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| 1 minute read

Private citizens in the public corruption crosshairs

A prototypical honest-services-fraud prosecution goes something like this: A public official accepts a bribe to take an official act. He gets prosecuted on the theory that he thereby deprived the public of its right to his honest services. The idea is that he owes a fiduciary duty to the public by virtue of his position. By taking the bribe, he breached that duty, depriving the public of its "intangible right of honest services." 18 U.S.C. § 1346.

Let's add a wrinkle: Can a private person - as opposed to a public official - ever be prosecuted on the theory that he or she owed a fiduciary duty to the public sufficient to deprive the public of its right to honest services? On May 11, 2023, the U.S. Supreme Court in Percoco v. United States answered yes... sometimes.

In Percoco, the Court rejected the argument that a private person "can never have the necessary fiduciary duty to the public." For example, the Court observed, private people "may enter into agreements that make them actual agents of the government." But beyond that observation, the Court went no further to explain when else such a duty arises. As for the test used in Percoco's case - a private person owes a duty if he "dominated and controlled any government business," and "people working in the government actually relied on him because of a special relationship he had with the government" - the Court held the standard too vague. It could, for example, sweep in lobbyists whose "clout exceeds some ill-defined threshold."

Where does this leave us?  As Justice Gorsuch noted in his concurrence, private citizens are left to "guess[] what kind of fiduciary relationships [the] Court will find sufficient to give rise to a duty of honest services." But little guesswork is needed to surmise what comes next:  the deployment of novel theories of honest-services fraud that will continue to bring private people into the government's crosshairs. The time is nigh for companies with government-relations units and external-affairs departments to take stock of their company-to-government relationships and compliance policies.