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Articles

The Letter of the Law

May 28, 2009

Articles

The Letter of the Law

May 28, 2009

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Los Angeles Daily Journal
May 28, 2009
Craig Countryman

It is a federal crime, under 18 U.S.C. Sections 1341-46, to use the mail or wires to further “any scheme or artifice to defraud,” including a scheme “to deprive another of the intangible right of honest services.” Read literally, the statute would criminalize calling in sick to work when you really intend to spend the day at the beach, for that deprives your employer of your services that day. Recognizing the potential for such absurd results, the appellate courts have not read the provision literally. Every circuit agrees that not every breach of contract, conflict of interest, breach of fiduciary duty or misstatement violates the statute, but they agree on little else. There are long-standing splits on what principles separate a criminal deprivation of one’s “honest services” from a civil or ethical lapse. The Supreme Court recently refused, over Justice Antonin Scalia’s dissent, to hear a case that would have decided which principles were appropriate, the proper scope of each principle, or whether the statute is just unconstitutionally vague. Sorich v. United States, 129 S. Ct. 1308 (2009). It thus appears that conflict and ambiguity about the scope of “honest services” fraud will continue for the foreseeable future.

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