Today the Supreme Court of the United States overturned the convictions of two defendants in the Bridgegate case on charges of wire fraud (18 U.S.C. § 1343) and federal program fraud (18 U.S.C. § 666). The Court held that the defendants’ efforts to punish a political opponent by causing traffic in his town, while a corrupt exercise in regulatory power and misuse of employee services, did not meet the required element that its object was to obtain money or property.
“The Government in this case needed to prove property fraud.” Both the wire fraud and federal-program fraud statutes require an element that the purpose of the fraud be to “obtain  property,” the Court said. “That requirement, this Court has made clear, prevents these statutes from criminalizing all acts of dishonesty by state and local officials.” The Court looked to existing precedent that rejected the theory that fraud included “theft of honest services” by government officials and struck down a federal statute protecting an “intangible right to honest services.” The Court held that the federal laws under which the defendants were charged prohibit only bribes or kickbacks, neither of which were alleged in the Bridgegate case. Thus, in the absence of federal laws which prohibit it, it is up to state laws or elections to respond to instances of public corruption that do not involve property fraud.
The Court rejected the Government’s argument that the defendants met the element of seeking to obtain property by commandeering lanes of traffic on the George Washington Bridge and misusing government employees to effect that plan. To that contention, it responded that “not every corrupt act by state or local officials is a federal crime,” and that “because the scheme here did not aim to obtain money or property, [the defendants] could not have violated the federal-program fraud or wire fraud laws.” The defendants’ realigning of traffic lanes, the Court reasoned, was “a quintessential exercise of regulatory power,” which is not equivalent to appropriating government property.
The Court deemed the expenditure of employee time as an incidental cost of implementing the scheme, not an object of the scheme in and of itself. The Court distinguished cases where corrupt officials used government employees to do yardwork or home renovation for the officials’ favored family or political supporters. In those cases, the value of the employees’ services was the goal and object of the fraud to be diverted from public to non-public use. “The entire point of the fraudsters’ plans was to obtain the employees’ services.” Here, the Court reasoned that the labor cost was not the goal of the Bridgegate scheme but the incidental cost of achieving the true goal, which was “to impede access from Fort Lee” to the Bridge.
The Court devoted the penultimate paragraph of its opinion to rebuke the Government’s prosecution, citing “this Court’s oft-repeated instruction: Federal prosecutors may not use property fraud statutes to set standards of disclosure and good government for local and state officials.” The federal government may not “use the criminal law to enforce (its view of) integrity in broad swaths of state and local policymaking” by basing fraud charges on “every lie” told and “incidental cost” spent in the misuse of regulatory power. The federal fraud statutes at issue “bar only schemes for obtaining property.”
The Court concluded simply: “[N]ot every corrupt act by state or local officials is a federal crime. Because the scheme here did not aim to obtain money or property, [the defendants] could not have violated the federal-program fraud or wire fraud laws.”