REVISED
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 94-40560
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
MICHAEL BRYANT BRUMLEY,
Defendant-Appellant.
Appeal from the United States District Court
for the Eastern District of Texas
June 18, 1997
Before POLITZ, Chief Judge, and KING, GARWOOD, JOLLY, HIGGINBOTHAM,
DAVIS, JONES, SMITH, DUHÉ, WIENER, BARKSDALE, EMILIO M. GARZA,
DeMOSS, BENAVIDES, STEWART, PARKER, and DENNIS, Circuit Judges.
PATRICK E. HIGGINBOTHAM, Circuit Judge:
Michael Bryant Brumley was convicted in a bench trial of
conspiring to defraud the citizens of the State of Texas of honest
services by use of interstate wire communications and the United
States mail in violation of 18 U.S.C. § 371, three counts of wire
fraud in violation of 18 U.S.C. § 1343, three counts of money
laundering in violation of 18 U.S.C. § 1956, and two counts of
making a false statement to a financial institution in violation of
18 U.S.C. § 1014. Brumley does not appeal his conviction on the
last two counts of defrauding a financial institution, and they are
not before us.
As we will explain, Brumley’s primary contention is that the
government has misused federal criminal statutes to prosecute a
state employee for ethical lapses. Along the way to review by the
en banc court the issues on appeal have narrowed to four. First,
Brumley urges that neither the plain language of § 1346 nor its
legislative history expands the types of victims protected by the
statute to include a state employer. Second, he insists that an
ethical lapse, or at worst a state misdemeanor, is not a
deprivation of honest services. Third, he argues that the Commerce
Clause does not support § 1346. Finally, he contends that the
money laundering statute does not reach his conduct. Brumley also
challenged the statute and the indictment on vagueness grounds in
the district court, but he did not pursue these contentions on
appeal.
We reject each of these contentions and affirm the
convictions. In doing so we reject the argument that Congress
failed in its 1988 effort to expand the statute to cover the
deprivation of honest services which the McNally and Carpenter
decisions found were outside the statute’s reach. See Carpenter v.
United States, 484 U.S. 19, 25 (1987); McNally v. United States,
483 U.S. 350, 359-60 (1987). This argument has gathered strength
from the Supreme Court’s recent Commerce Clause decisions, but we
2
ultimately conclude that it cannot escape the plain language of
§ 1346.
I
A panel of this court first reversed the convictions for wire
and mail fraud, as well as money laundering and conspiracy. United
States v. Brumley, 59 F.3d 517 (5th Cir. 1995), withdrawn, 79 F.3d
1430 (5th Cir. 1996). The panel reversed for lack of evidence that
Brumley could foresee the interstate character of the wire
transmission relied upon by the government. After withdrawing this
opinion, the panel, with one judge dissenting, held that the term
“another” as used in 18 U.S.C. § 1346 does not reach citizens of a
state or political subdivision who have been deprived of the honest
services of their public officials. United States v. Brumley, 79
F.3d 1430, 1441-42 (5th Cir. 1996). We granted the government’s
petition for rehearing en banc on July 17, 1996. United States v.
Brumley, 91 F.3d 676 (5th Cir. 1996).
II
Texas’ workers’ compensation law was long administered by the
Texas Industrial Accident Board. Under this regime the Board dealt
with three groups: claimants, their lawyers, and insurance
carriers insuring the employers. Brumley worked for the Board and
resided in Beaumont, Texas. In 1990 the Texas legislature changed
the process for resolving workers’ compensation claims. The Board
became the Texas Workers’ Compensation Commission, and Brumley was
promoted to Associate Director of the new commission and moved to
3
the new commission’s Houston office. Brumley’s duties included the
handling of claims arising under the old law and, according to the
indictment, responsibility for “identifying attorneys and insurance
carriers who failed to follow TWCC or IAB rules and regulations.”
Brumley’s work gave him knowledge of the conduct of lawyers, the
identity of unrepresented claimants, and the details of the process
itself.
Brumley never seemed to be able to live within his income. As
early as 1982, he began to solicit loans from lawyers representing
claimants and their assistance in obtaining loans from lending
institutions. In 1985 and 1986, while he was conducting prehearing
conferences in cases in Lufkin, Texas, he charged and never repaid
several hundred dollars to the account of a claimant’s counsel at
the local country club. By 1988 Brumley had borrowed money from at
least eight lawyers and struck up a relationship with John M. Cely,
a Lufkin attorney with a substantial workers’ compensation
practice. Cely and persons employed by his law firm made frequent
appearances before Brumley in prehearing conferences. They began
a process whereby Cely would cause wire transfers to be made from
the Western Union office in Lufkin to Brumley at various locations
in Texas. These wire transfers were accomplished electronically
through a Western Union facility located outside of Texas. From
1987 to May of 1992, Cely made some seventy wire transfers to
Brumley totaling approximately $86,730. In all, Brumley “borrowed”
4
some $112,156 from eleven lawyers, including Cely. None of this
sum was ever repaid.
The indictment charged a scheme to defraud “the citizens of
the State of Texas, including the members of the Texas Industrial
Accident Board . . . , an agency of the State of Texas, from
receiving the intangible right to honest services.”
III
Brumley contends that Congress did not intend to reach schemes
to deprive an entity of state government of the intangible right of
honest services in its 1988 enactment of § 1346. That statute
provides:
For 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.
Reading § 1346 with § 1343 we have the following prohibition:
Whoever, having devised or intending to devise any
[scheme or artifice to deprive another of the intangible
right of honest services], . . . transmits or causes to
be transmitted by means of [interstate wires] for the
purpose of executing such scheme or artifice, shall be
fined under this title or imprisoned not more than five
years, or both.
Brumley’s present argument, taking a cue from the second panel
opinion, takes two related cuts at the application of the statute
to his conduct. First, he contends that “another” has the same
meaning as the term “whoever” for purposes of the fraud chapter of
the criminal code, specifically Chapter 63 of Title 18. And
5
“another” cannot include his state employer or the citizens of the
State of Texas. Second, invoking federalism, Brumley contends that
Congress failed to state its purpose with the clarity demanded for
federal incursions into state matters, at least those traveling on
the commerce power.
We are persuaded that a governmental entity qualifies as
“another” within the meaning of § 1346, and that “honest services”
can include “honest and impartial government.” The panel opinion
notes that Section 1 of Title I of the U.S. Code provides that
“‘person’ and ‘whoever’ include corporations, companies,
associations, firms, partnerships, and societies, and joint stock
companies, as well as individuals.” 79 F.3d at 1435. It “note[s]
that among the meanings of the word ‘whoever’ in Section 1, Title
I, there is nothing that could even remotely be interpreted or
construed to mean ‘a state,’ ‘a political subdivision of a state,’
‘a government,’ ‘a governmental agency,’ or ‘the citizens of a
state as a body politic.’” Id.
Brumley is himself an “individual,” and we think he must
qualify as a “whoever” within the meaning of the statute, in which
case he can be prosecuted for depriving “another” of his intangible
right of honest services. This case does not involve a prosecution
of a state, state subdivision, government, or agency. Rather, it
is a prosecution of an individual who abused his position as an
employee of a state commission. That the mail fraud statute
6
reaches Brumley’s conduct is consistent with the proposition that
the statute does not allow prosecution of a state or state agency.
Moreover, Section 1 of Title I provides that “person” and
“whoever” include the listed terms. We read this to mean that
“person” and “whoever” include the listed terms without deciding
whether other non-mentioned entities may qualify as a “person” or
a “whoever.” Otherwise, Congress would have said something other
than “include,” such as “person” and “whoever” mean the listed
terms (or consist of, or perhaps include only). In this criminal
statute, “another” defines the range of victims while “whoever”
defines the perpetrator; we do not think it makes sense to define
the victims by reference to the definition of the perpetrator. See
United States v. Castro, 89 F.3d 1443, 1456 (11th Cir. 1996)
(concluding that the plain language and legislative history of
§ 1346 do not limit its application to governmental victims of
fraud), cert. denied, 117 S. Ct. 965 (1997).
IV
Brumley argues that even if “another” does not modify
“whoever,” it does not include “citizens as the body politic.” The
exact thrust of this contention is uncertain, given the fact that
the defendant is not a political entity but a person charged with
fraudulent activity while employed by a state entity. We
understand the argument to be that “another” should not be read to
reach such abuses of state office. The contention is that § 1343
is at least sufficiently uncertain that it need not be so read, and
7
traditional principles of lenity and the doctrine of clear
statement counsel that it should not be. The argument points to
McNally itself, specifically the Court’s observation that:
Rather than construe the statute in a manner that leaves
its outer boundaries ambiguous and involves the Federal
Government in setting standards of disclosure and good
government for local and state officials, we read [the
statute] as limited in scope to the protection of
property rights. If Congress desires to go further, it
must speak more clearly than it has.
483 U.S. at 360.
The argument fails because Congress accepted the Court’s
invitation and was clear in its purpose. First, we think the
statutory language plainly reaches state officials such as Brumley,
and thus it is unnecessary to repair to legislative history. That
history is recounted by the dissent and by the panel majority, see
79 F.3d at 1435-40, and we will not rehearse it again. There is
nothing to suggest that Congress did not intend by § 1346 to
overturn the Supreme Court’s McNally decision and to insist that
the fraud statutes cover deprivations of intangible rights such as
those charged in the counts for which Brumley was convicted. We
join the First, Fourth, and Eleventh Circuits in rejecting similar
attacks on § 1343 convictions. United States v. Sawyer, 85 F.3d
713, 723-24 (1st Cir. 1996); United States v. Bryan, 58 F.3d 933,
939-43 (4th Cir. 1995); United States v. Waymer, 55 F.3d 564, 568
n.3 (11th Cir. 1995), cert. denied, 116 S. Ct. 1350 (1996).
8
The dissent, worried that the text of § 1346 fails to give
citizens adequate notice, accuses the majority of illicitly re-
drafting a criminal statute. But we are hardly announcing a
common-law crime. As the Supreme Court has recently explained,
“the touchstone is whether the statute, either standing alone or as
construed, made it reasonably clear at the relevant time that the
defendant’s conduct was criminal.” United States v. Lanier, ___
U.S. ___, ___, 117 S. Ct. 1219, 1225 (1997). Gauging fair notice
requires an inquiry into the state of the law as a whole, not
merely into the words printed on a single page of the United States
Code. Constructions of a statute announced by the Supreme Court or
lower courts can give citizens fair warning, even if the cases are
not “fundamentally similar.” Id. at ___-___, 117 S. Ct. at 1226-
28.
Here Brumley had notice that Congress had repudiated the
Supreme Court’s interpretation in McNally. Congress, in other
words, announced that it wanted the courts to enforce the honest-
services doctrine developed in the years leading up to McNally.
Because Congress was not faced with a uniform formulation of the
precise contours of the doctrine, some defendants on the outer
reaches of the statute might be able to complain that they were not
on notice that Congress criminalized their conduct when it revived
the honest-services doctrine. But even if there are such
defendants, Brumley is not among them. As we will explain, his
conduct was inconsistent with his duties under Texas law. The
9
boundaries of “intangible rights” may be difficult to discern, but
that does not mean that it is difficult to determine whether
Brumley in particular violated them. See Village of Hoffman
Estates v. Flipside, Hoffman Estates, Inc., 455 U.S. 489, 505, 102
S. Ct. 1186, 1196 (1982) (rejecting a vagueness challenge to a
quasi-criminal ordinance regulating the sale of drug paraphernalia
because the ordinance was “reasonably clear in its application to
the complainant”).
V
We must next find the meaning of honest services as used in
this federal statute.1 As we have explained, Congress has insisted
that the fraud statutes cover the deprivation of intangible rights.
In doing so, it reestablished the honest services doctrine. It
bears emphasis that before McNally the doctrine of honest services
was not a unified set of rules. And Congress could not have
intended to bless each and every pre-McNally lower court “honest
services” opinion. Many of these opinions have expressions far
broader than their holdings. See United States v. Curry, 681 F.2d
402, 419 n.1 (5th Cir. 1982) (Garwood, J., concurring). Congress,
then, has set us back on a course of defining “honest services,”
and we turn to that task.
The statute continues to draw much cogent and scholarly
commentary. See, e.g., George D. Brown, Should Federalism Shield
Corruption?--Mail Fraud, State Law and Post-Lopez Analysis, 82
Cornell L. Rev. 225 (1997).
10
Before McNally, the meaning of “honest services” was uneven.
See, e.g., United States v. Holzer, 816 F.2d 304, 307-10 (7th Cir.)
(affirming the conviction of a county judge who accepted “loans”
from attorneys who practiced before him, even though the government
never showed that the judge ruled differently in a case because of
any lawyer’s willingness to make a “loan”), vacated, 484 U.S. 807
(1988) (remanded for reconsideration in light of McNally); United
States v. Silvano, 812 F.2d 754 (1st Cir. 1987) (affirming the
conviction of a city budget director who did not disclose his
secret plan to enrich a friend with an expensive and unnecessary
project bid); United States v. Lovett, 811 F.2d 979 (7th Cir. 1987)
(affirming the conviction of a mayor who accepted an undisclosed 5%
interest in a local cable company attempting to bid on a city
franchise); United States v. Bruno, 809 F.2d 1097, 1104-06 & n.1
(5th Cir.) (affirming convictions under § 1343 based on a scheme to
bribe), cert. denied, 481 U.S. 1057 (1987); United States v.
Barber, 668 F.2d 778 (4th Cir.) (affirming the conviction of an
Alcoholic Beverage Control Commission official who “withdrew”
liquor from a state warehouse with subsequent “authorization” from
liquor companies so that the companies would be billed), cert.
denied, 459 U.S. 829 (1982); Bradford v. United States, 129 F.2d
274, 276 (5th Cir.) (grounding a § 1343 conviction on a scheme to
use city officials’ positions to sell buses to the city at
exorbitant prices for unearned profits), cert. denied, 317 U.S. 683
(1942); Shushan v. United States, 117 F.2d 110, 115 (5th Cir.) (“No
11
trustee has more sacred duties than a public official and any
scheme to obtain an unfair advantage by corrupting such a one must
in the federal law be considered a scheme to defraud.”), cert.
denied, 313 U.S. 374, 314 U.S. 706 (1941).
A close look at these cases uncovers two uncertainties
regarding the draw by this federal statute upon state law,
specifically in defining the statutory element of honest services.
First, must the services be owed under state law? Second, must the
breach of a duty to provide services rooted in state law violate
the criminal law of the state? We decide today that services must
be owed under state law and that the government must prove in a
federal prosecution that they were in fact not delivered. We do
not reach the question of whether a breach of a duty to perform
must violate the criminal law of the state.
We begin with the plain language of the statute. There are
two words — “honest” and “services.” We will not lightly infer
that Congress intended to leave to courts and prosecutors, in the
first instance, the power to define the range and quality of
services a state employer may choose to demand of its employees.
We find nothing to suggest that Congress was attempting in § 1346
to garner to the federal government the right to impose upon states
a federal vision of appropriate services — to establish, in other
words, an ethical regime for state employees. Such a taking of
power would sorely tax separation of powers and erode our
federalist structure. Under the most natural reading of the
12
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 law. Stated directly, the
official must act or fail to act contrary to the requirements of
his job under state law. This means that if the official does all
that is required under state law, alleging that the services were
not otherwise done “honestly” does not charge a violation of the
mail fraud statute. The statute contemplates that there must first
be a breach of a state-owed duty. It follows that a violation of
state law that prohibits only appearances of corruption will not
alone support a violation of §§ 1343 and 1346. See United States
v. Sawyer, 85 F.3d 713, 728-29 (1st Cir. 1996). As the Ninth
Circuit put it, “[t]o hold otherwise that illegal conduct alone
[would suffice] would have the potential of bringing almost any
illegal act within the province of the mail fraud statute.” United
States v. Dowling, 739 F.2d 1445, 1450 (9th Cir. 1984), rev’d on
other grounds, 473 U.S. 207 (1985).
Stated another way, “honest services” contemplates that in
rendering some particular service or services, the defendant was
conscious of the fact that his actions were something less than in
the best interests of the employer — or that he consciously
contemplated or intended such actions. For example, something
close to bribery. If the employee renders all the services his
position calls for, and if these and all other services rendered by
him are just the services which would be rendered by a totally
13
faithful employee, and if the scheme does not contemplate
otherwise, there has been no deprivation of honest services. See,
e.g., United States v. Czubinski, 106 F.3d 1069, 1077 (1st Cir.
1997) (reversing convictions under §§ 1343 and 1346 because
although unauthorized browsing of taxpayer files by an IRS employee
constitutes a breach of personnel policies, “there [was] no
suggestion that he failed to carry out his official tasks
adequately, or intended to do so”); United States v. Rabbitt, 583
F.2d 1014, 1026 (8th Cir. 1978), cert. denied, 439 U.S. 1116
(1979); United States v. McNeive, 536 F.2d 1245, 1246 (8th Cir.
1976). Thus, the mere violation of a gratuity statute, even one
closer to bribery than the Texas statute, will not suffice.
Sawyer, 85 F.3d at 729-30.
Finally, the statute proscribes an actual scheme or artifice
to defraud. There is nothing in the informing principles of
federalism or legislative history to suggest that the scheme or
artifice to defraud elements are drawn from state law. Rather,
they are familiar terms of federal criminal law generating and
drawing their sustenance from federal common law. These wholly
federal elements, read with the jurisdictional elements of mail
usage and coupled with the draw upon state law for the definition
of service, allow the statute to serve federal interests without
supplanting rights of core state governance. The indictment
charged that Brumley used his position to assist Cely in exchange
14
for money. Thus, the federal component of the crime was properly
charged, and, as we will explain, was proved.
We pause to put aside the frequent invocations of a
deprivation of citizens’ rights to honest services. See Bruno, 809
F.2d at 1105-06; Shushan, 117 F.2d at 115. The reference to such
“rights” of citizens has little relevant meaning beyond a shorthand
statement of a duty rooted in state law and owed to the state
employer. Despite its rhetorical ring, the rights of citizens to
honest government have no purchase independent of rights and duties
locatable in state law. To hold otherwise would offer § 1346 as an
enforcer of federal preferences of “good government” with attendant
potential for large federal inroads into state matters and genuine
difficulties of vagueness. Congress did not use those words, and
we will not supply them.
The federalism arguments that inform the definition of “honest
services” under federal criminal law are powerful, and we
acknowledge them in our holdings today. A sitting state official
with adjudicatory authority who accepts payments from lawyers
practicing in front of him and simultaneously acts for those
lawyers in his official capacity contrary to his state-law duty has
provided dishonest services to his employer, here the Texas
Industrial Accident Board and its successor, the TWCC. As it turns
out, Texas condemns such conduct by making it a criminal offense
punishable by imprisonment for up to one year and a fine as large
as $4,000, and this violation was part of a fraudulent scheme and
15
conspiracy under § 1346, as found by the district court. The
tension inherent in federal criminalization of conduct by state
officials innocent under state law is absent here.
We have held that services under § 1346 are those an employee
must provide the employer under state law. Using his office to
pursue his own account and not that of his employer, Brumley
violated a Texas criminal statute. This case does not then require
us to decide whether the amended federal statute criminalizes
conduct no part of which is criminal under state law. Cf. United
States v. Cochran, 109 F.3d 660, 667 (10th Cir. 1997) (“[I]t would
give us great pause if a right to honest services is violated by
every breach of contract or every misstatement made in the course
of dealing.”).
Our previous cases have not made clear the use of state law we
emphasize today. To the extent our prior cases are contrary, they
are overruled.
VI
Having concluded that § 1343 applies to deprivations of honest
services by state employees and that such services must be owed
under state law, we now address Brumley’s contention that his own
actions did not do so. At trial, the government stipulated that it
would not try to prove that any IAB award was enhanced by Brumley
or that any claimant was awarded more money by Brumley or that
Brumley referred any unrepresented claimant to an attorney in
return for cash. Rather, the government’s “position [was] that the
16
quid pro quo [was] intangible, such as favoritism or other types of
intangible matters.” The government points out that Cely admitted
to the trial court that the $86,780 in payments to Brumley were not
“loans.” And during the time period that Brumley was receiving
these payments from Cely, Brumley vouched for Cely’s good character
when Cely was investigated by IAB and interceded to try to stop the
investigation altogether. Brumley also advised Cely on the
alteration of documents subpoenaed by the IAB, so as to make easy
detection of wrongdoing difficult. The relationship between Cely
and Brumley was so tight that when one of Cely’s employees inquired
into Cely’s unconcerned confidence about an impending TWCC/IAB
investigation of Cely, he replied: “We have Brumley.” Brumley also
helped Cely’s attempt to lease property in Lufkin to the TWCC by
advising Cely how to conceal his efforts and by aggressively
discouraging the TWCC from leasing from another bidder.
The district court found “ample and convincing” evidence to
support each of the counts of the indictment. According to the
district court, Brumley and Cely engaged in a conspiracy in which
Cely would give Brumley money and Brumley would use his position
with the IAB and TWCC to assist Cely’s dealings with the agency.
Although the district court found clear evidence of ethical
violations, it did not rely on them to make its decision. Instead,
the district court found a scheme to defraud that included conduct
that violated Texas penal law. See Tex. Penal Code Ann. § 36.08(e)
(making it a Class A misdemeanor for a public servant with judicial
17
authority to “solicit[], accept[], or agree[] to accept any benefit
from a person the public servant knows is interested in or likely
to become interested in any matter before the public servant or
[his] tribunal”).
Brumley’s other contentions are without merit, and we affirm
the judgment of convictions.
AFFIRMED.
18
JOLLY and DeMOSS, Circuit Judges, with whom SMITH, Circuit Judge,
joins, Dissenting:
We respectfully dissent from what we consider to be an
issue-evasive and jurisprudentially flawed majority opinion. With
little analysis, and much judicially engrafted legislation, it
holds that general, undefined, vague, and ambiguous words
constitute a clear statement that Congress intended for federal
prosecutors and grand juries to police the conduct of state
officers acting in their official state capacities. We should make
clear that we do not at all suggest that the criminal statute at
issue is unconstitutional or must otherwise be stricken -- only
that as the statute is applied in this case, the indictment and
proof fails to state and prove a crime.
INTRODUCTION
First, the majority needs to be reminded that when
interpreting a criminal statute, courts must apply the rule of
lenity; that is, when choosing between two readings of a criminal
statute, the courts must favor the narrower interpretation unless
Congress has spoken to the contrary in language that is clear and
definite. This is an indisputable rule of statutory construction
ignored by the majority. Second, the Supreme Court has emphasized
that when a statute is applied, as here, to alter the balance of
federalism, congressional intent must be plain on the face of the
statute -- an intent that even infrared eyes cannot detect from
this statute.
The words we interpret today are these few: “For the purpose
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.” For the majority to prevail, these words must
clearly demonstrate that Congress intended to apply the wire fraud
statute to police the integrity of state officials acting in the
capacities of their offices. Moreover, these words must satisfy
constitutional due process, which requires that citizens be given
fair notice that specific conduct constitutes a crime.
The majority utterly fails to address these principles of
statutory construction. The reason the majority opinion avoids
raising these crucial matters is simple: it cannot possibly conform
its conclusions with principles of statutory construction.
Principles of statutory construction are not the only
obstacles to the majority's reading of the statute. The
legislative history is also devastating to the majority’s position
that Congress has spoken clearly in § 1346 to reach the conduct of
state officers acting in their official capacity. Because the
statute fails on its face to make a crime of the charged conduct,
this dissent need not address the matter of legislative history.
The legislative history does, however, make plain beyond any doubt
that § 1346 cannot be fairly construed to reflect a clear
congressional intent to police the integrity of state officers.
20
Thus, rather than deal with the legislative history, the majority
pursues the only course available to it: silence.
Indeed, the only significant issue in this case that the
majority squarely faces is the meaning of “honest services," a term
that the majority acknowledges is ambiguous and undefined by
Congress. One would think that the majority would directly
acknowledge that this patent and indisputable ambiguity cripples
this prosecution. But no. Instead, the majority assumes a role
somewhere between a philosopher king and a legislator to create its
own definitions of the terms of a criminal statute. Surely, the
majority should recognize the laudatory principle to which we as a
Court try scrupulously to adhere: The courts may not assume the
place of Congress by writing or rewriting criminal laws pursuant to
which citizens will be prosecuted. This is solely the prerogative
of Congress. With great respect for the usual judgment of our
colleagues, we must say that the majority opinion in this respect
is hardly a judicial opinion.2
That it is necessary for the majority to write more
in the nature of legislative drafting than judicial reasoning
underscores that the majority implicitly acknowledges that the
statute does not reflect a clear statement of Congressional intent.
For example, the majority says at page 10, “We decide today” that
“honest services” must be owed under state law in order to
establish a crime under § 1343 as amended by § 1346. Furthermore,
at page 14, the majority overrules all previous cases that
criminalize conduct under § 1343, if these cases involve less, or
more, than the majority’s determination of the appropriate state
law component. In short, the majority’s legislative engraftment
onto § 1343 gives the appearance that Brumley is being convicted of
a crime that is now in the process of being devised by the Court.
21
The majority opinion is flawed in other respects as we shall
develop more fully in this dissent. Its argument that it makes no
sense to "define victims by reference to the definition of the
perpetrator" is sophistry, a glib phrase giving the appearance of
a truism, resorted to by the majority because it can provide no
answer to otherwise define the meaning of “another” as it appears
in the statute. Although it may be less than a perfect method of
divining the hidden intent of Congress, we suggest that defining
"another," which is otherwise completely undefined by Congress, by
referring to "whoever," is an absolutely correct grammatical
construction of the one-sentence statute; at least it provides some
definitional meaning or limits to the term “another.” The majority
opinion provides no definitional limits for a key term in a
criminal statute. The majority also says nothing about the due
process problems of sufficient notice of what behavior has been
prohibited when such key terms have no definitional limits.
In this dissent, we shall further show that the majority,
without any analysis, baldly states that "another" means the
citizens as the body politic. It is beyond our capacity to accept
the conclusion that by using the term "another" in § 1346, Congress
clearly has referred to the entire “body politic” of the State of
Texas. In so concluding without analysis, the majority gives the
phrase judicial chutzpa new meaning.
After the majority completes its assumed legislative task of
defining honest services, it appears to have some second thoughts
22
about the application of "another" to the body politic, and
"pauses" to
put aside the frequent invocations of a deprivation
of citizens' rights to honest services. The
reference to such "rights" of citizens has little
relevant meaning beyond a shorthand statement of a
duty rooted in state law and owed to the state
employer. Despite its rhetorical ring, the rights
of citizens to honest government have no purchase
independent of rights and duties locatable in state
law. To hold otherwise would offer § 1346 as an
enforcer of federal preferences of "good
government" with attendant potential for large
federal inroads into state matters and genuine
difficulties of vagueness. Congress did not use
those words, and we will not supply them.
Maj. Op. at 13 (internal citation omitted). It is certainly true
that Congress did not use those words. Indeed, that is a major
point of this dissent. The indictment, however, used those words.
Does the majority conclude that the indictment charges the
specifics of a crime unauthorized by Congress? If for no other
purpose than to remind the majority, we point out that the
indictment charged Brumley with depriving "the citizens of the
State of Texas . . . from receiving . . . honest services." Yet
the majority says the term has no “purchase.” No purchase? The
deprivation of the “citizens of Texas rights to honest services” in
this case has “purchased” a federal prison sentence for Mr.
Brumley.
We turn now to more fully address the substantive issues
raised by this appeal. We first address the Supreme Court opinions
in McNally and Carpenter, the cases that prompted the passage of §
23
1346. We will then show how the Supreme Court has made it
unmistakably plain that Congress must make a clear statement when
it intends to extend a criminal statute into policing the behavior
of state officials. Next we will show that the statutory language
cannot possibly be interpreted as such a clear statement, and that
the legislative history debunks the majority’s position that § 1346
is a clear statement that Congress intended to police the honesty
of state government officials in their official capacities.
Finally, we demonstrate that the phrase "honest services" is
entirely ambiguous.
McNALLY AND CARPENTER
A thorough understanding of the Supreme Court's landmark
decision in McNally v. United States, 483 U.S. 350, 107 S. Ct.
2875, 97 L.Ed.2d 292 (1987), is the first order of business. This
case involved the prosecution of a former public official of
Kentucky and a private individual for alleged violation of the
federal mail fraud statute, 18 U.S.C. § 1341. The principal theory
of the prosecution in McNally, which was accepted by the courts
below, was that the defendants' participation in a self-dealing
patronage scheme defrauded the citizens and government of Kentucky
of certain "intangible rights," such as the right to have the
commonwealth affairs conducted honestly. The jury convicted the
defendants and the Court of Appeals affirmed the convictions,
24
relying upon a line of decision from the Courts of Appeals holding
that the mail fraud statute proscribed schemes to defraud citizens
of their intangible rights to honest and impartial government. The
Supreme Court granted certiorari and reversed. The most
illuminating language of the majority opinion in McNally provides
that:
Rather than construe the statute [mail fraud, §
1341] in a manner that leaves its outer boundaries
ambiguous and involves the Federal Government in
setting standards of disclosure and good government
for local and state officials, we read § 1341 as
limited in scope to the protection of property
rights. If Congress desires to go further, it must
speak more clearly than it has.
Id. at 360 (emphasis added).
This seven to two majority opinion overturned the theories
upon which a large number of prior Circuit Court decisions had been
based. Justice Stevens' dissent identifies in detail the prior
Circuit Court cases and categorizes them in separate footnotes:
Footnote 1
State and federal officials convicted of defrauding
citizens of their right to the honest services of
their governmental officials, id. at 362;
Footnote 2
Elected officials and campaign workers convicted of
mail fraud for using the mail to falsify votes,
thus defrauding the citizenry of its right to an
honest election, id. at 363;
Footnote 3
In the private sector, agents with clear fiduciary
duty to their employers or unions, found guilty of
25
defrauding by accepting kick backs or selling
confidential information, id. at 363; and
Footnote 4
In the private sector, defendants convicted for
defrauding individuals of their rights to privacy
and other non-monetary rights. Id. at 364.
The key language from McNally quoted above clearly states that
the majority overruled the body of case law referred to in Justice
Stevens' footnotes for two reasons:
1. The majority did not want to construe the statute as
involving the federal government in setting standards of
disclosure and good government for local and state officials.
This is a healthy recognition of the realities of our federal
system and pulls the rug out from under the conceptual
analysis used by the Circuit Courts in deciding the cases in
footnotes 1 and 2 of the dissent; and
2. The majority did not want to construe the mail fraud
statute in a manner that would create ambiguity in its outer
limits, so it said the statute would apply only to the
"protection of property rights," thereby pulling the rug out
from under the category of cases described in footnotes 3 and
4.
Both the majority opinion and the dissent in McNally indicate
that Congress might change the Court's construction; but the
26
majority made it absolutely clear that Congress "must speak more
clearly than it has" if it desired to make such changes.
Shortly after its decision in McNally, the Supreme Court
decided Carpenter v. United States, 484 U.S. 19, 108 S. Ct. 316, 98
L.Ed.2d. 275 (1987). In Carpenter, a unanimous Supreme Court
described its holding in McNally as follows:
We held in McNally that the mail fraud statute does
not reach "schemes to defraud citizens of their
intangible rights to honest and impartial
government" and that the statute is "limited in
scope to the protection of property rights."
Id. at 320 (internal citations omitted).
In Carpenter, the Supreme Court found that the property
rights, though intangible, were none the less property rights and
that "McNally did not limit the scope of § 1341 to tangible as
distinguished from intangible property rights." Id. Therefore,
Carpenter clearly reaffirms the majority opinion in McNally, but
recognizes that both tangible and intangible property rights are
protected by the mail fraud and wire fraud statutes as they then
stood.
Because of the emphasis that the majority opinion places on
the circumstance of the employment relationship between Brumley and
the TWCC, it should be noted that in Carpenter the Court
characterized an employer’s contractual right to an employee’s
honest and faithful services as "an interest too ethereal in itself
to fall within the protection of the mail fraud statute." Id.
27
Consequently, Carpenter foreclosed the use of the "intangible right
of honest services" doctrine in private employment relationships,
just as McNally had foreclosed the use of that doctrine as to the
defrauding of "citizens of their intangible rights to honest and
impartial government."
PRINCIPLES OF STATUTORY CONSTRUCTION
On the last day of the 100th Congress in October 1988,
Congress passed a highly publicized and much debated omnibus drug
bill. Attached to that omnibus bill, as one of some 30 other
unrelated provisions, was a provision containing the text of what
has now been codified as 18 U.S.C. § 1346. See Pub. L. 100-690,
Title VII, § 7603(a), Nov. 18, 1988, 102 Stat. 4508. Our first
task is to decide whether the language used by the Congress in §
1346 satisfies the admonition of the Supreme Court in McNally that
Congress "speak more clearly than it has."
As with any statutory question, analysis begins with the
language of the statute. Kellogg v. United States, (In re West
Texas Marketing Corp.), 54 F.3d 1194, 1200 (5th Cir.), cert.
denied, ___ U.S. ___, 116 S. Ct. 523, ___ L.Ed.2d ___ (1995). In
determining a statute's plain meaning, the courts assume that,
absent any contrary definition, "Congress intends the words in its
enactments to carry their ordinary, contemporary, common meaning."
Pioneer Investment Services v. Brunswick Associates, 507 U.S. 380,
28
388, 113 S. Ct. 1489, 1495, 123 L.Ed.2d 74 (1993) (internal
quotation marks omitted). As the Supreme Court has stated: "There
is, of course, no more persuasive evidence of the purpose of a
statute than the words by which the legislature undertook to give
expression to its wishes." Griffin v. Oceanic Contractors, Inc.,
458 U.S. 564, 571, 102 S. Ct. 3245, 3250, 73 L.Ed.2d 973 (1982)
(internal quotation marks omitted). If the language is clear, then
"the inquiry should end." United States v. Ron Pair Enterprises,
489 U.S. 235, 241, 109 S. Ct. 1026, 1030, 103 L.Ed.2d 290 (1989).
In United States v. Bass, 404 U.S. 336, 92 S.Ct. 515, 30
L.Ed.2d 488 (1971), the Supreme Court stated the principles which
the Court has long followed in construing criminal statutes passed
by Congress:
First, as we have recently reaffirmed, "ambiguity
concerning the ambit of criminal statutes should be
resolved in favor of lenity." Rewis v. United
States, 401 U.S. 808, 812 [(1971)].... In various
ways over the years we have stated that "when
choice has to be made between two readings of what
conduct Congress has made a crime, it is
appropriate, before we choose the harsher
alternative, to require that Congress should have
spoken in language that is clear and definite."
United States v. Universal CIT Credit Corp., 344
U.S. 218, 221 [(1952)].... This principle is
founded on two policies that have long been part of
our tradition. First, "a fair warning should be
given to the world in language that the common
world will understand of what the law intends to do
if a certain line is passed. To make the warning
fair, so far as possible the line should be clear."
McBoyle v. United States, 283 U.S. 25, 27
[(1931)].... Second, because of the seriousness of
criminal penalties and because criminal punishment
usually represents the moral condemnation of the
29
community, legislatures and not courts should
define criminal activity. This policy embodies
"the instinctive distaste against men languishing
in prison unless the lawmaker has clearly said they
should." H. Friendly, Mr. Justice Frankfurter and
the Reading of Statutes in BENCHMARKS, 196, 209
(1967).
Id. at 522-23 (other internal citations omitted).
Therefore, the Supreme Court has recognized that criminal
statutes must be construed narrowly. Moreover, the Court has
emphasized a second critical principle:
Unless Congress conveys its purpose clearly, it
will not be deemed to have significantly changed
the federal-state balance.... As this Court
emphasized only last term in Rewis v. United
States, [401 U.S. at 812,] we will not be quick to
assume that Congress has meant to effect a
significant change in the sensitive relation
between federal and state criminal jurisdiction.
In traditionally sensitive areas, such as
legislation affecting the federal balance, the
requirement of clear statement assures that the
legislature has in fact faced, and intended to
bring into issue, the critical matters involved in
the judicial decision. In Rewis, we declined to
accept an expansive interpretation of the travel
act. To do so, we said then, "would alter
sensitive federal state relationships [and] could
overextend limited federal police resources."
While we noted there that "[i]t is not for us to
weigh the merits of these factors," we went on to
conclude that the "fact that they are not even
discussed in the legislative history... strongly
suggests that Congress did not intend that [the
statute have the broad reach]." 401 U.S. at 812...
As in Rewis, the legislative history provides
scanty basis for concluding that Congress faced
these serious questions and meant to affect the
federal state balance in the way now claimed by the
government.
30
Id. at 523 (internal footnotes and citations omitted) (alterations
in original). When legislation has the potential of altering the
relationship between state and federal police powers, this Court
must adopt a narrow interpretation of the statute.
It is clear, of course, that, under the Supremacy Clause, the
Congress may legislate in areas traditionally regulated by the
States. Nevertheless, the Court has emphasized that "[t]his is an
extraordinary power in a federalist system. It is a power that we
must assume Congress does not exercise lightly." Gregory v.
Ashcroft, 501 U.S. 452, 460, 111 S. Ct. 2395, 2400, 115 L.Ed.2d 410
(1991). "If Congress intends to alter the usual constitutional
balance between the States and the Federal Government, it must make
its intention to do so unmistakably clear in the language of the
statute." Id. at 461 (internal citations omitted) (emphasis
added).
INTERPRETING THE TEXT OF SECTION 1346
The text of § 1346 is only one sentence in length and reads as
follows:
For 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. A plain reading of the statutory text produces
numerous ambiguities and questions:
a. Who is the "deprivor" and who is the "deprivee?"
31
b. What is an "intangible right?"
c. What are "honest services?"
d. What is "the intangible right of honest services?"
If a criminal statute is to satisfy the "fair warning" test of
Bass, answers to these questions must be available to the "common
world" in a fashion which is clear and readily understandable so
that the line where permitted conduct ends and prohibited conduct
begins is certain.
The answer to the first question, "Who is the deprivor?,"
should be clear to the common man. The chapter referred to is
Chapter 63 of Title 18 entitled "Mail Fraud," and the term "scheme
or artifice to defraud" appears in four sections: Section 1341,
Mail Fraud; Section 1342, Fictitious Names or Addresses; Section
1343, Fraud by Wire, Radio or Television; and Section 1344, Bank
Fraud. The pronoun "whoever" is the pronoun used at the beginning
of each of these sections. Section 1 of Title I of the United
States Code, relating to rules of construction, contains the
following definition:
In determining the meaning of any Act of Congress,
unless the context indicates otherwise --
"person" and "whoever" include corporations,
companies, associations, firms, partnerships,
societies, and joint stock companies, as well as
individuals; ....
If one substitutes for the pronoun "whoever" its statutory
definition, and if one also inserts the definition of § 1346 in §
32
1343 (Wire Fraud), which is the relevant section involved in this
case, the statute reads as follows:
WHO [any person, individual,
corporation, company, association,
firm, partnership, society or joint
stock company who],
PROHIBITED
CONDUCT having devised or intending to
devise s c h e m e o r
artifice [to deprive another of
the intangible right of
honest services]
transmits or causes to be
transmitted by means of
wire, radio or television
communication in
interstate or foreign
commerce any writings,
signs, signals, pictures
or sounds
MOTIVE for the purpose of
executing such scheme or
artifice; etc.
The answer to the first question, therefore, is that the deprivor
is "any person, individual, corporation, company, association,
firm, partnership, society or joint stock company."
The answer to the second question, "Who is the deprivee?," is
not clear. The word "another" is not defined anywhere in the
United States Code. The dictionary says that the first and most
frequent use of "another” as a pronoun is "one more; an additional
one."3 Grammarians teach that the word "another," when used as a
WEBSTER'S COLLEGIATE DICTIONARY, Random House, 1992.
33
pronoun, is an indefinite pronoun which has no specific meaning in
and of itself but draws its meaning from the context in which it is
used. A logical argument could be made, therefore, that the
pronoun "another," as incorporated by § 1346 into § 1343, would
have the same meaning as the lists of nouns incorporated into §
1343 by the Title 1, § 1 definition of "whoever." If this second
insertion is made, the first portion of § 1343 (wire fraud) reads
as follows:
[Any person, individual, corporation, company,
association, firm, partnership, society or joint
stock company who], having devised or intending to
devise any scheme or artifice [to deprive any other
person, individual, corporation, company,
association, firm, partnership, society or joint
stock company of the intangible right of honest
services] etc.
With these insertions, § 1343 as amended by § 1346 can certainly be
read to clearly define the deprivor and the deprivee, setting aside
for the time being the definitional problem of what constitutes a
"deprivation of an intangible right of honest services." But these
insertions do not solve the interpretation problem in this case,
because the indictment charged Brumley with conspiring to defraud
and defrauding "the citizens of the State of Texas, including
members of the Texas Industrial Accident Board, an agency of the
State of Texas, from receiving the intangible right to honest
services," and defrauding "the citizens of the State of Texas
including the Industrial Accident Board and its successor (the
Texas Workman’s Compensation Commission), a state agency, of the
34
intangible right to good, faithful and honest service." There is
nothing in the definition of "whoever" in § 1 of Title 1 which
could even remotely be interpreted or construed to mean "a state,"
"the citizens of a state," "a political subdivision of a state,"
"a governmental agency," or "an employee or official of a govern-
mental agency." Moreover, the majority opinion impliedly concedes
that none of the nouns listed in the definition of § 1 of Title 1
could be construed to include a "state or state agency" when it
states that "the statute does not allow prosecution of a state or
state agency." Maj. Op. at 6.
The answers to the questions "What is an intangible right?",
"What are honest services?," and what is "the intangible right of
honest services" are not clear nor is their meaning readily
available to the average citizen. The term "intangible right" is
not defined in the United States Code, is not defined in BLACK’S LAW
DICTIONARY, and, prior to its use in § 1346, had never been used in
any other statute of the United States. The term "honest services"
is not defined anywhere in the United States Code, is not defined
in BLACK’S LAW DICTIONARY, and had never been used in the United States
Code prior to its use in § 1346. The phrase "the intangible right
of honest services" is, therefore, inherently undefined and
ambiguous. There is no listing in the United States Code of all
"intangible rights;" therefore, there is nothing which could be
identified as "the intangible right of honest services."
35
It is therefore incomprehensible to us that the majority can
conclude, as it must in order to uphold this conviction, that the
inclusion of the words "[f]or 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,"
reflects a clear statement of a Congressional intention to protect
the citizenry of a state from corrupt state officials. Given this
certain ambiguity of statutory words, there is surely no call for
us to proceed further into legislative history to demonstrate that
Congress has failed to satisfy the requirements delineated in Bass
and Ashcroft. Nonetheless, the egregious error of the majority in
applying this statute to the instant facts is emphasized by
reference to legislative history. The legislative history
demonstrates conclusively that the United States House of
Representatives was unwilling to pass a criminal statute to reach
the conduct alleged in the instant indictment.
LEGISLATIVE HISTORY
The specific text of what has become 18 U.S.C. § 1346 was
inserted in the Omnibus Drug Bill for the first time on the very
day that the Omnibus Drug Bill was finally passed by both the House
and the Senate.4 The text of what is now § 1346 was never included
For an excellent discussion of the legislative
history of § 1346, see Adam H. Kurland, The Guarantee Clause as a
Basis for Federal Prosecutions of State and Local Officials, 62 S.
36
in any bill as filed in either the House of Representatives or the
Senate. As a result, the text of § 1346 was never referred to any
committee of either the House or the Senate, was never the subject
of any committee report from either the House or the Senate, and
was never the subject of any floor debate reported in the
Congressional Record.
There are only two items of legislative history pertinent to
the text of § 1346 as actually passed. First, there are remarks on
the floor of the House entered by Representative Conyers regarding
various provisions in the Omnibus Drug Bill, including the section
of that bill which added the new § 1346 to Title 18. After
describing the Supreme Court decision in McNally and its effect on
various prior federal Circuit Court opinions, Representative
Conyers stated:
This amendment restores the mail fraud
provision to where that provision was before the
McNally decision. The amendment also applies to
the wire fraud provision and precludes the McNally
result with regard to that provision.
The amendment adds a new section to 18 U.S.C.
63 that defines the term "scheme or artifice to
defraud to include a scheme or artifice to defraud
another of the intangible right of honest
services." Thus, it is no longer necessary to
determine whether or not the scheme or artifice to
defraud involved money or property. This amendment
is intended merely to overturn the McNally
decision. No other change in the law is intended.
CAL. L. REV. 367, 487-91 (1989).
37
134 Cong. Rec. H11,108-01 (daily ed. Oct. 21, 1988) (emphasis
added).
It is significant that in this statement Representative
Conyers does not use the word "state," nor the words "citizens of
a state," nor the words "state official," nor the words "public
official," nor the words "state employee." What Representative
Conyers does refer to as the change made by the amendment is that
it eliminates the necessity "to determine whether or not the scheme
or artifice to defraud involved money or property."5
Second, several weeks after the passage of the Omnibus Drug
Bill, the Senate Judiciary Committee prepared and entered into the
Congressional Record a report regarding all of the provisions in
the Anti-Drug Abuse Act of 1988 which were within the jurisdiction
of the Senate Judiciary Committee, for the purpose of detailing
"Congress' intent in enacting these provisions." Regarding the
text of what is now 18 U.S.C. § 1346, this report states as
follows:
Section 7603. Intangible Rights for Mail and Wire
Fraud.
This section overturns the decision of McNally
v. United States in which the Supreme Court held
In the case of Representative Conyers’ remarks,
affording them any weight is dubious, as he voted against the final
omnibus drug bill. See Geraldine Szott Moohr, Mail Fraud and the
Intangible Rights Doctrine: Someone to Watch Over Us, 31 Harv. J.
Leg. 153, 169 n.69 (1994). Likewise, there is nothing in the
Congressional Record which identifies Representative Conyers as the
sponsor of this amendment.
38
that the mail and wire fraud statutes protect
property but not intangible rights. Under the
amendment, those statutes will protect any person's
intangible right to the honest services of another,
including the right of the public to the honest
services of public officials.6 The intent is to
reinstate all of the pre-McNally case law
pertaining to the mail and wire fraud statutes
without change.7
134 Cong. Rec. S17,360-02 (daily ed. Nov. 10, 1988) (footnotes
added).
Such post-enactment legislative history, however, is not
entitled to great weight. See Consumer Products Safety Comm’n v.
GTE Sylvania, Inc., 447 U.S. 102, 118 (1980). Moreover, additional
legislative history reveals that, on at least two occasions,
Congress was unwilling to specifically enact a statute that
expressly spoke to the conduct of public officials. The first such
occasion was H.R. 3050, 100th Cong., 1st Sess., filed July 29,
1987, which provided for the addition of a new section in Chapter
63 of Title 18 of the United States Code, which would have read:
The phrase "including the right of the public to the
honest services of public officials" in this report is pure
conjecture at best. Surely the staff of the Senate Judiciary
Committee knew that Section 2 of S2973 (public corruption) was
rejected by the House of Representatives See our discussion of
S2973 hereinafter.
The majority correctly notes that the pre-McNally
case law was "uneven" and was "not a unified set of rules."
Therefore, the federal statute could not have intended to
"reinstate all of the pre-McNally case law." To do so would have
required a truly extraordinary statute, in which the substantive
force of the statute varied in each judicial circuit.
39
Section 1346. Definition of Defraud for Certain
Sections.
As used in Sections 1341 and 1343, the term
"defraud" includes the defrauding of the citizens
of a body politic --
1. of their right to the conscientious,
loyal, faithful, disinterested and unbiased
performance of official duties by a public
official thereof; or
2. of their right to have the public
business conducted honestly, impartially, free
from bribery, corruption, bias, dishonesty,
deceit, official misconduct and fraud.
This bill was referred to the House Committee on the Judiciary but
was never further acted upon in any way. Had this bill become law,
Congress would have declared in clear and unmistakable language
that the "citizens of a body politic" are protected by federal law
from dishonest public servants.
Second, the most comprehensive vehicle by which Congress
sought to change the McNally decision in a manner sufficient to
satisfy the tests of McNally was Senate Bill 2793 (S2793), titled
the "Anti-Corruption Act of 1988." This bill was introduced in the
Senate on September 7, 1988, referred to the Judiciary Committee,
reported favorably by that committee without a report, and passed
later by the Senate on October 14, 1988. This bill was then sent
to the House of Representatives, where it was referred to the House
Judiciary Committee on October 19, 1988. Concurrently with its
passage by the Senate, S2793 was designated by a unanimous consent
agreement of the Senate as one of a large number of amendments to
40
"comprise the joint leadership package" which would be attached as
amendments to H.R. 5210, the Drug Initiative Act of 1988, Omnibus,8
which was then before the Senate, having earlier been passed by the
House. H.R. 5210 (with S2793 included) was then passed by the
Senate and sent back to the House. On October 22, 1988, the House
of Representatives reconsidered H.R. 5210 with the leadership
package of amendments attached in the Senate and made various
amendments thereto, and then passed the revised bill. One of the
amendments made by the House of Representatives was to delete the
text of S2973 and substitute in its place the language which now
appears codified as 18 U.S.C. § 1346. H.R. 5210 as then amended
was sent back to the Senate, which concurred in those amendments
later on October 22, 1988.
Because of the direct relevance of S2973 to the text of what
was ultimately passed as 18 U.S.C. § 1346, a copy of that bill is
appended as an addendum to this dissent. Section 2 of this bill
(pages 1-6 of addendum) would have created a new Section 225,
entitled "Public Corruption," to be inserted in Chapter 11 of Title
18 of the United States Code. This new section would make
criminal: (a) depriving or defrauding the inhabitants of a state or
a political subdivision of a state of the honest services of an
official or employee of such state or subdivision and (b) depriving
It should be noted that H.R. 5210 as previously
passed by the House did not contain any section dealing with the
McNally decision nor the concept of "honest services."
41
or defrauding the inhabitants of a state or political subdivision
of a state of a fair and impartially conducted election process in
any primary, runoff, special or general election. On its face
Section 2 of S2793 would have been a fairly comprehensive,
articulate and clear attempt to define criminal conduct which would
satisfy the requirements of McNally that the Congress speak "more
clearly than it has" and, in the area of federal/state relations,
that Congress clearly express its intent to affect such relations.
If Section 2 of S2793 had been adopted by the House of
Representatives, there would not now be any need for determining
whether the word "another" means a "state or a political
subdivision of a state." There is no report in the legislative
history explaining why the House of Representatives declined to
accept the full text of S2793 as part of the omnibus Anti-Drug Act
of 1988 (H.R. 5210).
We may conclude from the demise of these more comprehensive
bills (H.R. 3050 and S2793) that the House of Representatives was
unwilling to join the Senate in the comprehensive definition of
crime involving "public corruption" as set forth in Section 2 of
S2793.
Section 3 of S2793, entitled "White Collar Crime,"
contemplated the addition of a new § 1346, entitled "Scheme or
Artifice to Defraud," which would be added to Chapter 63 of Title
18 of the United States Code. It is apparent that Section 3 of
42
S2793 is a progenitor in some respects of the text of 18 U.S.C. §
1346, which was ultimately adopted by both Houses. Change the word
"organization" to "another" and put a period after the words
"honest services," and one has the text of what was ultimately
passed.
The legislative history likewise does not reveal any report or
statement as to why the House of Representatives opted to make the
changes it made in the portion of Section 3 of S2793 which the
House of Representatives retained as Section 7603 of the Omnibus
Crime Bill. The word "organization" is defined in Section 18 of
Title 18 as meaning "a person other than an individual." The
substitution of the pronoun "another" for the noun "organization"
would work some enlargement of the class of potential victims,
since the word "organization" by definition does not mean
individual persons. But the critical question to our inquiry here
is whether simply by making this one word change the House intended
to accomplish the same results that would have been accomplished if
Section 2 of S2793 had also been adopted. Simply to pose the
question is to answer it. If the House of Representatives truly
agreed with the Senate that "depriving the inhabitants of a state
or political subdivision of a state of the honest services of an
official or employee of such state or subdivision" should become a
federal crime when use was made of the mails or interstate wire,
radio or television communications, then the clearest and most
comprehensive way to do that (and satisfy the Supreme Court's tests
43
in McNally) would have been to adopt the entirety of Section 2 of
S2793. The House of Representatives was unwilling to do that.9
Given this legislative history, the following conclusions must
be drawn:
1. Both the House and the Senate certainly knew how to
"speak clearly and definitively" on the subject of fraud
depriving the citizens of a state or political subdivision of
A conclusion that the House of Representatives
during the 100th Congress in 1988 was consciously unwilling to pass
Section 2 of S2793 is corroborated by two other sources. First,
the Public Integrity Section of the Department of Justice stated in
its 1988 Report to Congress:
Also, the Section pushed for and
ultimately obtained congressional
attention to the obstacle to
effective corruption prosecution
posed by the Supreme Court decision
in McNally v. United States. That
decision largely invalidated the use
of the mail fraud statute to combat
state and local corruption.
Unfortunately, the legislation
passed by Congress in 1988 did not
completely address the problems
posed by the McNally decision, and
the Section will continue its
efforts to see that this valuable
weapon against corruption is
restored. (Emphasis added).
Second, in subsequent Congresses, the Senate passed and
included in its version of various crime bills provisions almost
verbatim the same as the provisions of Section 2 of S2793. See 135
Cong. Rec. S12,430-32 (daily ed. Oct. 3, 1989) (statement of Sen.
Biden); 136 Cong. Rec. S6638-39 (daily ed. May 21, 1990) (statement
of Sen. Biden); 137 Cong. Rec. S9382-83 (daily ed.
July 9, 1991); 138 Cong. Rec. S6911-03 (daily ed. May 19, 1992).
But none of these bills passed
by the Senate were ever adopted by the House of Representatives.
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the intangible right of good and honest government, but the
House refused to do so; and
2. None of the bills containing any such express
provisions received a majority vote of both houses of
Congress. Instead, what was passed by both houses of Congress
was a last minute, "bobtailed" compromise which had never been
the subject of hearings in either house.
The wording of § 1346 simply does not effect a change in the
portion of the McNally opinion which held that the mail fraud
statute does not reach "schemes to defraud citizens of their
intangible rights to honest and impartial government." The
legislative history reinforces this view.
SECTION 1346 FAILS TO GIVE NOTICE
The majority opinion seems to make the test of "speaking more
clearly" simply Congress’ evidencing an intention to overrule
McNally. But overruling McNally does nothing to place in the
statutory language the necessary words, phrases and language which
would notify the average citizen that these statutes have been
dramatically extended to include conduct and activities not
previously stated therein. Clearly, when the Supreme Court decided
McNally, all of the preexisting Circuit Court constructions,
interpretations and applications went down the drain; the
convictions of many defendants who had been prosecuted under the
45
pre-McNally law had to be vacated, and conduct occurring prior to
the effective date of § 1346 could no longer be prosecuted under
the old law.
McNally placed the burden on Congress to put down in statutory
form whatever expanded scope it chose to give to the fraud
statutes. In effect, Congress was charged with codifying in
statutory form the definitions of the conduct which would be
prohibited by the concepts of "intangible rights," "honest
services," and "good and honest government," and to expressly
indicate whether Congress intended to extend these concepts to the
conduct of state officials. The requirement imposed by the Supreme
Court to speak more clearly was not for the benefit of the Circuit
Courts which had, in fact, given birth to these concepts in the
first place. Rather, the requirement to speak more clearly, in
addition to addressing federalism concerns, was for the benefit of
the public, the average citizen, the average mid-level state
administrator like Brumley, who must be forewarned and given notice
that certain conduct may subject him to federal prosecution. The
staff of the Senate Judiciary Committee and the Department of
Justice clearly understood these requirements and drafted S2793
(see addendum) which would satisfy them. This bill passed the
Senate, but the House was unwilling to specifically regulate the
conduct of state officials. In its place, the House substituted a
one-sentence statement that did not define the word "another," did
46
not define the term "intangible right," and did not define the term
"honest services." It is difficult to understand how the majority
can conclude that the statutory language of § 1346 "plainly reaches
state officials such as Brumley."
HONEST SERVICES
Finally, we have to register our disagreement with the
fundamental premise upon which the majority opinion seems to be
based, i.e., that Congress can delegate to the federal courts the
task of defining the key terms and coverage of a criminal statute.
We have found no Supreme Court case which supports that
proposition, and the majority opinion cites no authority, either
constitutional, statutory or decisional, for that premise. The
majority pays lip service to the principle that Congress must
define the criminal conduct when it states:
We will not lightly infer that Congress intended to
leave to courts and prosecutors, in the first
instance, the power to define the range and quality
of services a state employer may choose to demand
of its employees.
Maj. Op. at 10. Surprisingly, the majority flatly contradicts
itself when it states that the passage of § 1346 has set the Courts
"back on a course of defining honest services, and we turn to that
task." As stated earlier, research indicates that the term "honest
services" has never been used by the United States Congress in any
statute prior to its use in § 1346, and that the term is nowhere
47
defined by Congress. Likewise, there is nothing in the words of
the statute itself nor in any of the legislative history of § 1346
which would indicate any Congressional intent to delegate to the
Courts the task of defining the words "honest services," even if
Congress could constitutionally do so.
The majority’s attempt to define "honest services"
demonstrates why such ad hoc definitions cannot possibly satisfy
the requirements of "fair notice" to our fellow citizens as to
where the line between permitted and prohibited conduct is drawn.
On the one hand, the majority says that "the statute contemplates
that there must first be a breach of a state owed duty," but on the
other hand, it states that "the mere violation of a gratuity
statute, even one closer to bribery than the Texas statute, will
not suffice." Likewise, at one point the majority states that "we
do not reach the question of whether a breach of duty to perform
must violate the criminal law of the state," but in another point
the majority supports its evidentiary analysis by saying that
"Brumley violated a Texas criminal statute." Finally, at two
points the majority recognizes that the case law on "honest
services" prior to McNally was "not a unified set of rules" and was
"uneven." From its review of the pre-McNally cases, the majority
found "two uncertainties regarding the draw by this federal statute
upon state law, specifically in defining the statutory element of
honest services." Maj. Op. at 10. It is obvious, therefore, that
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the majority has recognized that the term "honest services" has not
achieved the status of a commonly accepted and recognized term of
art which Congress could have been relying upon in using these
words. The majority makes a labored effort to infuse some sort of
meaning to these words; but in truth and in fact, the majority
finds that meaning in its own subjective notions and not in the
words of Congress.
CONCLUSION
Because our colleagues in the majority (1) have closed their
eyes to obvious ambiguities in the text of 28 U.S.C. § 1346; (2)
have chosen to completely ignore and avoid the legislative history
of § 1346 which that undermines the majority's conclusion; (3) have
concluded, without analysis or reference to any principles of
statutory construction, that § 1346 "plainly reaches state
officials such as Brumley;" and (4) now legislate the definition of
honest services, we find ourselves in total and fundamental
disagreement with the majority opinion. We therefore respectfully
dissent.
49
United States v. Brumley
Court: Court of Appeals for the Fifth Circuit
Date filed: 1997-08-01
Citations: 59 F.3d 517
Copy CitationsCombined Opinion