction under Section 1346 requires proof

that the mails were used in furtherance of the fraudu-

lent scheme, the statute represents a permissible exer-

cise of congressional power under the Postal Clause,

U.S. Const. Art. I, § 8, Cl. 7. See Badders v. United

States, 240 U.S. 391, 393 (1916); see also Parr v. United

States, 363 U.S. 370, 389, 390 (1960). Petitioner’s own

conduct, moreover, involved economic transactions sub-

ject to federal regulation under the Commerce Clause.’

3. Petitioner contends (Pet. 23-27) that, in a mail

fraud prosecution for deprivation of “the intangible

right of honest services,” 18 U.S.C. 1346, the govern-

ment “must prove a violation of state law establishing

and defining such a ‘right.’” Pet. 23. He relies (ibid.) on

United States v. Brumley, 116 F.3d 728 (5th Cir. 1997)

(en bane), cert. denied, 118 S. Ct. 625 (1998), for the

proposition that “services must be owed under state

law and that the government must prove in a federal

7 There is also no merit in petitioner’s suggestion (Pet. 19-20)

that Section 1346 should not apply to this case because it involved

political campaign contributions that are closely regulated by the

States and “suffused with First Amendment concerns.” Petitioner

was not prosecuted for making political contributions. He was

prosecuted for engaging in a scheme to bill clients for campaign

contributions that they did not authorize—conduct that is wholly

unprotected by the First Amendment.

13

prosecution that they were in fact not delivered.” 116

F.3d at 734. That claim does not warrant review.

Petitioner never advanced any such claim in the

courts below. Indeed, in an opinion rejecting one of

petitioner’s attacks on the indictment, the district court

noted that petitioner “acknowledges that ‘/s/tate law is

irrelevant to proving the essential elements of mail

fraud.’” Pet. App. 56a. Nor did he argue on appeal that

a state-law right is a necessary predicate of a Section

1346 violation. Rather, petitioner made a variety of

evidentiary arguments about the government’s use of

Maryland election laws and restrictions placed on his

response. See, e.g., Pet. C.A. Br. 23-25, 26-27, 29-31.

He also argued that the district court constructively

amended the indictment by redacting references to

Maryland election laws, id. at 28-29. But petitioner did

not claim that Maryland election laws were (or should

have been) in any way relevant in defining the “right of

honest services” that petitioner, a lobbyist, owed to his

clients. Nor did he make the argument (which he now

advances in this Court) that the government had to

prove under Section 1346 that petitioner had an obliga-

tion defined by state law to provide honest services to

the victims of his fraudulent scheme.* Because peti-

5 In fact, in seeking reversal based on the government’s

asserted references to his violations of Maryland election laws,

petitioner contended that “[t]hose improper references have

nothing to do with the actual charges, i.e., the billing of expenses to

clients.” Pet. C.A. Br. 31; see aiso Pet. C.A. Reply Br. 17 (arguing

that the government used election laws to prove more than motive

and intent, thus committing error); id. at 26 (arguing that to

establish a “deprivation of honest services under § 1346 * * * the

defendant must have breached intentionally his [fiduciary] duty

with the specific intent to defraud; that is, with the specific intent

to fraudulently cause material harm to his principal”; no mention of

14

tioner never argued in the court of appeals that the

government was required to prove a state-law source of

a right to honest services, this case is not an appropri-

ate vehicle for this Court to review any such claim. °

Even if it were properly presented here, petitioner’s

reliance on United States v. Brumley, supra, would be

misplaced. The defendant in Brumley, an adjudicative

officer within a state agency, accepted payments from

lawyers who practiced before him and acted for those

lawyers in his official capacity. The court of appeals

stated that “[uJnder the most natural reading of the

statute, a federal prosecutor must prove that conduct of

a state official breached a duty respecting the provision

of services owed to the official’s employer under state

any requirement that the right to “services” be defined under state

law).

® Petitioner cannot overcome his failure to advance in the court

of appeals his claim that “state law [must be] the source of the

‘right’ to the ‘services’ at issue” (Pet. 24) merely by noting that the

court of appeals stated that “[t]his Circuit previously has con-

cluded that a prosecution for mail fraud does not require the Gov-

ernment to establish proof of any violation of an underlying state

law or regulation.” Pet. App. 19a. While this Court has discretion

to consider an issue that was “passed upon” by the court of

appeals, even though not pressed by a party, United States v.

Williams, 504 U.S. 36, 41 (1992), there is no reason to permit

petitioner to benefit from that rule. Petitioner made no effort to

obtain reversai of his conviction on that ground; and the court of

appeals simply restated circuit law (on the irrelevance of state law)

as an introduction to its discussion (and rejection) of the quite

different claims petitioner actually did present. See Pet. App. 19a-

21a (rejecting claim that district court erred in admitting evidence

of Maryland election laws); id. at 2la-26a (rejecting claim of

prosecutorial misconduct in purported government argument that

petitioner violated state election laws); id. at 26a-28a (rejecting

claim of constructive amendment of indictment by deleting refer-

ences to Maryland election law).

15

law”—.e., “the official must act or fail to act contrary to

the requirements of his job under state law.” 116 F.3d

at 734. Because the defendant in Brumley was a state

employee, the court did not have occasion to consider

the application of Section 1346 to private-sector defen-

dants. Nor does Bruniley’s analysis logically apply in

the private sector, where parties generally enter into

relationships governed by express contracts and back-

ground duties and do not occupy positions created by

state law.

In any event, a violation of state law is not an ele-

ment of a mail fraud offense. See, e.g., United States v.

Sawyer, 85 F.3d 713, 726 (1st Cir. 1996); United States

v. Bryan, 58 F.3d 933, 940 (4th Cir. 1995); United States

v. Margiotta, 688 F.2d 108, 123-124 (2d Cir. 1982), cert.

denied, 461 U.S. 913 (1983); United States v. Von Barta,

635 F.2d 999, 1007 (2d Cir. 1980), cert. denied, 450 U.S.

998 (1981); United States v. Mandel, 591 F.2d 1347,

1361-1362, aff'd, 602 F.2d 653 (4th Cir. 1979) (en banc),

cert. denied, 445 U.S. 961 (1980); United States v. Bush,

522 F.2d 641, 646 n.6 (7th Cir. 1975), cert. denied, 424

U.S. 977 (1976); United States v. Edwards, 458 F.2d

875, 880 (5th Cir.), cert. denied, 409 U.S. 891 (1972). As

10 Contrary to petitioner’s contention (Pet. 10-11, 26-27), the

district court properly excluded evidence intended to show peti-

tioner’s compliance with Maryland election laws. Evidence that

petitioner complied with Maryland election laws would have

provided no defense to the charge that he had fraudulently billed

clients for expenses they did not authorize. Evidence concerning

petitioner’s understanding of the election laws, however, was

properly admitted for the limited purpose of proving petitioner’s

intent. As the court of appeals explained, “[petitioner’s] under-

standing of the election laws arguably explains his motive and

intent for choosing the particular scheme which he utilized.” Pet.

App. 21a.

16

the court of appeals correctly recognized, “[s]ending a

false bill to a third party through the mails with the

necessary criminal intent is a classic violation of the

mail fraud statute.” Pet. App. lla.

4. Relying on United States v. D’Amato, 39 F.3d

1249 (2d Cir. 1994), petitioner argues (Pet. 28-30) that

the defendant must contemplate the prospect of harm

to the victim in order to be guilty of mail fraud. The

court in D’Amato held that “[mlisrepresentations

amounting only to a deceit are insufficient to maintain a

mail or wire fraud prosecution,” and that “the deceit

must be coupled with a contemplated harm to the

victim.” Jd. at 1257 (quoting United States v. Starr, 816

F.2d 94, 98 (2d Cir. 1987)). Any conflict between

D’Amato and decisions of other circuits (see Pet. 28 &

n.22; Pet. App. 9a-10a & n.5) provides no basis for

further review in this case, however, since petitioner

could not prevail even under the D’Amato standard. As

the court of appeals explained, “(t]he contemplated

harm is [petitioner’s] fraudulent transfer to his clients

of his cost of doing business which cost took the form of

political contributions.” Jd. at 10a. The court noted

that petitioner’s clients “testified that they did not

authorize and would not have knowingly paid for the

political contributions [petitioner] made.” Jd. at lla.

That petitioner’s clients may have been happy with the

overall quality of his representation, and may have

regarded the improper billings as relatively insignifi-

cant in comparison to the value of the services rendered

(see Pet. 9-10), does not cast doubt on the court of

appeals’ analysis or negate any element of the charged

offense.

17

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted.

SETH P. WAXMAN

Solicitor General

JAMES K. ROBINSON

Assistant Attorney General

DEBORAH WATSON

Attorney

APRIL 1999