UNITED STATES v. PAUL MICHAEL GUERTIN
Case No. 1:21-cr-262 (TNM)
January 24, 2022
TREVOR N. McFADDEN, U.S.D.J.
MEMORANDUM OPINION
Paul Michael Guertin stands accused of committing wire fraud, in violation of
I.
Guertin is a former Foreign Service Officer in the U.S. Department of State.1 During part of his ten-year tenure, Guertin served at the U.S. Consulate in Shanghai adjudicating visa applications. He also served in the Department of State‘s Intelligence & Research Division in Washington, D.C. As a condition of his employment, Guertin had to pass periodic background- and security-clearance investigations.
In 2010 and 2016, Guertin allegedly lied on his background investigation questionnaire, the Standard Form 86 (SF-86). According to the Government, Guertin failed to disclose certain information required by the SF-86—a sexual relationship with a foreign national whose visa application he had adjudicated; certain financial problems arising out of gambling activity; and an undisclosed loan agreement with two Chinese nationals collateralized by Guertin‘s home.2 Guertin also allegedly lied to State Department investigators during the background investigation to conceal this information. A federal grand jury indicted Guertin, charging him with wire fraud, see
The motion is ripe for resolution and the Court has jurisdiction. See
II.
An indictment must contain “a plain, concise, and definite written statement of the essential facts constituting the offense charged.”
III.
The Indictment charges Guertin with wire-fraud in violation of
A.
The federal wire-fraud statute prohibits engaging in “any scheme or artifice to defraud” using the wires for the purpose of “obtaining money or property.”
devised and intended to devise a scheme to defraud and to obtain money and property from the State Department by means of materially false and misleading statements, and by withholding and concealing information, on his SF-86 background investigation questionnaires and in interviews with State Department background investigators. . . . It was the purpose of the scheme to defraud for the defendant . . . to unlawfully enrich himself by maintaining his State Department employment and salary[.]
Indictment ¶¶ 21–22 (emphasis added).
The question presented here is whether those factual allegations state an offense under
1.
To start, the Indictment does not, on its face, allege conduct falling within the plain meaning of
Guertin allegedly sought to “maintain[] his . . . State Department employment and salary.” Indictment ¶ 22. But a scheme to “maintain” something is not synonymous with a scheme to “obtain” the same thing. The word “obtain” generally connotes affirmative action to secure something outside one‘s possession. See Obtain, Black‘s Law Dictionary (11th ed. 2019) (defining the term as to “bring into one‘s own possession; to procure“). The word “maintain,” by contrast, connotes action to preserve the status quo. See Maintain, id. (defining the term as “[t]o continue in possession of (property etc.)“). The upshot is that to state an offense under the plain meaning of
The Government says the obtain/maintain distinction is irrelevant on these facts: “[I]f the alternative, absent fraud, is that the defendant is likely to lose his job . . . then the fraudulent scheme clearly is intended to obtain money or property that he would not otherwise have obtained, namely, his continued salary.” Opp. 11. There are three problems with that argument.
First, the Government relies on tortured semantics—it is a contradiction in terms to say a defendant‘s scheme enables him to “obtain” a pre-existing contractual right like a “continued salary.” The only way to make sense of that contradiction would be to ignore the active, affirmative connotations of the word “obtain.” The Court will not do so. Cf. Sebelius v. Cloer, 569 U.S. 369, 376 (2013) (explaining that “unless otherwise defined, statutory terms are generally interpreted in accordance with their ordinary meaning“).
Second, the Government musters no binding or persuasive authority to support its interpretation of “obtain.” Most of the Government‘s cited cases involve schemes to obtain something new—a job, a promotion, a grant, or bonus—not schemes to “obtain” a “continued salary.” See Opp. 4–7; United States v. Granberry, 908 F.2d 278, 279 (8th Cir. 1990) (upholding conviction for defendant who allegedly falsified his criminal history to obtain a job as a school bus driver); United States v. Doherty, 867 F.2d 47, 56 (1st Cir. 1989) (upholding conviction for scheme which sought “appointment to or promotion within police departments” to receive “the salary or increased salary by reason of appointment to or promotion within the police department“).
To be sure, Granberry invoked sweeping language that supports the Government‘s argument. See Granberry, 908 F.2d at 280 (“What the School . . . wanted was a competent school-bus driver who was truthful and had not been convicted of a felony, and that is not what it got.“). But judicial opinions are not statutes, and its holding—upholding a conviction for a fraudulent scheme to secure new employment—does not get the Government where it needs to go. The Government is left with one on-point case supporting its position: a trial court opinion that predates persuasive appellate authority to the contrary. See United States v. Feng Tao, 499 F. Supp. 3d 940, 953–54 (D. Kan. 2020) (refusing to dismiss wire fraud charge for professor who failed to notify university of his violation of conflict-of-interest policies).
Indeed, the only circuit courts to address the issue have rebuffed the Government‘s salary-maintenance theory. See United States v. Yates, 16 F.4th 256, 266 (9th Cir. 2021); United States v. Goodrich, 871 F.2d 1011, 1013–14 (11th Cir. 1989). Consider Yates. There, the Government charged two bank managers with conspiring “to conceal the true financial condition of the Bank” to deceive “the Board of Directors, shareholders (current and prospective), regulators and the public.” 16 F.4th at 263; see also
Third, if there were any remaining question whether “obtaining money or property” can mean “maintaining money or property,” the Court must resolve that ambiguity in Guertin‘s favor. See Yates v. United States, 574 U.S. 528, 547–48 (2015) (“[I]f our recourse to traditional tools of statutory construction leaves any doubt about [] meaning . . . we would invoke the rule that ambiguity concerning the ambit of criminal statutes should be resolved in favor of lenity.” (cleaned up)).
Because the Indictment alleges that Guertin sought to “maintain,” not “obtain” a salary, it does not state an offense within the plain meaning of
2.
Extending the wire-fraud statute to these facts would also contravene longstanding Supreme Court precedent. For decades, the wire-fraud statute and its mail-fraud twin,
Historically, courts construed the related mail-fraud statute,
Consider a typical example: a city mayor receives a bribe from a third party in exchange for awarding it a valuable contract. Assuming the contract is identical to one that would have been reached in an honest bargaining process, the city has not suffered a pecuniary loss and any illicit profits come from a third party. In such a situation, “courts reasoned, actionable harm lay in the denial of [the city‘s] right to the [mayor‘s] ‘honest services.‘” Id. Honest-services prosecutions could arise out of a private employee‘s breach of duty
This extension of federal fraud statutes to cover “intangible rights” was controversial. Some argued honest-services prosecutions threatened to extend federal criminal liability to all manner of public and private misrepresentations. See, e.g., John C. Coffee, Jr., The Metastasis of Mail Fraud: The Continuing Story of the “Evolution” of A White-Collar Crime, 21 Am. Crim. L. Rev. 1, 2 (1983) (“The mail fraud statute seems destined to provide the federal prosecutor with what Archimedes long sought—a simple fulcrum from which one can move the world.“). And because the realm of potentially covered misrepresentations was capacious, ordinary people could not readily determine the scope of potential liability under the statute. Id. at 9 (“[T]here is an impact not only on those who are guilty of misconduct, but also on those who are risk averse and insist on arranging their affairs so as to avoid any chance of entanglement with the criminal law.“). Those concerns make some sense—reading mail- and wire-fraud statutes to sweep in a vast, ambiguous realm of public/private interactions would run against well-established norms of fair notice and due process. See Johnson v. United States, 576 U.S. 591, 595 (2015) (noting the Government violates the Fifth Amendment where it “tak[es] away someone‘s life, liberty, or property under a criminal law so vague that it fails to give ordinary people fair notice of the conduct it punishes“).
Those critiques ultimately won out. In McNally, the Supreme Court held the mail fraud statute covers only conduct intended to deprive a victim of property rights, not intangible rights like honest services. See McNally, 483 U.S. at 361. There, Kentucky officials had selected an insurance company for the Commonwealth based on an illicit agreement that the company would share commissions with other agencies partially owned by the same officials. Id. at 352–53. There was no suggestion that “in the absence of the alleged scheme the Commonwealth would have paid a lower premium or secured better insurance.” Id. at 360. The question before the Court was whether the officials could be convicted of mail fraud without that showing of loss to Kentucky.
The Court answered that question “no.” In its view, extending
The Government‘s theory of the case here revivifies Justice Stevens’ dissent in slightly different garb: The Department of State paid Guertin a salary for his loyal services; he breached that loyalty through fraud during the SF-86 process; and his salary constitutes a cognizable property loss to the Department of State. But that‘s just private-sector honest-services fraud—a case in which the employee‘s criminal conduct arises out of his “continued representation . . . to the employer that he is honest and loyal to the employer‘s interests.” Procter & Gamble Co., 47 F. Supp. at 678; see also Yates, 16 F.4th at 267 (“Permitting the government to recharacterize schemes to defraud an employer of one‘s honest service . . . as schemes to deprive the employer of a property interest in the employee‘s continued receipt of a salary would work an impermissible end run around the Court‘s holding in Skilling.“) (cleaned up). True, the alleged breach of duty is different here—Guertin violated a contractual duty of honesty, not a fiduciary duty of honesty—but the alleged deprivation arising out of that breach is the same. In either case, the victim‘s deprivation is the loss of an employee‘s bargained-for loyal services.
The Government‘s argument thus proves too much. If an employee violates
To state an offense under
III.
The next question is whether the Indictment alleges Guertin obstructed an “official proceeding” in violation of
Section
- a proceeding before a judge or court of the United States, a United States
magistrate judge, a bankruptcy judge, a judge of the United States Tax Court, a special trial judge of the Tax Court, a judge of the United States Court of Federal Claims, or a Federal grand jury; - a proceeding before the Congress;
- a proceeding before a Federal Government agency, which is authorized by law; or
- a proceeding involving the business of insurance whose activities affect interstate commerce before any insurance regulatory official or agency or any agent or examiner appointed by such official or agency to examine the affairs of any person engaged in the business of insurance whose activities affect interstate commerce;
The answer to that question must be “no.” The plain meaning of
A.
Perhaps needless to say, “the meaning of ‘official proceeding’ depends heavily on the meaning of the word ‘proceeding.‘” United States v. Sandlin, No. 21-CR-88 (DLF), ___ F. Supp. 3d ___, 2021 WL 5865006, at *3 (D.D.C. Dec. 10, 2021). There are two possible definitions of the term “proceeding.” The term can broadly refer to “[t]he carrying on of an action or series of actions.” Proceeding, Oxford English Dictionary (3d ed. 2007); United States v. Ermoian, 752 F.3d 1165, 1171 (9th Cir. 2013). Or it can refer more narrowly to “[t]he business conducted by a court or other official body; a hearing.” Proceeding, Black‘s Law Dictionary (11th ed. 2019). Here, there are good statutory reasons to choose the narrower definition. This reading also adheres to the bulk of caselaw in this area. See Sandlin, 2021 WL 5865006, at *3 (“courts, considering various statutory clues, have consistently held that ‘proceedings’ should be defined narrowly.“).
In Section
The definitional provisions in
And the requirement that any proceeding be before “a federal government agency,”
Taken together,
B.
Here, the Government does not allege Guertin obstructed a covered proceeding. The Indictment lays out the following details concerning the security-clearance adjudication process:
- Any applicant for a security clearance must fill out a background investigation questionnaire known as the Standard Form 86 (SF-86);
- The applicant then must undergo an “extensive background investigation, where, among other things, [he] is required to provide the investigating agency with access to the employee‘s financial records, consumer reports, and travel records“;
- The investigator—an ad hoc federal contractor—then conducts several interviews, including interviews with the employee;
- The investigator then submits the results of the investigation to an employee of the State Department Office of Personnel Suitability and Security (PSS);
- The PSS employee adjudicates the application and recommends granting, denying, or revoking a clearance.
Indictment ¶¶ 6–8; see also 12 FAM § 230 et seq.
That process bears scant resemblance to a formal tribunal. The “proceeding” alleged here involves a single, low-level bureaucrat issuing a routine certification. There is no body “before” which Guertin had to appear, much less an “official” body approaching the formality of a “court” or “Federal grand jury.”
The Government disagrees, embracing a sweeping interpretation of
That argument runs headlong into the text. Section
At first blush, United States v. Perez, 575 F.3d 164 (2d Cir. 2009), appears to support reading “official proceeding” broadly enough to cover these facts. That case involved the prosecution of three federal corrections officers who lied to Bureau of Prisons (BOP) investigators during a use-of-force investigation. See 575 F.3d at 165–66. BOP investigatory protocols required a corrections officer to prepare a Use of Force Report and to compile relevant documentation. Id. Once the officer completed the paperwork, he would forward it to an After-Action Review Committee (AARC) “composed of the Warden, the Associate Warden (responsible for correctional services), the Health Services Administrator, and a BOP Captain.” Id. at 166. The AARC would then refer any further investigatory matters to the Office of Inspector General, the BOP internal-affairs office, or the FBI. Id.
The question presented was whether that process constitutes an “official proceeding” under
But that holding is ultimately unavailing for the Government here. The AARC involved (1) a panel of (2) senior officials (3) exercising disciplinary authority. See id. (“Obstructing the work of a body of senior officials, charged with such quasi-adjudicative responsibilities, fits comfortably within the category of conduct proscribed by section 1512.“). Each of these factors more closely resembles a formal tribunal and not one of them is present here. So even if Perez is right on those facts, the Government
Of more relevance is the Fifth Circuit‘s decision in Ramos. There, U.S. Customs and Border Protection (CBP) agents were prosecuted for lying during a use-of-force investigation. See 537 F.3d at 446. Unlike in Perez, there was no allegation the defendants had obstructed a formal review hearing, only an investigation. See id. n.16. One of the questions presented was thus “whether the Border Patrol‘s internal investigation of alleged employee misconduct . . . is ‘an official proceeding’ within the meaning of
The Government has made passing reference to a formal appeal process available after an adverse clearance-adjudication. See Opp. 22. Apparently, this process involves senior Department officials and the opportunity for a hearing. But the Court is limited to the allegations in the Indictment, see Payne, 382 F. Supp. 3d at 73, and the Indictment mentions no such process.
Even if the Indictment had alleged a formal appeal process, it would have little relevance. As the Government acknowledges, the appeals process only takes place if the clearance-applicant receives an adverse decision and seeks to challenge that decision. See Opp. 22. That did not happen here. And as the parties acknowledge, most clearance-adjudications are not appealed. It thus makes little sense to say Guertin‘s conduct was directed at obstructing that process. See Ermoian, 752 F.3d at 1170–71 (holding a criminal investigation is not an “official proceeding,” even though it might lead to an “official proceeding” like a federal grand jury or criminal trial); Arthur Andersen LLP v. United States, 544 U.S. 696, 708 (2005) (interpreting a materially similar subsection of
In sum,
IV.
Guertin‘s conduct, as alleged by the Government, is disturbing and quite possibly constitutes a terminable offense. But we are a government of laws and not of men, and the Government has not properly alleged any violation of federal law here. The
Dated: January 24, 2022
TREVOR N. McFADDEN, U.S.D.J.