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George H. Ryan, Sr. v. United States of America

December 21, 2010

GEORGE H. RYAN, SR. PLAINTIFF,
v.
UNITED STATES OF AMERICA,
DEFENDANT.



The opinion of the court was delivered by: Judge Rebecca R. Pallmeyer

MEMORANDUM OPINION AND ORDER

In April 2006, George H. Ryan, Sr., once Governor of Illinois, was convicted of racketeering, mail fraud, making false statements to the FBI, and tax violations. This court sentenced him to a prison term of 78 months, a sentence he is now serving. Ryan's conviction was affirmed by a divided Seventh Circuit and, after that court denied rehearing en banc, the Supreme Court denied certiorari. Earlier this year, however, the Supreme Court decided Skilling v. United States, 130 S. Ct. 2896 (2010), which imposed limits on the scope of the "honest services" mail fraud theory under which Ryan was convicted. In the wake of Skilling, Mr. Ryan has filed a petition pursuant to 28 U.S.C. § 2255. He urges that his mail fraud and RICO convictions must be overturned, and has asked the court to vacate, set aside, or correct his sentence to reflect the interpretation of the mail fraud statute articulated in Skilling. Ryan also asks the court to release him on bail pending the ultimate resolution of this motion. For the reasons described herein, the court denies Ryan's motion to vacate, set aside, or correct his sentence, and denies Ryan's motion to set bail.

BACKGROUND

On April 17, 2006, following a six-month trial, a jury convicted George Ryan of conspiring to use the resources of the State of Illinois for his personal and financial benefit in violation of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1962(d); devising a scheme to defraud the people of the State of Illinois and the State of Illinois of money, property, and the right to his honest services, in violation of the federal mail fraud statute, 18 U.S.C. §§ 1341, 1346; making false statements to the FBI, 18 U.S.C. § 1001(a)(2); obstructing the Internal Revenue Service, 26 U.S.C. § 7212(a); and filing materially false tax returns, 26 U.S.C. § 7206(1). See United States v. Warner, No. 02-cr-506, 2006 WL 2583722, at *1 (N.D. Ill. Sept. 7, 2006). The court set aside that verdict with respect to two mail fraud counts, id. at *12, but otherwise upheld the jury's determinations. Ryan's co-Defendant, Lawrence Warner, was convicted on related counts. On September 11, 2006, the court sentenced Ryan to 78 months on the racketeering count, 60 months on the mail fraud and false statement counts, and 36 months on the tax fraud counts, all to run concurrently. (Order [888] at 2.)*fn1 The court also sentenced Ryan to one year of supervised release. (Id.) The Seventh Circuit upheld Ryan's conviction on appeal. United States v. Warner, 507 F.3d 508 (7th Cir. 2007), cert. denied, 553 U.S. 1064 (2008). Ryan began serving his sentence in November 2007, and has served approximately 36 months. (Order [984].) Because the facts of this case have been discussed at length in the court's previous opinions and in the Seventh Circuit,*fn2 the court will not repeat them here.

In June 2010, the Supreme Court decided Skilling v. United States, 130 S. Ct. 2896 (2010). Vacating the conviction of Jeffrey Skilling on charges that grew out of the Enron collapse, the Supreme Court held there that "honest services" mail fraud encompasses only "paradigmatic cases of bribes and kickbacks." 130 S. Ct. at 2933. Ryan brought this petition on August 31, 2010, pursuant to 28 U.S.C. § 2255, which allows a federal prisoner to "move the court which imposed the sentence to vacate, set aside or correct the sentence" if his sentence "was imposed in violation of the Constitution or laws of the United States." 28 U.S.C. § 2255(a). A § 2255 petition must be filed within one year of "the date on which the right asserted was initially recognized by the Supreme Court, if that right has been newly recognized and made retroactively applicable to cases on collateral review." 28 U.S.C. § 2255(f)(3). The Government agrees that the decision in Skilling re-sets the clock for filing of Ryan's post-conviction petition "because it 'narrow[s] the scope of a criminal statute by interpreting its terms,' and therefore announces a new substantive rule of criminal law." (Response Br. at 11 n.5, quoting Schriro v. Summerlin, 542 U.S. 348, 351-52 (2004)).

DISCUSSION

Ryan advances two grounds in support for his motion to vacate or set aside his mail fraud and RICO convictions. First, he urges that Skilling undermines the jury instructions: "Because the court's jury instructions were erroneous under Skilling and the error was not harmless, Ryan's conviction and Sentence are unlawful." (Mot. to Vacate ¶ 14.) Second, Ryan urges that under the standard established in Skilling, the evidence is "insufficient to support Ryan's mail fraud and RICO convictions . . . ." (Id.) Because his conviction should be vacated, Ryan urges, he should be released immediately and admitted to bail. (Mot. to Set Bail ¶ 2.)

Skilling is unquestionably relevant here and warrants examination of Ryan's conviction. That said, it is important to note that Skilling's appeal to the Supreme Court presented substantially different circumstances from those in Ryan's case. Skilling had been charged with "conspiring to defraud Enron's shareholders by misrepresenting the company's fiscal health, thereby artificially inflating its stock price." Skilling, 130 S. Ct. at 2934. Skilling was prosecuted for these acts, characterized as depriving his private employer and its shareholders of the intangible right to his honest services, and the Supreme Court "acknowledge[d] that Skilling's vagueness challenge has force." Id. at 2929. George Ryan, on the other hand, held statewide elected office, and as more fully described below, the conduct for which he was convicted-steering contracts, leases, and other governmental benefits in exchange for private gain-was well-recognized before his conviction as conduct that falls into the "solid core" of honest services fraud. Such conduct was identified by the Court in Skilling as the proper target of § 1346. Id. at 2930-31.

In response to Skilling's argument that the statute is void for vagueness, the Supreme Court acknowledged that due process requires any "'penal statute [to] define the criminal offense [1] with sufficient definiteness that ordinary people can understand what conduct is prohibited and [2] in a manner that does not encourage arbitrary and discriminatory enforcement.'" Id. at 2927-28 (quoting Kolender v. Lawson, 461 U.S. 352, 357 (1983)). Ryan's current challenge does not rest on vagueness grounds, and the court believes that, in the language of Skilling, Ryan clearly understood "what conduct was prohibited" and could not have been surprised that he was subject to prosecution. Ryan's efforts to conceal his conduct from public scrutiny themselves demonstrate he knew it was improper. Indeed, long before George Ryan and his associates wrote this chapter in Illinois's distressing history of public corruption, one of Ryan's predecessors as Governor, Otto Kerner, was prosecuted under this same theory by an earlier United States Attorney.*fn3 On direct appeal in this case, the Seventh Circuit acknowledged that the statute could be challenged if Defendants Ryan and Warner "could not have known that the conduct underlying their convictions could be considered 'depriv[ing] another of the intangible right of honest services.'" United States v. Warner, 498 F.3d 666, 697 (7th Cir. 2007) (quoting 18 U.S.C. § 1346). As applied in this case, the Court of Appeals concluded, the statute is not unconstitutionally vague-a conclusion that drew no comment from the dissenting judge.

Four years ago, in writing about Ryan's prosecution, Professor Alschuler (who was not then one of Ryan's lawyers) asserted that "the mail fraud and RICO statutes unfairly stack the deck" in large part because the Government was allowed to present "every allegation of criminal and non-criminal misconduct by Ryan and Warner that prosecutors have collected," and if "some of the dirt they have thrown at the wall has stuck, [the jury] is likely to find the defendants guilty of the principal charges against them." 9 GREEN BAG 2D at 113. At oral argument on the motions before this court, Alschuler argued again that "[a]ll of this evidence went into one churning cauldron." (Oral Arg. at 5.) Skilling, however, did not invalidate the honest services mail fraud statute, nor did it invalidate RICO. Skilling limited prosecutions under these statutes to bribery and kickback schemes-the very theory of prosecution under which Ryan was convicted. Skilling emphasized that when Congress reinstated the honest services mail fraud statute after it was invalidated by McNally v. United States, 483 U.S. 350 (1987), the focus was on "core" or "paradigmatic" cases involving kickback or bribery schemes. The Skilling Court made several references to Shushan v. United States, 117 F.2d 110 (5th Cir. 1941), as an example of the paradigmatic case that would survive its ruling. Skilling, 130 S. Ct. at 2926, 2931. Notably, our own Court of Appeals*fn4 relied on Shushan when it upheld Otto Kerner's conviction, quoting this language:

No trustee has more sacred duties than a public official and any scheme to obtain an advantage by corrupting such an one must in the federal law be considered a scheme to defraud. . . . A scheme to get a public contract on more favorable terms than would likely be got otherwise by bribing a public official would not only be a plan to commit the crime of bribery, but would also be a scheme to defraud the public.

United States v. Isaacs, 493 F.2d 1124, 1150 (7th Cir. 1974) (quoting Shushan v. United States, 117 F.2d 115 (5th Cir. 1941)). The Seventh Circuit then observed that "this is precisely what occurred here. The citizens of Illinois were defrauded of Kerner's honest and faithful services as governor." 493 F.2d at 1151. Ryan's prosecution, like Kerner's before it, targeted conduct that remains at the core of honest services fraud.

While Skilling did not comment directly on Ryan's case, it came close. In a particularly relevant section, the Court noted that "the honest-services doctrine had its genesis in prosecutions involving bribery allegations." 130 S. Ct. at 2931 (citations omitted). That section cites United States v. Sorich, 523 F.3d 702, 707 (7th Cir. 2008), for its language that these prosecutions constitute "most [of the] honest services cases. . . ." Sorich itself, in the section cited in Skilling states:

Broadly speaking, honest services fraud cases come in two types. In the first, an employer is defrauded of its employee's honest services by the employee or another. . . . In the second and more common type of case, the citizenry is defrauded of its right to the honest services of a public servant, again, by that servant or by someone else. For instance, in United States v. Warner, 498 F.3d 666 (7th Cir. 2007), the Illinois Secretary of State [Ryan] channeled state contracts and leases to a friend in return for paid vacations. In both examples above, and in most honest services cases, the defendant violates a fiduciary duty in return for cash-kickbacks, bribes, or other payments. 523 F.3d at 707. The Seventh Circuit and the Supreme Court have, thus, acknowledged that this case presents the paradigmatic type of case undisturbed by Skilling. This does not end our inquiry, of course, because neither court grappled with the details presented here. It does, however, suggest that in many cases,*fn5 and in Ryan's case, Skilling was not the sea change that Ryan urges.

Ryan's case warrants more examination because, rather than relying solely on a bribery theory, the Government chose also to present Ryan's mail fraud and RICO charges under a conflict-of-interest theory-the very same theory invalidated in Skilling. The result of this course of action is addressed below; for now, what matters is whether, in returning its verdict, the jury must have found those elements that would support a conviction under the still-valid honest services bribery theory. Further, the court must determine whether the instructions it gave the jury on the conflict-of-interest and related theories could have violated Ryan's substantial rights. As Ryan's attorneys argued repeatedly at trial, the conduct for which he and Warner were convicted does not fall into a plain-vanilla bribery fact pattern in which a suitcase of cash is exchanged for an official action. But Skilling does not say that it must. The method by which Ryan's co-schemers compensated him for official action requires a searching examination after Skilling, but as explained here, the conclusion that his conduct violates the law survives Skilling.

This court's analysis begins by considering the jury instructions to determine whether they are incorrect, based on the holding in Skilling. If so, the court next examines whether the error was nevertheless harmless. The court proceeds to address the Government's contention that, even if the honest services charge in this case exceeds what is permissible after Skilling, the jury would nevertheless necessarily have convicted Ryan of pecuniary fraud. The court briefly examines Ryan's challenge to the sufficiency of the evidence; an in-depth examination is unnecessary because the harmless error standard requires more than the sufficiency-of-the-evidence test. Finally, the court determines whether evidence introduced at trial would be barred in a post-Skilling honest services prosecution, and whether the introduction of that evidence prejudiced Ryan and requires that his conviction be vacated.

I. Harmless Error Review of Honest Services Mail Fraud Charges

As noted, Ryan challenges the instructions given to the jury in this case. He argues that they improperly presented a theory of honest services fraud that is no longer valid after Skilling. He contends, further, that error in the instructions was not harmless and that the court must accordingly vacate Ryan's conviction on the mail fraud and RICO counts.

A. Standard of Review

Error in jury instructions does not automatically require that a conviction be vacated. As the Skilling Court explained, where a jury returns a general verdict that may rest on a legally invalid theory, the conviction may be upheld under a harmless-error analysis. 130 S. Ct. at 2934. Harmless error review means that "[a]ny error, defect, irregularity, or variance that does not affect substantial rights must be disregarded." FED. R. CRIM. P. 52(a). Skilling cited Hedgpeth v. Pulido, 129 S. Ct. 530, 531 (2008), where the Court instructed that "a reviewing court finding such error should ask whether the flaw in the instructions 'had substantial and injurious effect or influence in determining the jury's verdict.'" Hedgpeth, 555 U.S. 57, 129 S. Ct. 530, 531 (quoting Brecht v. Abrahamson, 507 U.S. 619, 623 (1993)), cited in Skilling, 130 S. Ct. at 2934 n.46. That standard, the Court made clear, applies on direct review of a conviction as well as on collateral review. Id. at 2834 n.46.

Ryan draws a further distinction; he argues that the Brecht harmless error standard does not apply because this case does not involve collateral review of a state-court proceeding, but rather post-conviction review of a federal proceeding. He contends that "[t]he federalism concerns that prompted Brecht are absent in Section 2255 proceedings brought by federal prisoners." (Pet.'s Br. at 26.) Ryan argues for application of the standard articulated by the Seventh Circuit in Lanier v. United States, 220 F.3d 833, 839 (7th Cir. 2000): that the conviction should be overturned unless it is "clear beyond a reasonable doubt that a rational jury would have found the defendant guilty absent the error." Id. at 839. The Government argues that Lanier "applied the heightened standard without analysis" and notes that no Circuit has applied a less deferential standard for Section 2255 motions after specifically considering the standard of review issue. (Response Br. at 13-14 n. 7.) This court notes that Lanier cited Neder v. United States, 527 U.S. 1 (1999), where the Court explained that when an element of the offense was omitted from the jury instructions, the reviewing court "asks whether the record contains evidence that could rationally lead to a contrary finding with respect to the omitted element," and if the answer is "no," the error is harmless. 527 U.S. at 19.

In two recent cases, the Seventh Circuit has used a harmless error test to uphold convictions challenged as inconsistent with Skilling. Black v. United States, 130 S. Ct. 2963 (2010), a companion case to Skilling, was remanded for a determination of whether the convictions of Conrad Black and his co-defendants for honest-services fraud could be upheld under an alternative theory of "money-property fraud." On remand, the Seventh Circuit noted that a bribery or kickback scheme "was not proved here," but observed that the defendants' convictions could nevertheless be upheld "if it is not open to reasonable doubt that a reasonable jury would have convicted [Black] of pecuniary fraud . . . ." United States v. Black, 625 F.3d 386, 388 (7th Cir. 2010), reh'g en banc denied, No. 08 CR 727 [117] (7th Cir. Dec. 17, 2010). In United States v. Cantrell, 617 F.3d 919 (7th Cir. 2010), the Seventh Circuit upheld an honest services conviction on direct appeal without articulating a standard of review because the charged conduct "was clearly a kickback scheme," so the honest services statute applied, even as narrowed by Skilling. Id. at 921.

Black is directly on point. This court reviews the conviction under a harmless error standard and asks whether it is beyond a reasonable doubt that a reasonable jury*fn6 would have convicted Ryan of a legally valid theory on which it was properly instructed.

B. Skilling Standard

Before addressing the propriety of the instructions in this case, the court pauses to review the theory of honest services fraud post-Skilling. The defendant in Skilling was charged with "conspiring to defraud Enron's shareholders by misrepresenting the company's fiscal health, thereby artificially inflating its stock price."130 S. Ct. at 2934. As a result, the Government alleged, Skilling profited from the sale of Enron stock to the tune of $89 million. No allegation of any bribery or side payments was made, however, and the Court concluded that Skilling's conduct could not constitute honest services fraud. Because the indictment alleged not only honest services fraud, but also pecuniary fraud and securities fraud, the Court remanded the case for a determination of whether the verdict would survive harmless error analysis. Id. at n.46.

Skilling asked the Supreme Court to strike down § 1346 on vagueness grounds, but the Court chose instead to limit its scope. "Interpreted to encompass only bribery and kickback schemes, § 1346 is not unconstitutionally vague." Id. at 2933. The Court did not offer a specific definition of the types of bribery and kickback schemes prohibited by the honest services statute, but instead noted that the "prohibition on bribes and kickbacks draws content not only from the pre-McNally case law, but also from federal statutes proscribing--and defining--similar crimes." Id. The court pointed to several federal statutes defining bribery and kickback schemes (18 U.S.C. §§ 201(b), 666(a)(2); and 41 U.S.C. § 52(2)) and identified several cases that define bribery in the context of honest services fraud. This court relies on these sources for a definition of honest services bribery that survives post-Skilling.

First, one of the cited statutes, 18 U.S.C. § 201(b), explains in part that the elements of bribery are satisfied when an individual directly or indirectly, corruptly gives, offers or promises anything of value to any public official . . . with intent . . . to influence any official act; or . . . to induce such public official . . . to do or omit to do any act in violation of the lawful duty of such official .

The elements are also satisfied when a public official directly or indirectly, corruptly demands, seeks, receives, accepts, or agrees to receive or accept anything of value personally or for any other person or entity, in return for . . . being influenced in the performance of any official act . . . [or] being induced to do or omit to do any act in violation of the official duty of such official or person . . . . 18 U.S.C. § 201(b)(1)(A)-(C), (2)(A)-(C). Likewise, 18 U.S.C. § 666, explains that bribery occurs whenever an individual corruptly gives, offers, or agrees to give anything of value to any person, with intent to influence or reward an agent . . . of a State . . . in connection with any business, transaction, or series of transactions of such organization, government, or agency . . . . 18 U.S.C. § 666(a)(2).

As the case law cited by the Supreme Court reflects, a showing of bribery need not include direct quid pro quo exchange; two of the three cases cited by the Court as examples of honest services bribery rest on a "stream of benefits" bribery theory. In a Third Circuit decision upholding a conviction for public corruption, the court approved jury instructions that explained, "where there is a stream of benefits given by a person to favor a public official, . . . it need not be shown that any specific benefit was given in exchange for a specific official act. If you find beyond a reasonable doubt that a person gave an official a stream of benefits in implicit exchange for one or more official acts, you may conclude that a bribery has occurred." United States v. Kemp, 500 F.3d 257, 281 (3d Cir. 2007),cited in Skilling, 130 S. Ct. at 2934. The Kemp court re-stated this theory to explain that, "[w]hile the form and number of gifts may vary, the gifts still constitute a bribe as long as the essential intent--a specific intent to give or receive something of value in exchange for an official act--exists." Kemp, 500 F.3d at 282 (emphasis omitted).

Similarly, in United States v. Whitfield, 590 F.3d 325 (5th Cir. 2009), cited in Skilling, 130 S. Ct. at 2934, the Fifth Circuit upheld an honest services bribery conviction under a "stream of benefits" theory. The jury charge required that jurors find "a corrupt agreement for [defendant] to provide the particular judge with things of value specifically with the intent to influence the action or judgment of the judge on any question, matter, cause or proceeding which may be then or thereafter pending subject to the judge's action or judgment."590 F.3d at 353. The court noted that the government did not need to prove the parties had a specific case in mind when the exchange took place, and specifically dismissed the contention that the instruction should have required the jurors to find a "quid pro quo": "Despite the district court's failure to include the actual phrase quid pro quo in the jury charge, in the instant context the instructions sufficiently conveyed the 'essential idea of give-and-take.'" Id. (citing United States v. Kincaid-Chauncey, 556 F.3d 923');">556 F. 3d 923, 943 (9th Cir. 2009)).

The "stream of benefits" theory has been a viable basis for convictions on bribery and extortion charges for some time, and has sometimes been referred to as supporting such charges under a "course of conduct" or "retainer" theory. See, e.g., United States v. Jennings, 160 F.3d 1006, 1014 (4th Cir. 1998) ("The quid pro quo requirement is satisfied so long as the evidence shows a course of conduct of favors and gifts flowing to a public official in exchange for a pattern of official actions favorable to the donor.") (internal quotation and citation omitted); United States v. Kincaid-Chauncey, 556 F.3d 923, 943 (9th Cir. 2009) (honest services bribery can be established if "the government official has been put on 'retainer'-that is, that the government official has received payments or other items of value with the understanding that when the payor comes calling, the government official will do whatever is asked.").

C. The Jury Instructions

Ryan contends that the jury instructions in this case were flawed in five different respects:

(1) He asserts the instructions are flawed by their reliance on the Bloom standard, see United States v. Bloom, 149 F.3d 649 (7th Cir. 1998), which was rejected in Black; (2) he claims the jury was instructed that the prohibition on accepting bribes or kickbacks was just one violation that could support an honest services conviction, while Skilling established that it is the only violation that can support such a conviction; (3) he urges that the instructions do not adequately express the requirement of a showing of quid pro quo exchange; (4) Ryan asserts that the instructions permitted a conviction on the basis of a conflict of interest, a showing insufficient after Skilling; and (5) he argues that the instructions permitted a conviction on the basis of state-law violations, also not sufficient after Skilling. (Pet.'s Br. at 21.) The Government urges that there was no error because the instructions, read as a whole, did require the jury to find that Ryan took bribes or kickbacks in order to convict him.

An instructional error can occur in a variety of ways-including, for example, an instruction on an invalid alternative theory of guilt, or an instruction that omits or erroneously describes an element of the offense. United States v. Marcus, 130 S. Ct. 2159, 2165 (2010). Even if an instructional error has occurred as to some element of the charge, reversal is required "only if the instructions, 'viewed as a whole, misguide the jury to the litigant's prejudice.'" United States v. Palivos, 486 F.3d 250, 257 (7th Cir. 2007) (describing harmless error analysis, and citing United States v. Souffront, 338 F.3d 809, 834 (7th Cir. 2003)).

1. The Bloom Standard

Ryan's first challenge to the instructions is their incorporation of what he refers to as the Bloom standard.*fn7 The instruction at issue stated: Where a public official misuses his official position or material nonpublic information he obtained in it for private gain for himself or another, then that official or employee has defrauded the public of his honest services if the other elements of the mail fraud offense have been met. (Tr. 23911.)

The trial judge gave a similar instruction in Black: she instructed the jury that "a person commits honest-services fraud if he 'misuse[s] his position for private gain for himself and/or a co-schemer' and 'knowingly and intentionally breache[s] his duty of loyalty.'" Black, 130 S. Ct. at 2967. The Supreme Court concluded that these instructions were flawed because the "scheme to defraud alleged [in Black] did not involve any bribes or kickbacks," id. at 2968 n.7, and accordingly remanded for a determination of whether the instructional error was harmless. The Black Court did not consider or address what instruction would have been appropriate if the scheme to defraud had rested on a bribery or kickback theory.

On direct appeal in this case, the Seventh Circuit noted that the conflict-of-interest instruction challenged by Ryan included language requiring the jury to find not only a conflict of interest but also to find that "the other elements of the mail fraud statute are met." United States v. Warner, 498 F.3d 666, 698 (7th Cir. 2007). The Seventh Circuit was satisfied that the addition of this requirement meant that the government was required to prove "that the public official allowed or accepted the conflict of interest with the understanding or intent that she would perform acts within her official capacity in return." Id. That same language is included as part of the Bloom instruction that Ryan challenges in the pending motion. The instruction did not limit the prohibited conduct to bribery or kickback schemes, however, and could also be interpreted as an instruction that a scheme of self-dealing itself violates the law-no longer a valid theory of honest services fraud post-Skilling. The court concludes the instruction was in error. No self-dealing offense was actually charged, however, and whether this error is harmless or not will be considered below.

2. Duty Not to Accept Bribes or Kickbacks Was Non-Exclusive

Ryan next argues that the instructions were flawed because they explained that the duty not to accept bribes or kickbacks was only one of the duties whose violation could lead to an honest services conviction, while Skilling makes clear that a bribery or kickback scheme is the only scheme sufficient to support an honest services fraud conviction. (Pet.'s Br. at 21.) The instruction at issue explained that a public official has a duty not to accept "personal and financial benefits with the understanding that the public official would perform or not perform acts in his official capacity in return." (Instructions at 85; Tr. 23906.) Ryan also urges that the "structure" of the instructions was flawed because they "made the acceptance of a bribe or kickback only one path to conviction rather than the only one." (Pet.'s Br. at 22.)

Ryan is correct that, post-Skilling, an honest services fraud conviction does require a bribery or kickback scheme. As the court reads the challenged instruction, however, nothing in it suggests such a scheme is not a required path to conviction. In fact, this instruction taken alone suggests that a bribe is required for conviction. The instruction requires that "the government prove[] beyond a reasonable doubt that the public official accepted the personal and financial benefits with the understanding that the public official would perform or not perform acts in his official capacity in return" (Instructions at 85; Tr. 23906)-an instruction indistinguishable from a bribery instruction. The court finds no error in the language of this instruction; whether a flaw in the overall "structure" of the instructions requires reversal will be addressed as part of the harmless error analysis.

3. The Failure to Require a Quid Pro Quo*fn8

Ryan's next objection challenges the instruction examined above (Instructions at 85; Tr. 23906), as well as the instruction on campaign contributions. Ryan argues that the "personal and financial benefits" instruction is flawed in two respects: first, that it does not require jurors find an "exchange" sufficient to meet the quid pro quo requirement; and second, that the latter half of the instruction might encompass gratuities as well as bribes. Ryan next argues that the campaign contribution instruction is in error because it does not require an explicit quid pro quo. In its entirety, the instruction on "personal and financial benefits" reads:

The law does not require that the government identify a specific official act given in exchange for personal and financial benefits received by the public official so long as the government proves beyond a reasonable doubt that the public official accepted the personal and financial benefits with the understanding that the public official would perform or not perform acts in his official capacity in return.

Likewise, the law does not require that the government identify a specific official act given in exchange for personal and financial benefits received by the public official so long as the government proves beyond a reasonable doubt that the personal and financial benefits were given with the understanding that the public official would perform or not perform acts in his official capacity in return. (Instructions at 85; Tr. 23905-06.) Ryan argues that this instruction improperly eliminated any quid pro quo requirement because it "turned on the understanding of one person-the public official-rather than on whether the two parties had agreed to an exchange." (Pet.'s Br. at 23.) The court finds this argument unpersuasive. The instruction required the public official to accept a benefit with the understanding he will perform an action in return. Such an understanding necessarily requires a second party to the exchange. The language requiring that the act be performed "in return" underscores the instruction's requirement that there be an agreed exchange.

Further, the predicate language does include the term "in exchange," and notes that while the exchange need not involve "a specific official act" it must include "acts . . . in return." This language adequately articulates the quid pro quo requirement.

Next, Ryan contends that the instruction explaining what provision of benefits does not violate the mail fraud statute incorrectly suggests that a gratuity might serve to violate the statute as well as a bribe. The instruction reads:

[T]he providing of personal or financial benefits by a private citizen to and for the benefit of a public official, or to and for the benefit of a public official's family, friends, employees, or associates, does not, standing alone, violate the mail fraud statute, even if the private citizen does business with the state, so long as the personal or financial benefits were not intended to influence or reward the public official's exercise of office. (Instructions at 87; Tr. 23907.) The Supreme Court has explained that the difference between a bribe and a gratuity is "its intent element." United States v. Sun-Diamond Growers of California, 526 U.S. 398, 404 (1999) (interpreting 18 U.S.C. § 201). While a bribe requires an intent to influence, or to be influenced, a gratuity "requires only that the gratuity be given or accepted 'for or because of' an official act.'" Id. at 405. The instruction's language limiting illegal benefits to those "intended to influence or reward the public official's exercise of office" is the language of bribery. Inclusion of the term "reward" in addition to "influence" is necessary to capture instances where the benefit arrives after the act. Ryan appears to urge that a "reward" must be understood to be a gratuity, but the word reward itself is used in one of the federal bribery statutes, 18 U.S.C. § 666, which explains that bribery occurs whenever an individual "corruptly gives, offers, or agrees to give anything of value to any person, with intent to influence or reward an agent . . . in connection with any business, transaction, or series of transactions of such organization, government, or agency. . . ." 18 U.S.C. § 666 (a)(2) (emphasis added). This language is virtually identical to that contained in the instruction, and the court finds no error in the instruction.

Next, Ryan challenges the instruction that permitted the jury to find the intent necessary for a conviction of honest services fraud from evidence of a "benefit or benefits received by a defendant or given by a defendant with the intent that such benefit or benefits would ensure favorable official action when necessary . . . ." (Instructions at 86; Tr. 23906; Pet.'s Br. at 24 n.15.) Ryan insists such a showing is insufficient to establish intent. Instead, he argues, "the benefit must be conferred or received in exchange for something. An intent to ensure favorable action when necessary is not enough." (Pet.'s Br. at 24 n.15.) The case law, however, defeats Ryan's interpretation. In United States v. Gorny, 732 F.2d 597 (7th Cir. 1984), for example, the jury instructions included an instruction similar to this one, based on the Illinois bribery statute. The instruction stated:

[B]ribery occurs when property or personal advantage is accepted by a public employee with knowledge that it is offered with intent to influence the performance of any act related to his public position. No particular act need be contemplated by the person offering the property or personal advantage, or by the public official to whom the offer is made. The crime is completed when the property or personal advantage is accepted by the public employee knowing it was offered with the intent that he act favorably to the person offering the property or personal advantage when necessary. 732 F.2d at 600. Gorny affirmed the conviction of a deputy commissioner on a county board of tax appeals who received payments in cash and other advantages from attorneys who practiced before the board. Although Gorny did not receive payments "based on the outcome of any specific case," the Seventh Circuit confirmed his conviction of mail fraud and racketeering, noting that there was evidence from which the jury could find that "these payments and other favors were conferred upon Gorny with intent to influence him" and that Gorny received these favors with a similar intent. Id. at 600, 601. See also United States v. Kincaid-Chauncey, 556 F.3d at 944 n.15 ("when the payor comes calling, the government official will do whatever is asked."). This instruction is clearly consistent with the "stream of benefits" or retainer theory, and, together with the other benefits instructions, adequately expresses the quid pro quo requirement.

Finally, Ryan argues that the campaign contribution instruction does not adequately explain the type of quid pro quo required for campaign contributions to constitute bribes. For purposes of campaign contributions, Ryan urges, the jury must find more than an implied exchange; there must be an "explicit quid pro quo." (Pet.'s Br. at 23.) The instruction at issue states:

When a person gives and a public official receives a campaign contribution knowing that it is given in exchange for a specific official act, that conduct violates the mail fraud statute, if the other elements of the mail fraud offense are met. The intent of each party can be implied from their words and ongoing conduct. (Instructions at 88; Tr. 23908.)

Ryan is correct that a campaign contribution can be deemed a bribe only if the money is given in return for a commitment to take (or not take) a specific action. In McCormick v. United States, 500 U.S. 257, 273 (1991), the Supreme Court held that a campaign contribution could constitute extortion in a Hobbs Act case, "but only if the payments are made in return for an explicit promise or undertaking by the official to perform or not to perform an official act." Id. A year later, the Court confirmed the quid pro quo requirement, but explained that "[t]he official and the payor need not state the quid pro quo in express terms, for otherwise the law's effect could be frustrated by knowing winks and nods. The inducement from the official is criminal if it is express or if it is implied from his words and actions, so long as he intends it to be so and the payor so interprets it." Evans v. United States, 504 U.S. 255, 274 (1992) (Kennedy, J., concurring).

The final sentence of the campaign contribution instruction in this case tracks Justice Kennedy's language in Evans, and therefore accurately articulates the standard for finding a quid pro quo based on campaign contributions. Moreover, as the Government noted in oral argument, Evans and McCormick were both settled law at the time this case went to the jury, and nothing in Skilling has unsettled them.

4. Conflict-of-Interest Instruction

Ryan next challenges the conflict-of-interest instruction given to the jury: A public official or employee has a duty to disclose material information to a public employer. If an official or employee conceals or knowingly fails to disclose a material personal or financial interest, also known as a conflict of interest, in a matter over which he has decision-making power, then that official or employee deprives the public of its right to the official's or employee's honest services if the other elements of the mail fraud offense are met. (Instructions at 84; Tr. 23905.) On direct appeal in this case, the Seventh Circuit examined this instruction to determine whether it comported with the "private gain" requirement imposed by this circuit's jurisprudence (but not by some other circuits). See Skilling, 130 S. Ct. at 2928 n.36. The Seventh Circuit was satisfied that the instruction at issue properly required the jury to find that the defendant public official had allowed or accepted a conflict of interest for his own private gain, with the intent to perform acts in his official capacity in return. Warner, 498 F.3d at 698.

The objection Ryan now presents is a different one: he notes that this instruction would permit the jury to convict him for self-dealing and other conflicted transactions that fall short of a bribery or kickback scheme. Skilling's core holding precludes such a result. "In light of the relative infrequency of conflict-of-interest prosecutions in comparison to bribery and kickback charges, and the intercircuit inconsistencies they produced, we conclude that a reasonable limiting construction of ยง 1346 must ...


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