United States v. Vassilios K. Handakas

the dis- From the indictment. charges of it leave immunity. We promise alleged necessarily remand holding to on court trict court’s of the district the discretion to impacting possibly hearing other decisions will flow scope the determine op- conviction. the of defendant’s government legitimacy the the to allow whether court holds regarding district evidence that the present to In the event portunity and its agreement existed or immunity agreement the existence that no terms, F.2d at its Knights, comply with did not terms. that Rosario Cf. a suffi- makes once defendant intact (holding that will remain conviction defendant’s it is hearing, trigger showing to jury cient selec- panel will address and this de- discretion district court’s previ- within that he issues tion and summation format). ele- A critical factual termine ously raised. who will be agreement alleged

ment of and will- truthfulness Rosario’s determines CONCLUSION government, testify ingness —the reasons, remand for we forgoing For the may party. It court, or some other opinion. with this consistent proceedings never government and the that Rosario over this jurisdiction retains panel This If issue. understanding this an reached necessary address appeal it becomes in the bargain a material term it is jury selec- regarding arguments Rosario’s assessment, possi- it is then court’s district States v. See United summation. tion and a final never parties reached ble that (2d Cir.1994). Jacobson, 21-22 con- possible It agreement. also to issue is directed the Clerk Accordingly, prin- tract, general process or fairness due juris- retention of noting our the mandate to enforce a the court permit ciples will or- diction, a Jacobson compliance with term. particular this contemporaneously with der filed agree- an finds that If district court opinion. wheth- existed, can determine ment then and the its terms complied with er Rosario immuni- improperly withheld

government care, take must district court

ty. The is-

however, deciding general avoid liability, which Rosario’s criminal sue America, STATES UNITED in this because impossible case may prove Appellee, truthful- Rosario’s potential issue Doe, guilt. his See directly implicates ness Doe, court the district at 125. In HANDAKAS, K. Vassilios to dis- motion correctly denied defendant’s Defendant-Appellant. al- where defendant indictment miss an 00-1751. agreement Docket No. immunity of an leged a breach an affirmative defense that also was Appeals, Court of issue charges he faced. Id. criminal Circuit. Second implicated defen- directly of the breach matter improper an guilt dant’s Argued Nov. Here, the pretrial consideration. Id. 22, 2002. Decided March told the truth in whether Rosario issue of the benefit entitled

November directly immunity deal also alleged his one of on at least

implicated guilt his

City School Construction Authority (“SCA”) of its “intangible right of honest services,” conspiracy to pro- launder the fraud, ceeds of the mail and the structur- ing of financial transactions to evade cur- rency reporting laws.

The mail conspiracy fraud count arises out of work done for the SCA a Handa- kas-owned company construction and the violation of “prevailing [1] the rate of wage” provision contract required by New York’s “Little Davis-Bacon Act,” and ^[2] other certification reporting and require- ments in the construction contracts. The government’s deprivation of “honest ser- vices” theory was all that was left of the mail fraud charge after a special jury ver- lant. Attorney; brief), Appellee. Attorneys, on the brief. Barbara D. Un- gas, New ed Richard States ern grad, United derwood, Chief Assistant United States James Lisa District New for Attorney, Brooklyn, B. Weber, Fleischman, York, NY, David C. Attorney, Lebow, States Assistant United States Bournazos & Mataran- James, Attorney York; for Defendant-Appel- on Assistant United theory that Susan NY Assistant Unit- supplemental for the East- (Alan Corkery, Vine- ute is leging Handakas tous, because the the SCA of services” structuring schemes; the two structuring counts consecutive evidence of intent dict absolved Handakas of the alternative ^[3] On that (alternatively) appeal, inapplicable that provision engaged its Handakas 12-month he engaged Handakas maintains: “money indictment in structuring over two to commit mail of the mail fraud stat- conspired ^[2] periods, there property.” conduct that are is insufficient two charged the “honest without al- to defraud multiplici- charged; separate ^[1] fraud; that that Before: FEINBERG, JACOBS, and ^[4] that the money laundering convic- tion, CABRANES, which is based Judges. Circuit on the laun- entirely dering of funds derived from the unlawful Judge FEINBERG dissents in part by activity fraud, mail fall must for the separate opinion. same Additionally, reasons. Handakas ar- JACOBS, Judge. Circuit gues in pro se supplemen- brief and in a tal by brief counsel that mail his fraud Vassilios K. appeals Handakas from the conviction cannot stand because the “hon- judgment of conviction and sentence en- provision est services” mail tered in fraud the United States District Court statute unconstitutionally for the is vague, Eastern District of and York New (Weinstein, J.), that following we must money his reverse the conviction launder- (inter alia) jury well, conspiracy ing conviction commit as wholly which is mail fraud depriving the premised York New on the mail fraud.1 pro 1. Handakas’s se brief raises a arguments number additional of which are merit- —all vagueness cordingly, we the mail counts sion and We allege money ^[2] of the are hold: fraud multiplicitous because separate mail laundering applied conspiracy ^[1] reverse fraud statute “honest services” structuring to Handakas. conspiracy count, as well as conviction structuring is schemes, void they do provi- count Ac- for on wage scale wilfully meanor see also N.Y. first than dollars § 220 offense thirty (McKinney “[a]ny pays by imprisonment ... shall days.... ... by a fine person or Const, shall less than 2000). be art. ” guilty punished N.Y. of five hundred corporation §1 [the] for 17. Under of a Lab. stipulated not more for such misde- Law thereon, projects, the counts one of Handakas In the course dependent vacated, re- payroll records that certified sentence submitted structuring; prevailing rate compliance the district flected the case remanded fact, Handakas, in remaining wage requirement. resentencing on the court than substantially less un- his paid counts workers and the other structuring count wage. rate of prevailing half the appeal. this disturbed was evidence Additionally, there off I names left certain workers’s Handakas fraudulently substituted and payroll the facts consider appeal, we On rec- names, manipulated that he other govern to the favorable light most worked, and of hours number ord of the Virginia, v. ment. See Jackson upon based paid Handakas that the SCA 307, 319, 61 L.Ed.2d 99 S.Ct. is, however, It his false submissions. (1979). government entitled that doubtful president Handakas, capacity in his inferences findings and of the benefit Waterproof- of Astro and shareholder sole evidence, upon which bears on this based (“Astro”), sub- Company ing Restoration Al- to the harm SCA. possible financial general con- successful a number mitted jury argued to the government though the SCA, public benefit tracting to the bids loss, i.e., financial suffered that SCA pro- construction that oversees corporation money deprived SCA City schools. New York jects performed on services,” the well as “honest property as out of his arises fraud The mail conviction Handa- by special verdict jury found obli- certain contractual wilful breach on the fraud of mail guilty kas was by Astro. undertaken gations of its deprived the SCA he ground that lows state ^[1] In the SCA award awarding law mandating its contracts, all contracts that, inter alia: SCA fol not on the “intangible prived of money right of ground that property. honest services”—and the SCA was de- subcontractors, Han- bidder, N.Y. Pub. two league see qualified lowest 2001); (disguised large and (McKinney transfers dakas funneled Law 1734 Auth. ^[2] successful bidder pay project work as subcontractor payments) himself for family members and to expenses submit wages,” personal “prevailing rate ers formed a Handakas series certify as that so Greece. payroll records certified pho- received such corporations that N.Y. shell receiving payment. a condition and wired from 2000); payments Astro ny (McKinney seq. Law et Lab. tion less. currency report, [2] on the counts of We therefore affirm Handakas's making a ^[1] failure materially false to file convic- representation, States. ^[3] conspiracy to defraud Handakas, money back to directly or indi- prior tion to trial constitutes a waiver.” rectly, in the United States or Greece. Chacko, 96-519, No. (S.D.N.Y. WL at *4 Aug.21, 1997); 14, 1998, May On Handakas was arrest- 12(b)(2) see also Fed.R.Crim.P. (requiring airport, Greece, ed at an en route to carry- objections “[defenses and based on $102,000 ing without having made the cur- defects in the indictment or information” rency report disclosure required by law. trial).2 prior raised But we will The arrest triggered investiga- further apply plain review, error because par tions, eventually the indictment. Han- agree plain ties error is the standard dakas was on all convicted counts- of the and did not question brief the of whether indictment: one count of conspiracy to alleged multiplicity apparent commit mail fraud depriving another of the face of the indictment. (in “the intangible right of honest services” 371, 1341, §§ violation of 1346); 18 U.S.C. To plain error, demonstrate Han one count of conspiracy to money launder “(1) (2) dakas must error, show: that is (in 1956(h), 3551, §§ violation of 18 U.S.C. (3) plain, and that affect[s] substantial et seq.); two counts of illegally structuring rights.” States, Johnson v. United financial transactions evade reporting 461, 466-67, U.S. 117 S.Ct. (in requirements violation of 31 U.S.C. L.Ed.2d 718 (quoting United States 5324(a)(3), (c)(2)); §§ one count of failure Olano, (in to file a currency report violation of 31 (1993))(internal 123 L.Ed.2d 508 quotation 5316(c)(1)(A), §§ 5322(a)); U.S.C. one omitted, marks alteration in original). “If count making materially repre- false all met, three conditions are 'appellate an (in sentation violation of 18 U.S.C. court may then exercise its to discretion 1001(a)(2)); and one count conspiracy of error, notice a forfeited only but if the (in to defraud United the violation error seriously fairness, affect[s] the integ 371, 3551, §§ of 18 U.S.C. seq.). et rity, public reputation of judicial pro Handakas was sentenced to prison a 467, ceedings.” Id. at 117 S.Ct. 1544 months, term of 70 and pay was ordered to Olano, (quoting 732, 507 at 113 S.Ct. $500,000 fíne, $638,350.27 a restitution, in 1770) (internal quotation omitted, marks and a special $700 assessment. alteration in original). II An indictment is multiplicitous multiplicity The challenge to the when it “charges separate in counts two or structuring counts is crimes, raised for the first more fact, in when law and only appeal. time on Generally, we review one Chacko, crime has been committed.” challenges brought “not 481862, the attention of 1997 WL at *4 (quoting United court” plain [district] for Holmes, error. Fed. 1150, States v. 1153-54 52(b); (2d R.Crim.P. see also Cir.1995)); United States v. see also Blockburger v. Thomas, (2d 655, Cir.2001). States, 660 52 S.Ct. However, a strong argument 180, (1932) (“The “there is 76 L.Ed. applicable 306 alleged multiplicity is clear that, from the rule is the same where act transac indictment the failure to objec- raise this tion a violation constitutes of two distinct Compare 2. Lartey, Coiro, United States v. 716 F.2d 922 (ap- F.2d (2d Cir.1983) (holding plying plain that failure to poten- standard error where duplicity raise prior objection indictment tial multiplicity apparent was not on the face ' waiver), trial indictment). constituted with United States v.

statutory provisions, the test to be applied funds: ^[1] exceed $100,000 within a 12- to determine whether there are two of- month period, ^[2] are “part of a pat- activity.” 31 U.S.C. illegal provi- each tern of one is whether fenses or is intend- 5324(d)(2). provision fact But that of an additional proof requires sion not.”)- for more serious When to enhance sentences does ed other which offenses; for two device charged as it is structuring is statutory offense same single of- counts, proper compounding a question segmenting separate counts intended the Congress fense. whether prosecu- “unitfs] separate constitute looks else- government appeal, On States, 349 U.S. v. United Bell

tion.” (correctly) support. It notes where for (1955). L.Ed. 905 82-83, source of look[ ] “often courts unclear, “the Congress intent If the than the rather funds structured favor resolved be should ambiguity the allow- deciding deposits, number of 620; “doubt will 83, 75 S.Ct. lenity,” id. at Br. Appellee’s prosecution.” able unit trans- single turning against resolved Nall, 949 States v. (discussing United at 28 offenses,” at id. multiple action into Cir.1991)). (10th gov- 620. source of argues then ernment with Handakas charges two Count because count was distinct each funds for structuring intentionally knowingly un- separate checks wrote Handakas of) trans (and structuring in the assisting Therefore, each check $10,000 each. der order $100,000 in exceeding actions him the subcontractors cashed over requirements reporting tax evade transaction, sepa- separate was a May through May 1996 period itself, funds, ie. check rate source of with the Handakas charges three Count the other distinct physically from May 1997 period over offense same checks. May 1998. through added). argu- This (emphasis Id. structur- forbids s]ection “[Title deposit can an individual ment —that ‘purpose evad- awith ing transactions prose- unit ” an “allowable fact constitute require- statutory reporting ing’ certain distinction, cution,” at 28—violates id. States, 510 U.S. v. United ments. Ratzlaf Nall, number between based on 615 126 L.Ed.2d 135, 140, 114 S.Ct. of transactions. and the number sources (1994). maintains government The (holding that there Nall, F.2d at 308 949 separate units are and counts three two separate for three only one source structuring oc- because prosecution money came all of the deposits where bank in- period and a 24-month curred over the defen- payment to lump sum from one than of more concealment volved the that, dant, accordingly, there and period. $100,000 12-month within each count). structuring one indi- However, of the statute provision no structuring course of single cates that con- check drawing of each cannot in- 12-month on segmented based can be prosecution,” unit “allowable stitute an time) (or any intervals other tervals itself, and not the structuring “the because interval. any of funds by the amount of crime.” is the unit deposit, individual F.2d Davenport, 929 pro- enhancement penalty The statute’s added). (7th (emphasis 1172 apparent- vision, government which the offense, by structuring every Each and structuring of- relied, provides that ly of funds multiple transfers nature, entails structured where the “aggravated” fense is enough amounts small to avoid detec- ing prejudice that “affected the outcome of Ratzlaf, tion. at the district court proceedings.” United (defining the structuring of transac- Gore, States v. Cir. “break[ing] up tions as the a single [of] 1998). Depending on how the counts were transaction reporting above the threshold grouped in the Pre-sentence Investigation separate transactions”); into two or more Report, duplicative structuring count Scanio, United States v. 488 may impact have had no on Handakas’s (2d Cir.1990) (“[PJersons ... ‘structure’ sentence; Supreme held, Court has currency their transactions [by] en- however, prejudice in a multi inheres gaging] multiple transactions each in- plicity regardless error impact of its on the $10,000 volving slightly under as to [so] sentence: avoid triggering the financial institutions’ The remedy of ordering one the sen- filing obligations.”), overruled on other tences to be served concurrently with grounds States, by Peck United F.3d the other cannot be squared with Con- (2d Cir.1995). Accordingly, num- gress’ convictions, intention. One of the (i.e., ber of offenses structuring “units of as well sentence, as its concurrent prosecution”) is not determined punishment unauthorized for a separate fractional, number of sub-liminal transac- conviction, offense. The second whose Nall, tions made for concealment. See concomitant sentence is concur- served at (holding that government im- rently, evaporate does not simply be- properly charged three structuring viola- concurrence, cause of the of the tions sen- where made deposits defendant three separate conviction, tence. The deposit apart “source of each was the same ..., lump sentence, sum from the except identical concurrent po- for the date has deposit”); tential Davenport, 929 F.2d adverse collateral consequences (“The government’s position that may ignored. leads to not be For example, the weird result if a defendant re- presence of two convictions on the $10,000 splits ceives up into 100 may record delay the eligi- defendant’s deposits he is ten times guiltier than a bility parole or result in an increased up defendant who splits the same amount sentence under a statute recidivist for a deposits.”). into ten Moreover, future offense. the second conviction may impeach be used to Because precedential we find no credibility defendant’s certainly car- statutory support for the multiple struc stigma ries the societal accompanying turing charges, conviction on two separate Thus, criminal conviction. the sec- counts constituted an “error” that conviction, ond even it results no “plain.” Olano, United v. States 507 U.S. greater sentence, impermissible is an 725, 732, 1770, 113 S.Ct. 123 L.Ed.2d 508 punishment. (1993); States, see also v. Johnson United 461, 466-68, 520 1544, U.S. 117 S.Ct. 137 States, 856, Ball v. United 470 U.S. 864- (1997) L.Ed.2d 718 (holding that an error 65, 1668, (1985) 105 S.Ct. 84 740 L.Ed.2d “plain” if the at “law the time trial of (internal omitted) citations (emphasis in

was settled clearly and contrary to the law original); Coiro, see also United v. States at the appeal.”). time of (2d 1008, 1015 (citing Ball, As to 865, 1668). the whether error 470 U.S. at “affect[s] 105 S.Ct. 467, rights,” substantial id. at 117 Although parties S.Ct. the have not briefed the 1544, Handakas the bears burden of impact show- structuring second count on reasonably use is or if its is used the mail Ball sentence, under we hold

Handakas’s States, 347 United Pereira v. foreseeable. prejudicial, error is multiplicity the that 8-9, 98 L.Ed. 74 S.Ct. U.S. will we whether decided to be It remains States, v. United (1954); also Durland see plain the notice to discretion our exercise L.Ed. 161 U.S. “seri- if the error may do error, which we mailings need (holding that fairness, or integrity the ously affectfs] effective). elements are two The first be proceedings.” judicial of reputation public record. on this easily satisfied 736, 113 S.Ct. Olano, at we are Because (alteration original). element, statutory the the third As to Han- grounds, other remanding on already depriva- a there be requires that wording resentenced; no be event will dakas intangible “the money, property, tion of public, or the prosecution, the of interest 18 U.S.C. honest services.” right of subjecting served would be the courts trial, government At the § 1346. §§ resentencing punishment Handakas loss on suffered that the SCA contended com- when he offenses structuring for two “honest theory of The three scores. all circumstances, these mitted one. Under govern- jury by argued services” fair- adversely affect it would we think right had that SCA “[t]he ment was pro- sentencing integrity of ness ful- would be how its contracts determine to do that. court district require the cess to away filled,” Handakas “took >{{ * # # #% (“J.S.A.”) App. Supplemental right.” Joint two struc remand the at 1919-20. Accordingly, we “with instructions convictions

turing of deprived was SCA As to whether its discre exercise District Court have conflicting evidence property,” “money or the convictions.” vacate one tion to question That at trial. was adduced 1668; see Ball, at S.Ct. 470 U.S. form, special verdict via a then decided Ball, Coiro, 1015 (quoting at also court, sepa- district which supplied by the 1668). 865, 105 was de- the SCA rately whether asked States are: [1] “the ^[2] deprive another 18 U.S.C. Cir.1997). furthered intangible right “a scheme or Zagari, §§ The first element The elements Ill 1346; use of the money, property, or of honest artifice see also United 307, 327 requires: mail fraud mail, [3] to services.” defraud,” [i] prived to review tion would services.” decided. As “honest services.” assured that only that the of “honest services.” [i] in isolation a The district money or SCA each result, separately considered theory this case deprived of court thus property, conviction jury checked compels us carefully for theft prosecu- “honest [ii] off suggests defraud, government appeal, On [ii] scheme the existence Specifically, jury was confused. that the part of on the intent to specific defraud jury must argues government misrepresen defendant, material and [iii] wages sub-prevalent Autuori, have found tations. subpar resulted in workers paid to Astro’s (2d 105, (citing United 115 F.3d SCA’s injury to the thus in an 1249, work 'Amato, 1256-57 D 39 F.3d v. States “money that the States, money property, and or (2d Cir.1994); v. 527 Neder United off not finding was checked property” 1827, or L.Ed.2d 35 1, 25, 144 119 S.Ct. check- deemed one jury if because (1999)). is satisfied element The second 101 However, mark to be enough. ple verdict can understand what pro- conduct is form was clear enough; and the jury hibited and ^[2] manner does not instructed, (largely) in sylla- words of one encourage arbitrary and discriminatory ble, “[y]ou yes can answer both enforcement. ” yes yes to 1 or to neither.... J.S.A. Lawson, Kolender v. 352, 357, 103 461 U.S. 1855, (1983); S.Ct. 75 L.Ed.2d 903 see also Evidence on both sides was offered as to Vill. Estates v. Flipside, of Hoffman Hoff loss; theory each the form separately Estates, Inc., man 489, 455 U.S. 102 S.Ct. jury; canvassed the charge lucidly ex- 1186, (1982); 71 L.Ed.2d 362 Smith v. plained options express and how to Goguen, 566, 1242, 415 U.S. 94 S.Ct. 39 them; and government im- sought no (1974); L.Ed.2d 605 Grayned City v. provement in the form or charge. The Rockford, 104, 2294, 408 U.S. 92 S.Ct. 33 government accept must and live an with (1972); L.Ed.2d 222 Papachristou City v. jury adverse finding. See United States Jacksonville, 156, 839, 405 U.S. 92 S.Ct. Powell, 57, 63, 471, 469 U.S. 105 S.Ct. (1972). 31 L.Ed.2d 110 “[A] court must L.Ed.2d 461 (noting “the unreview- first determine whether gives the statute power jury able of a to return a verdict of person ordinary intelligence a rea reasons”) guilty impermissible not for opportunity sonable pro what know Rivera, (quoting 339, Harris v. 454 U.S. hibited and then consider whether the law 346, 460, (1981)). 70 L.Ed.2d 530 provides explicit standards for those who wholly on the “honest we must decide the outcome-determinative ist for reversal on the mail fraud Accordingly, services” is unconstitutionally vague plied to Handakas. question as to whether the term “honest (and because narrower because grounds services” conviction rests do count), theory ap- ex- Strauss, apply prosecutorial (2d Cir.1999) forbidden short, it.” Chatin v. the statute ^[*] conduct discretion. (quoting United States v. ^[*] Coombe, and set boundaries must ^[*] (2d give 186 F.3d ^[*] Cir.1993)). notice of ^[*] 82, v. United the Fifth and Fourteenth Amendments re ments of criminal offenses. “There are no statute is void give notice of constructive case is quire punished, ^[*] plainly 71 L.Ed. 443 legislature States, The Due Process Clauses of ^[*] offenses; and, it must be shown that his within the statute.” Fasulo the conduct ^[*] vagueness (1926). ^[*] specify before prohibited A criminal the ele one fails ^[*] can Isaacs, strued the term services.” 1984); another originally judge-made law. Courts con Clapps, 732 F.2d defraud” to include The doctrine of “honest services” was (8th Cir.1973). United States v. (9th “the F.2d See, e.g., Cir.1980); “any intangible right States, scheme or artifice to schemes' to Bohonus, United States v. 1152-53 United (7th Cir.1974); of honest States v. deprive 764- Cir. fails to prose channel the discretion of the time, Over the “honest services” doc- cution: applicable trine general became to four

As generally stated, the void-for-vague- categories of defendants: ^[1] government ness doctrine requires ^[1] penal officials who defraud public of their statute define the criminal offense own honest services; ^[2] elected officials sufficient ordinary peo- definiteness that falsify and campaign workers who votes 102

right thereby defraud to an honest election; the electorate ^[3] private of the avoid Congress”); see extension beyond also the limits John C. intended Coffee, The Restoration by, Jr., Mail Fraud: duties Modern fiduciary abuse actors who example, actors who defraud taking bribes; others of certain ^[4] private intan- of Crim. Public/Private L.Rev. 427, 427 Distinction, 35 Am. (1998) (comparing McNally rights” v. “intangible privacy. of the rights, expansion such gible 1-4, 350, n. States, 362-64 of the spread U.S. 483 in the 1970s to the United doctrine (1987) (Ste- 2875, Moohr, 292 L.Ed.2d vine); 97 Mail 107 S.Ct. Geraldine Szott kudzu pre- (surveying the vens, J., dissenting) Rights Doctrine: Intangible Fraud and the doctrine). of McNally scope Us, Harvard J. over 31 to Watch Someone (“[I]ncremental (1994) 153, 179 Legis. the doc categories, four these Within intangible rights ... of progression case-by- way, “uneven” an grew trine example of ... an excellent doctrine court after circuit-by-circuit; case and [P]rosecutors creation. judicial crime abuse. prosecutorial of warned court to trial undefined conduct 728, bring previously 116 F.3d Brumley, v. United States criminalize the court will Cir.1997) (en banc) hope in the (5th (listing cases 733 it.”). varying services” applying “honest Martin, v. also United States

ways); see uphold 1987, to courts continued Until Cir.1999) (“[A] (7th cen 961, 966 services,” of “honest for theft convictions [mail fraud] of the tury interpretation amend- Congressional 1909 on a relying to still the doubts has failed statute expand- supposedly 1341 which ment vague.”); dangerously think it who those scope beyond deprivations ed the statute’s 1327, Lemire, F.2d v. 720 States United 4, of Mar. property. Act money (“[I]f (D.C.Cir.1983) merely de n. 11 1336 1130; 215, 1909, 321, § McNal- 35 Stat. ch. and faith loyalty priving the victim 350, 358, States, 107 483 U.S. ly v. United crim fiduciary constitutes of his ful service (1987) (citing 2875, 292 97 L.Ed.2d S.Ct. becomes disloyalty alone inal fraud ... 1148, Clapps, v. United States every crime, remains before little [and] (3rd Cir.1984); States v. United 1152 indictable.”); wrong potentially civil (8th Cir.1973)). States, 761, 764 F.2d 488 1014, Rabbitt, F.2d v. 583 States United however, 1987, Supreme Court held Cir.1978) (8th (“Every of breach case 1024 actually was intended amendment in office in public and misfeasance trust Supreme Court codify an earlier mailing has which some connection (which more than had done no holding fall within and cannot does not occurred “property” in expand the definition statute.”); mail fraud confines of the 1341); were prosecutions fraud mail Louderman, F.2d v. depriva- by the Court therefore limited (9th Cir.1978) that the 1383, (noting McNally, 483 property. money tions carefully and “should be mail fraud statute (holding 107 S.Ct. exten in order avoid strictly construed a codification of to be the 1909 amendment by Con beyond the limits intended sion States, v. Durland United McNeive, 536 States gress”); United (1896)); also see L.Ed. Cir.1976) (8th (noting F.2d States, 531 U.S. v. United Cleveland standards lack of definite relative “[t]he 148 L.Ed.2d 1341”); contained reading of the amend- (5th (reaffirming that Edwards, 875, 880 ment). federalism and Citing principles of statute mail fraud (noting that federal McNally reasoned powers, separation in order strictly construed “must be

103 However, it wrong judiciary for the federal approaches one of these simply good “set[ ] to standards of disclosure and entire, reinstates dissonant body of government for local and state officials.” prior precedent, circuit while the other 360, 2875; 483 at 107 McNally, of, S.Ct. invites the creation out whole cloth Brumley, see also (Jolly, 116 F.3d at 738 judicial interpretations new of “honest ser (so J., dissenting) reading McNally). interpretations that will undoubt vices”— edly vary from circuit to circuit. The re McNally Congress declared that “[i]f sult further, truly statute, is “a go extraordinary desires to in speak must more which clearly than it the substantive McNally, has.” at force of the statute 360, 107 2875. in question present judicial One each varie[s] circuit.” Brumley, by ed the conviction of Handakas J., is wheth 116 F.3d (Jolly, at n. 6 dissenting). 743 adopted by er the Congress year statute Frost, For example, compare 125 at F.3d (18 1346) § speaks later U.S.C. clarity with 365-66 (requiring a breach of a fiduciary to satisfy sufficient the Court’s command. duty to sustain a theft of “honest services” private sector), with United (an States Section 1346 amendment to the Sancho, v. 157 F.3d 921 1988) Anti-Drug Abuse Act of defines curiam) (per (rejecting a fiduciary duty “scheme or artifice to defraud” include to requirement); compare deprive “a scheme or artifice to United States another Cochran, (10th intangible right honest Cir. services.” 1997) § According (subjecting 1346. misrepresen U.S.C. one Sena- omission or tor, the intent was “to reinstate all of the Frost, tation to a of materiality), test pr e-McNally caselaw to the pertaining 125 F.3d at 368 (subjecting omission or mail and wire fraud statutes without misrepresentation to a test of reasonable change.” 134 CONG. REC. S17360-02 forseeability). 1988) (statement (daily ed. Nov. This has Circuit foreclosed the use Biden); Sen. see also 134 CONG. REC. pr e-McNally cases as a tool for construing (state- 21,1988) H11108-01 (daily ed. Oct. the revised statute: (“[Section Rep. Conyers)

ment of 1346] merely McNally intended to overturn the Before Supreme Court’s decision decision. No change other the law is ... McNally there judge-made intended.”). Whether, prior law.... passage §of the elements of implemented §

Some circuits have applied deprivations of intangible Thus, resurrecting pr e-McNally law. rights required a scheme to breach a “§ the Sixth Circuit has held that 1346 has is, fiduciary however, duty longer no restored the mail pre- fraud statute to its pertinent.... Congress passed a new scope.” Frost, United McNally States v. law, (6th specifies Section 1346 Cir.1997); 1346. F.3d see also Czubinski, scheme artifice to defraud includes (1st Cir.1997). deprive scheme “to Circuit, And another of the the Fifth intangible right after noting “Congress honest services.” could not have prove to bless each What the every pre- government intended must to sat- isfy this McNally lower court ‘honest element the offense de- services’ opinion,” “Congress by judicial observed that fined 1346—not has Section set us on a course of defining sought interpret back ‘honest decisions that ”; services’ and that Court has mail and prior “turn[ed] wire fraud statutes Brumley, task.” passage of 1346. to panel attempting If we were the first In Sancho, deciding at 921-22. 157 F.3d phrase of the “honest meaning the discern provides [1] statute the revised whether notice, and ^[2] limits on prosecutorial dis- services” in § 1346, we would likely find vague as to be part of the statute so that (where cretion, left we are therefore we its Section 1346 unconstitutional on face. start) statutory wording: the “the with in- that a “scheme to defraud” specifies of honest services.” intangible right deprivation of another’s “intan- cludes the services,” that and in gible right of honest IV expand expresses legislative intent to way vague- on bears inquiry The first deprivations money beyond offense the whether sufficiency notice—is say what ness—the it does not property; or but written, be, statute, provides they may is notice or when as it “honest services” the people deceitfully. “ordinary are withheld [to] to alert sufficient Kolender v. prohibited.” is what conduct meaning of “honest plain The services” 1855, 357, Lawson, 352, provides § no simply in text of the (1983); also Chatin v. see L.Ed.2d public or the courts as to what clue to the Cir.1999). Coombe, prohibited under the statute. conduct is essentially require- definitional Notice is in 1997 that Judge Jolly observed speak for itself penal statute must ment: right” and “honest ser- “intangible terms person can understand the lay that a so in Black’s Law vices” cannot found (for say Code, enough Id. It is prohibition. not Dictionary, matter) scope prohibi- than can intuit the federal statute other judges (Jolly, at 742 Brumley, § 1346. not: if Handakas could tion J., dissenting). observation remains That Congress McNally placed the burden “ today. Clearly, ser- accurate ‘honest statutory form whatever put down in status of a vices’ has not achieved give to expanded scope it chose to commonly accepted recognized and term effect, Congress was fraud statutes. rely- Congress art could have been which statutory codifying form charged The upon using these words.... ing of the conduct which the definitions ... and phrase inherently is undefined concepts prohibited by the would be (Jolly, dis- ambiguous.” Id. at J. services,” rights,” “honest “intangible senting). government....” “good and honest “a case where further preci- Nor is this by the requirement imposed Su- statutory language in the sion either speak clearly more preme Court was Kolender, 461 impossible or impractical.” the Circuit Courts benefit of for Congress S.Ct. 1855. U.S. at had, fact, given birth to which these (but ultimately rejected) contemplated Rather, concepts place. in the first more versions of 1346. For determinate ... requirement benefit of instance, Senate Bill entitled average citizen who public, 1988,” “Anti-Corruption passed Act given notice must be forewarned on October by the Senate subject him may that certain conduct J., Brumley, (Jolly, 116 F.3d at 743-44 prosecution. federal However, House de- dissenting). later bill, (Jolly, replaced Brumley, 745-46 J. leted the text of the added). text of 1346. Id. at 744.3 with the dissenting) (emphasis (a) depriving defrauding the inhabitants criminalized: 3. Senate Bill 2793 would have statute, Congress vagueness wrestled with the fraud the same applies. situation I problem. hearing proposed At a on the have to read specifi- would the cases to following exchange cally addition understand what the statute is at- Stroman, Ronald tempting get my point ensued between assistant at. And ,and subcommittee, you say counsel for the John C. you trying that what are Keeney, Acting Attorney Assistant to do is create Gener- a new statute because it al: is more specific, quite frankly it is not anymore specific. Well, [sic]

Mr. STROMAN: honest services official, public you of do think [a] that is Hearing Mail Fraud: the Sub- Before specific? I mean [ ] what does “honest comm. on Criminal Justice the House of Comm, if I Certainly services” mean? am a on the Judiciary, 100th Cong., 2d public official— added). Sess. at 48-49 (emphasis Well, KEENEY: Mr. means that —it We have' held that an administrative the circuit of appeals means what courts prison unconstitutionally rule was vague as years saying have been that when a applied prohibition where its could be un corruptly Mandel or a Kerner uses his only through derstood “the lawyer-like ” depriving office he is the citizens of that statutory interpretation.... task of Cha State of his honest services. Coombe, (2d tin v. Cir.

1999).4 here, Similarly, no one can know Mr. STROMAN: I would wholehearted- what is forbidden 1346 without un that, ly agree certainly but dertaking “lawyer-like task” of answer concept of intangible rights has been ing following questions: ^[1] Can pre- interpreted by a whole host of as McNally cases case law be to illumi consulted govern- well. To use the term “honest wording nate the 1346? [2] Can say specific law, ment” and that is more meaning than be drawn from the case ei intangible rights you have got when ther the uneven pre-McNally cases or the same history case law, quite frankly I few cases decided post- § 1346? ^[3] Is one do not I guided see distinction. am an to be only by case law within one’s If circuit, in the Government and I see the own or the law of the circuits official ” (if government, term “honest together possible)? certain- taken A ly anymore does not alert me “[lay-] ordinary than the intelligence” individual existing you try- statute as to what are position Handakas’s would not know ing I to cover. do not know what begin. (quoting that where to Id. at 87 Chatin York, 96-420, means. I would have to read the cases v. New No. 1998WL (S.D.N.Y. you 1998)); If I Apr.23, to. read the mail at *6 see also referred statutes, political ply of state or a subdivision aof state to criminal "carrie[d] because it of the honest services of an official or em- penalties ... more akin to criminal rather (b) ployee of such state or subdivision and Chatin, penalties.” than civil 186 F.3d at 86- depriving defrauding or the inhabitants aof regulation designated appropriate 87. The political state or subdivision of a state of a place time and for demonstrative and individ- impartially pro- fair and conducted election prayer. ual inmate at We Id. 89. were runoff, any primary, special gen- cess in or regulation troubled that the did not define eral election. properly "religious terms like service” or "re- J., Brumley, (Jolly, 116 F.3d at 744 dissent- that, ligious speech,” id. at 87—words on the ing). whole, meanings have that are more self-evi- dent, widely regulation 4. The or at least more understood. at issue in Chatin was sub- jected vagueness analysis ap- to the same we rela- agency employment by virtue Jersey, 306 U.S. Newv. Lametta (1939) (“No Ferer & Sons Ltd. tionship); Aaron one L.Ed. Bank, life, Manhattan liberty or Chase peril of may required by virtue (duty to disclose meaning of speculate as property knowledge). superior in- to be are entitled All penal statutes. the State commands toas what

formed progeny, United States In Sancho’s forbids.”). (2d Cir.2000), Middlemiss, which victim fall within primarily under tant” victim meaning holding that such cases est our defendant “no doubt” § 1346. areWe 920. interpretation court to consider services” “no doubt” that ^[*] he bribed did was based a a legal fiduciary Id. at 921. of “honest services” on not, argued ^[*] panel bribe, duty to inform “honest services” however, grounds on duty. that his conduct ^[*] of “honest services” rejected that and that pre-McNally not owe the “consultant” duty fell within It stated that are “not Sancho, 157 F.3d ^[*] meaning that the “consul- there was also first the intended the intended Sancho, the §in pertinent” argument, provision, case panel did not “hon- there 1346. law, ^[*] was in fab faithful ployer of “all gies, 263 the panel, conviction scheme Sancho able another acted able 753-54 and in furtherance employer. also involved of “honest conviction for Corp. v. by an action by contrary to the best proposition (3d Dep’t and Middlemiss by the breach of employee an action in tort A.D.2d services.”5 Id. at 120. relying on for mail deprived the defendant’s the breach Integrated Liner Technolo a scheme to defraud another the services in 788, 1999). would of which the that tort. fraud Sancho, Thus, Middlemiss a scheme of a appear to stand have See, e.g., Together, a may support a interest of N.Y.S.2d that a duty duty involving defendant provided” upheld enforce enforce Chem totally harm then, 752, em his pro- nor Middlemiss support of Sancho panel cited in Neither The cases the Id. meaning of “honest services” involving duty vides all cases analysis were its prosecu- this this case or saves an action in controls by disclosure enforceable Funds, prosecution of Handakas v. Arthur tion.6 The Ltd. Fund tort. See 1314, of the duties out of his violation Co., 1360 arises F.Supp. Andersen & 1, § 17 of the New by Article part imposed (S.D.N.Y.1982) (duty to disclose was duties); and 220 of the Constitution Mari- York State professional law common Law, duties that Prods., New York State Labor Fish Inc. v. World-Wide time Fish by an action in tort. 81, enforceable Prods., Inc., are not A.D.2d N.Y.S.2d princi- 1984) purposes, we see no (1st present For 281, (duty to disclose Dep’t 1346, however, constitutionality note, appears no ruled on that it had We challenge presented certainly in Sancho to hold vagueness none could said Middlemiss; is vagueness constitutionally applied issue since to Handa- statute was panels not con jurisdictional, those were not kas. event, up. those to take it strained put in appeals be decided on issues could convey implicitly suffi- if these cases 6. Even obliged parties; play by the Court not currently by the what meant notice of cient constitutionality ... pass questions of “to question on phrase "honest services”—a adjudication is unavoidable.” unless such express opinion they could not we no which — Department v. United Commerce to Handakas: neither have served as notice Representatives, House of yet when Handakas had been decided case 765, (1999) (inter L.Ed.2d 797 conviction. acts that led to his did the omitted). cases citation And even those nal pled distinction between duties of mail Every breach of a fraud. contract (committed by garden- breached Handakas and the or state law in vicinity of a variety usually telephone) contractual duties collected every and false state tax return (sent mail) “representations under the rubric of and would become punishable as wrongs For the in felony warranties.” committed federal court. See N.Y. Tax Handakas, prescribes 2000).8 §§ New York law Law 1801 (McKinney penalties may criminal and afford contract The government’s summation on the remedies, but does afford an action subject of “honest services” focused entire- tort. New York law endeavors to main ly on the deprivation the SCA’s contrac- tain the between distinction contract and See, rights. tual e.g., J.S.A. 1919-20. remedies, generally tort bars an ac fully Even someone familiar with §§ tion tort for a breach of contract. See cases, our would lack any Clark-Fitzpatrick, Inc. v. Long Island comprehensible notice that federal law has Co., R.R. 70 N.Y.2d 521 N.Y.S.2d criminalized breaches of contract. Accord- (N.Y.1987); 516 N.E.2d 193-94 Pi ingly, application of those criminal statutes Solymosy, lewski v. 266 A.D.2d 698 to Handakas violates process guar- the due (1st 1999) (“[T]he 660, 662 Dep’t N.Y.S.2d antee of fair notice. generally permit law does not recovery complaint tort where the legally states a Y contract.”). sounding sufficient claim vagueness The second inquiry (and two) Middlemiss, important” “the more company seeking a a whether “[statutory language at the food-concession license the offices of a of [is] such public authority conveyed sweep a a corpo [that it] secret standardless allows policemen, employee prosecutors, juries rate interest to an of pur the author and to ity, extorting personal predilections.” who was convicted both of sue their Smith (simul payments Goguen, from the licensee and v. 415 U.S. 94 S.Ct. taneously) (1974); mail committing by fraud the 39 L.Ed.2d 605 see also Kolender Lawson, 352, 357-58, theft his “honest services.” Middlem v.

iss, (1983). at 120. if F.3d Even “honest 75 L.Ed.2d 903 “An enact services” clause prohibit provide could be read to ment sufficiently explicit fails to conduct, such it give still would fail to apply standards for those who it it when slightest notice that breach of ‘impermissibly contract delegates basic mat policy could one to a mail subject policemen, judges juries fraud convict ters to and for ion.7 resolution an ad hoc subjective on and ” Coombe, basis.’ v. Chatin If we to affirm were mail Handakas’s (2d Cir.1999) (quoting Grayned City fraud on grounds conviction that he 104, 108-09, Rockford, 408 U.S. undertaking violated state-mandated a (1972)). 33 L.Ed.2d 222 pay “prevailing wages,” rate of to fur- reports performed, nish accurate An op- work indefinite criminal statute creates expansion we would effect a breathtaking portunity government the misuse of If, instead, Middlemiss had affirmed offense thus described is: use of the [i] operator, mails, of the cafeteria conviction for serv- aid of conduct that an [ii] in violates ing ordinary notwithstanding tuna fish a con- "explicit” duty state-created or a state crimi- requiring tract all term tuna be netted (or both). type duty nal statute But "the dolphin-free, might precedent Middlemiss be limiting breached is a factor in the honest militating in favor of affirmance in this case. analysis.” services Dissent at 116. 8. The does dissent all that can done to meaning statutory wording; tease out of the and protection law called consumer sum so Judge Winter’s appropriate

power. To ren- far more. services doctrine the honest phrase, has ... which “a catch-all fraud ders mail it suffi- trial, thought government At See United but misuse.” no use guilty that Handakas argue cient 108, 144

Margiotta, simply mail fraud to commit conspiracy (Winter, J., (explaining dissenting) obli- non-fiduciary contractual his violating prose- corrupt prosecutor the first “[w]hen prevailing pay his workers gation to fraud,” enemy for mail political cutes prosecu- is what wages. That rate govern- “good of honest services talk jury: to the argued tor indeed”). ring hollow ment will things you care about how [S]ometimes of an dangers highlighted done, in a you spell that out Chatin are service” “harnessed into that is it you offense make clear contract and prohibitions will not other with, when dealing state the SCA people you are as Chatin, 90. Even serve. here, you do want that not did provided by the overlay without a cer- something you but done want services,” the mail “honest that, amendment right have a way, you tain aptly been described fraud statute has The SCA at issue here. that’s what’s expedient.9 all-purpose prosecutorial an its con- right to determine how had a are free invoking prosecutors By tracts would befulfilled. apply legal standard juries “to to invite added). (emphasis J.S.A. at 1919 the rhet to little more than

which amounts property its right had a SCA Margi classes.” grade civics oric of sixth away that took [Handakas] contract.... (Winter, J., otta, dissent F.2d at 142 had its to decide how right SCA clause can “honest services” ing). If the performed.... defendant [T]he contract failure honor the punish be used There is duty of honest services. owes a pre payment SCA’s insistence here. a contract it could make wages, rate of vailing at 1920. J.S.A. who anyone out of breaches criminal [Tjhat’s was a exactly point. There tuna was representation: that contractual by contract. relationship ... defined stationery dolphin-free; netted at 1922. J.S.A. sneakers or recycled paper; made of [Tjhere that what the workers; can be no doubt by child are not made T-shirts intentionally did here was defendant labor—in grapes picked are union J., (Winter, Ar- provide prosecutor with what the federal Margiotta, F.2d at 688 143 See (''[W]hat long sought' simple me from dissenting) profoundly troubles fulcrum chimedes —a through world”); Roger abuse selective potential for J. is the can move the which one political degree Crimes, prosecution Courts, and the raw Miner, Federal Federal freeswinging mail fraud power club of 117, Federalism, Pol’y & 10 Harv. J.L. Pub. C. Cof- prosecutors.”); John federal affords (1987) interpreta- judicial (arguing that 121 fee, Jr., to Crime: Some From Tort Reflections fraud statute converted tion of the mail has Fiduciary Breaches on the Criminalization of pros- into a "vehicle statute mail fraud Law and Problematic Line and the Between unlimited number of of an almost ecution 117, Ethics, L.Rev. 126 19 Am.Crim. bearing very little connection offenses doubt, maxim, in (quoting prosecutor's "when Rakoff, mails”); Mail Jed S. The Federal Coffee, Jr., fraud”); charge C. The mail John (Part I), Duq. 18 L.Rev. Fraud Statute Continuing Fraud: Mail The Metastasis of (1980) (quoting prosecutors reference to Story White-Collar the "Evolution” aof Stradivarius, our Colt as "our statute Crime, (1983) (argu- Am.Crim. L.Rev. Cuisinart”). Slugger, our our Louisville destined to ing mail fraud statute "seems deprive seek to the SCA of this contract people time about buy who won’t certain right, right just to determine clothing because it’s in sweatshops made done, gets gets what work but how it in Asia. done. J.S.A. 1918. The argument contract at 1917.

J.S.A. thus in cast terms of social conscience and much, arguments prove These too how- treated “honest concept services” as a ever, government as the apparently real- boundary without or standard. appeal. ized on By govern- the time the Even the circuits that have reinstated post-argument supplemental ment filed its pr e-McNally recognize law that ad hoc subject, brief on this it was back-peddling parameters are give needed to the statute “misspoke” and conceded that during shape. Frost, See United States v. argument oral it suggested when that a (6th Cir.1997) (“[Our] F.3d refusal duty of “honest services” arises connec- to carry the intangible rights doctrine to performance tion with the of all contracts logical its extreme stems from a need to and is by any violated contract breach. avoid over-criminalization private Appellee’s Supplemental Br. at & n. 1. relationships: merely ‘[I]f depriving the government’s improved The appellate the- loyalty victim of the and faithful service of ory prosecution of this is that the “honest his fiduciary constitutes mail fraud may limits, services” clause have its but disloyalty crime, alone becomes the little that Handakas’s conduct falls within those remains every wrong poten- before civil supposed limits because of a “agency” rela- ” tially indictable.’ tionship (quoting between Handakas and the SCA. Lemire, However, Id. at 1-11. there is no refer- 1336 n. 11 (or (D.C.Cir.1983)) (second agency fiduciary ence to relationships) origi- alteration in indictment, nal)); charge10, Cochran, or in the inor United States v. summations, (10th Cir.1997) government’s (“[I]t or in the give would brief in chief on appeal. government’s pause us great right to honest services subject summation on the of “honest ser- is violated every breach of contract or vices” was focused on the contract right to every misstatement made the course of compliance representations and war- dealing.”); Brumley, 116 F.3d at 733 ranties: (“[BJefore McNally the doctrine of honest

[Tjhere are times when there things are services not a unified set of rules. important more price. than We are Congress And could not have intended to probably all familiar with instances bless each every pr e-McNally lower you where ... have decided not buy a court ‘honest opinion. Many services’ of particular product you because don’t like opinions expressions these have far broad- ... the way workers are treated. Years holdings.”). er than their ago boycott there a grapes of be-

cause the picked workers who it weren’t If the words of a criminal statute being treated fairly. offense, You read all insufficiently define the it is no charge 10. The may on "honest services” though was as The services not be honest even follows: physical specifi- work meets contractual statute, person Under the mail fraud a or cations. You should decide this in the issue entity may an be defrauded out of some- light special of the circumstances of this thing money property, other than this is case. intangible right also referred to as the J.S.A. at 2080. honest services. that certain by prosecutors to formed federal Congress for us part of deference appeal strongly so “The courts York laws the crime. New intuit or invent be Congress of the that violation should place social conscience may assume pur- criminal laws under federal law. rewriting as felonious by writing or treated prosecuted. will be payment citizens in the suant to which York’s interest New Congress.” solely prerogative wages This is is secured and prevailing rate of (find- J., dissenting) (Jolly, Id. at deemed sufficient by enforced state laws precedent permit- Supreme Court ing no § 220 of the New by the state. Under “delegate to the federal Congress to ting Law, comptroller of Labor York State defining key terms the task of courts empowered to City of New York is statute”); see a criminal coverage judg fact and enforce a findings make States, 531 U.S. v. United also Cleveland pay who fail to against ment contractors 148 L.Ed.2d 121 S.Ct. Law wages. N.Y. Lab. prevailing rate (“We reading of the Government’s resist 220(7 (8.). a.), Additionally, § the statute be- [property rights under] a that willful violation constitutes provides approve sweeping cause it invites us 220(2 a.), N.Y. Lab. Law misdemeanor. jurisdiction expansion of federal criminal (9.). (3.), Prosecutorial discretion has been of a clear statement in the absence for sharpen penalty here to exercised 574-75, Smith, at Congress.”); 415 U.S. that, in of certain state laws the violation Reese, 1242; United States prosecutor, of a federal are the estimation (1875) (mem.) (“It 214, 221, 23 L.Ed. 563 insufficiently policed punished by legisla- if the certainly dangerous would particularly dubious itself. This is state large enough to catch ture could set net is at best tan where interstate commerce offenders, and leave it to the possible all implicated. United States v. gentially Cf. say who could be step courts to inside and Lopez, detained, and who should be set rightfully (1995) (holding Federal Gun L.Ed.2d 626 would, extent, large. This to some sub- unconstitutional, Zone Act be Free School judicial legislative de- stitute the Congress’s cause criminal statute exceeded partment government.”); authority; reasoning that commerce clause 4, 142 141 n. Margiotta, possession gun in school zone was not (Winter, J., dissenting) activity substantially affect economic (“Even if there were not a canon of con- commerce). ed interstate calling upon us to avoid broad struction statutes, the re- construction of criminal holding right In a recent case that the judicial fíat extension of mail fraud cent property not a inter- gaming license was unwarranted.... obli- [T]he would be Supreme under Court est wholly creation of gations imposed are against the indiscriminate federali- warned mail fraud interpretations recent zation of state offenses: itself.”). statute poker typically Louisiana’s video statute ^{[*] [*] [*]} * * unambiguously imposes criminal making false statements on penalties for in The absence of discernible standards applications.... [U]nless license Con- implicates doctrine the “honest services” purpose clearly, it will gress conveys its principles McNally, of federalism. significantly not be deemed to have 360, gov- at 107 S.Ct. 2875. As U.S. demonstrates, balance in the changed this the federal-state summation ernment’s prosecution of crimes. prosecution conception driven a States, Cir.1992) 12, (analyzing Cleveland v. United 531 U.S. an as-applied chal- 24-25, 365, (now 221 lenge § S.Ct. 148 L.Ed.2d to 21 U.S.C. moved to 21 (2000) (internal 863), quotation and cita- marks U.S.C. which criminalized the sale omitted). principle tions The same of fed- of drug paraphernalia in interstate and implicated prose- commerce), eralism is when a federal foreign abrogated on other cutor uses the “honest services” clause to grounds by ‘N’ Things, Posters Ltd. v. States, governing reinforce a state law 513, terms United 511 U.S. public 1747, (1994). contracts. 128 L.Ed.2d 539 As dis- district court failed to address the

applied plain error The dissent ^[*] urges ^[*] review, that we should have because ^[*] vague * * words of limitations Handakas’s conduct violates the statute. cussed more that 1346 set no limits and state no fully can above, shed light the several on whether key However, ness Dissent at 114. it question. The cases cited the dissent at 113 n. escaped cannot be said that the issue 1, reject which either facial challenges to notice; Judge district court’s Weinstein’s as-applied 1346 or in challenges other pointed interrogatories special on the ver contexts, simply factual do not address the dict form purposefully ques isolated the question presented with which we are tion deciding way that we are a that here. The dissent cites no case in which a separate invited consideration. mail fraud conviction based on the “honest event, holding “plain a sup error” is provision services” upon was based ported by the four factors listed United scheme to deprive another of the “honest” Olano, States v. 113 performance purely contractual duties 1770, (1993); 123 L.Ed.2d 508 see statutorily or of imposed duties to submit Easter, also United States v. 981 F.2d information agency. state Dissent at 1549, 1557(10th Cir.1992) (“[W]e apply the (citing 113 n. 1 Frega, United States v. plain error rule rigidly less when review (9th Cir.1999) 793, F.3d (rejecting as- error.”). ing a potential constitutional applied challenge where scheme involved The opinion reasons adduced in this bribery judges); of state United States v. demonstrate that ^[1] there was error. The Frost, 125 F.3d 346, 370-71 (6th error was also ^[2] “plain” it is (rejecting facial challenge); Olano, 728, (5th “clear under current Brumley, law.” 507 v. 116 F.3d 732-33 Cir.1997) (en banc) principle S.Ct. 1770. (rejecting constitution provide statute must “notice” al challenge vagueness both based on where “explicit standards” to survive an “as- employee defendant a state who solic applied” bribes, challenge constitutional based on ited noting but “some defendants See, vagueness is well e.g., established. on the outer reaches of the statute might Coombe, Chatin v. 186 F.3d be able to complain they were not on Cir.1999); Strauss, 999 notice that Congress criminalized their (2d Cir.1993). Moreover, it conduct when revived the honest-ser doctrine”); is also clear that “explicit “notice” vices United States v. Para dies, (11th Cir.1996) required regu- standards” are 1282-83 “implicat[ing] (rejecting as-applied lations First Amend- challenge where freedoms,” ment dissent at but also bribery public scheme of a involved offi cial); criminal statutes do not those Gray, involve United States v. See, (5th Cir.1996) e.g.,

freedoms. United States v. (rejecting as-applied 776-77 Schneiderman, (2d 968 F.2d challenge 1568 conspira- where scheme involved VI employer their deprive employees

cy by services”); v. States United “honest of conspiracy to for a conviction To sustain Cir.1996) (11th Castro, must dem government money, the launder (rejecting as-applied challenge where onstrate: ^[1] that the defendant conspired accepting judges state involved place scheme in the transport funds from attorneys in ex defense out through place kickbacks from to or States United change for appointments as counsel for side the United States, ^[2] knowledge illegal v. defendants); States the proceeds United that funds were indigent Bryan, 58 F.3d 941-43 (4th Cir.1995) activity, ^[3] to conceal the nature of the currency re to avoid a activity or illegal challenge de as-applied where (rejecting 1956(h); § requirement. U.S.C. porting rigged that state official was a fendant Trapilo, v. States United contracts), abro agency bidding for state Cir.1997). grounds gated on other 2199, 138 642, 117 S.Ct. O’Hagan, 521 U.S. en- that Handakas The evidence showed (1997); Way money types separate in two gaged L.Ed.2d mer, 568-69 (11th transfers: ^[1] he arranged his personal the accounts paid to be out of challenges expenses as-applied (rejecting facial corpo- and shell controlled subcontractors official government was a defendant where that accepted kickbacks)). rations, ^[2] he had money wired from tial not The rights” dispute. 1770. error [3] —a Finally, Olano, point obviously affects “substan- which the error 507 U.S. at ^[4] dissent seriously does transfers these accounts to Greece. sis for transfers States; accordingly, that could have went money laundering conviction. abroad from the United they are the provided Only the ba- latter fairness, public integrity, or “the affects interna argues that the Handakas id.: re- judicial proceedings,” reputation of currency transac were not tional transfers system would be sub- justice spect for filing of a cur subject required to a tions our refuse exercise verted we would 5313(a)), (under rency report U.S.C. a conviction where we discretion reverse challenge government does and the the rele- application have found that appeal. govern argument to the defendant’s con- federal statute vant that the funds argue therefore ment must of due deprive the defendant duct would illegal proceeds were transferred if, as the dissent process law—even However, only potentially activity. violat- defendant’s conduct notes at 116 the finding is the predicate for that available law. ed state government’s conspiracy. The mail fraud only that point, arguing this brief concedes reasons, we foregoing For properly convicted of “Handakas unconstitutionally 1346 is hold Having fraud. conspiracy to commit mail Handakas and reverse applied crime, vague also he was been convicted mail count. on the fraud en jury the conviction to have properly found Han of that laundering proceeds consideration of ruling gaged This obviates Supplemental Br. Appellee’s the evi argument crime.” dakas’s alternative fraud conviction the mail 23-24.11 Since on this was insufficient. dence count ited Following supplemental oral briefing argument, on two narrow panel solic- is- ness, sues: ^[1] whether ^[2] how potential reversal was void for (on vague- opinion, has been reversed in the this mon- the mail fraud statute could “make a crimi- ey laundering conviction falls with it. out anyone nal of who breaches any con- representation.”

tractual Majority op. at CONCLUSION 108. an overly While broad use of may significant raise a question in some (Count One), The mail fraud count the circumstances, no question such should be (Count Four), money laundering count appeal. resolved on this (Count one of the structuring two counts Three) Two are REVERSED. The majority notes, The appropriately but remaining counts of are AF- conviction follow, fails to the “one doctrine more VACATED, FIRMED. The sentence is deeply any rooted than in pro other and the case is REMANDED to the dis- cess of constitutional adjudication[:] that trict court for resentencing. The district we ought pass not to questions of con may court in its expedite discretion wish to stitutionality ... adjudication unless such resentencing; from perspective, ap- our is unavoidable." Department Com of pears completed has Handakas or merce v. United States House Represen may complete soon term to which he tatives, 316, 343, 525 U.S. 119 S.Ct. may be resentenced. In these circum- 142 L.Ed.2d 797 (emphasis sup stances, the mandate shall issue forthwith. Service, plied) (quoting Spector Motor Inc. v. McLaughlin, FEINBERG, Judge Circuit (dissenting (1944)). L.Ed. For reasons part concurring part). in in below, given majority’s “adjudication” I 1346 is holding unconstitutionally vague dissent from the that 18 U.S.C. as applied § 1346 in this applied hardly is in case unconstitutional as “unavoid concur, however, I able”. this case. in the other

portions opinion. the majority with, To begin the constitutional issue majority The is concerned that a court, broad was not raised in the district as provision use “honest services” majority apparently concedes.1 This count) would poorly disguised effect Handakas’s sentence. attempt to file a second main brief.”). government's supplemental brief address perfunctorily es these issues and adds that the majority 1. The states that "it cannot be money laundering conviction "would survive” said that escaped the issue the district court's reversal of the mail fraud conviction because special notice” sepa- because the verdict form money laundering premised count "was rately deprived asked whether Handakas structuring on the as well convictions as the City New Authority York School Construction Appellee’s Supplemental mail fraud.” Br. at (a) (b) "money or property” or "honest However, unsupported that statement is However, Majority op. services.” at 111. charge by legal argument citation to the separate questions use of on the verdict form support money the novel idea that a way does not indicate any that the district laundering may predicated count on a vagueness question. court considered the A structuring point conviction. The is thus in simpler explanation likely: more much (on record) meritless; and, choate and this argued grounds Government both for the mail point, more to the it is waived. See United fraud conviction and verdict form focused (11th Nealy, Cir. event, jury's attention on both. 2000) ("Parties ap must submit all issues on purposes plain analysis, it does not error peal (citing R.App. their initial briefs.” Fed. vagueness happened matter whether the issue 28(a)(5))); Port, Plaquemines Pro. Harbor and passed through to have the district court Comm’n, Rather, Terminal Dist. v. Federal Maritime judge's appellant mind. must (D.C.Cir.1988) (discounting have raised issue the district court in supplemental "nothing plain brief more than a order to avoid the error constraints

114 Furthermore, this circuit it is the law of to reaching out us from preclude

should correctly precedent” majority “binding states must be it. As the that there decide counts, structuring discussion can in its an error “mandating” reversal before attention of brought to the “not challenges States v. Wein plain. United be deemed under are reviewed court” [district] the 139, traub, 152 F.3d 273 plain error standard the constraints of the (“Without from this court prior decision (1) 52(b). is Plain error P. Fed R.Crim. jury mandating the Supreme Court the (3) (2) affects error, that plain, that is [defendant], first for the that instruction v. United rights. Johnson substantial says have been appeal, should time on 466-67, 461, S.Ct. States, 117 520 U.S. error to any such we could not find given, (1997). 1544, 718 137 L.Ed.2d was.”). majority The it plain, error be assump- unlikely the Even if we make decision, binding let alone judicial no cites regard- was an error below that there tion circuit, dealing in this with precedent (the § 1346 dis- constitutionality of the ing It its view. does supports § that 1346 course, court, did not decide trict cited distinguish the cases attempt to issue), properly cannot characterize we 111-12. 2, majority op. at supra. See note Supreme Court plain. as such error different factual merely pointing out But held, plain error stan- applying has § held 1346 was in cases that patterns dard, “plain” synonymous is that affirmatively nothing does constitutional mini- “obvious”, that “[a]t “clear” or clear under current demonstrate an mum, appeals cannot correct a court of constitutionally was un law 1346 52(b) Rule unless pursuant error words, majori In applied here. other law.” United current error is clear under 734, alleged error is Olano, 725, to hold ty 113 appears 507 U.S. v. States (1993). 1770, Any 508 the major 123 L.Ed.2d current because plain S.Ct. under law unconstitutionality error as to the alleged simply disregards the so. That ity says “clear under certainly cannot be 1346 Johnson, and Wein- teachings of Olano every circuit court current law” when traub. vagueness specific question of address the cases, Thus, these second under ap- phrase “honest services” since the clearly not plain error test prong § 1346 to has found the statute peared true because particularly This is applied.2 met.3 on its face or as constitutional (1997); 598, 487 Unit S.Ct. 139 L.Ed.2d majority does 118 appeal, review 933, (4th Bryan, F.3d 941-43 ed v. 58 indicate States anything record to point to in the 1995), grounds, other United Cir. overruled on below. issue raised that the 642, O’Hagan, 117 521 U.S. S.Ct. States v. 793, 2199, (1997); States L.Ed.2d 724 United Frega, 138 v. 179 F.3d See United States 2. Cir.1995), Cir.1999), 564, (11th denied, Waymer, 568-69 (9th v. 528 U.S. rt. 803 ce 1119, denied, 1247, 1191, 517 U.S. 116 S.Ct. 105 rt. 146 L.Ed.2d S.Ct. 120 ce 1350, 346, (1996); Frost, L.Ed.2d cf. United (2000); F.3d 134 519 v. 125 Cir.1997), 728, (5th denied, Brumley, 732-33 (6th 525 U.S. States rt. 370-71 ce 1028, denied, (en banc), 40, (1998); Cir.) U.S. 810, cert. 522 L.Ed.2d 32 S.Ct. 142 119 1443, 625, Castro, (reject 606 S.Ct. 139 L.Ed.2d F.3d 1455 118 States v. 89 United denied, 1118, dissenting judges that (11th Cir.1996), ing argument of 1346 cert. adequate (1997); give average notice citizens Unit fails L.Ed.2d conduct). (5th prohibited Gray, F.3d 776-77 States v. ed denied, Cir.1996), U.S. cert. contrast, majority (1997); is correct in hold- L.Ed.2d 351 plain committed Paradies, ing the district court 1282-83 be- denied, structuring convictions Cir.1996), (11th error cert. n majority’s ruling appears depart from It is true that Handakas was under a analysis duty used our recent decision in contractual to refrain from falsifying Sancho, (2d payroll paying records and F.3d 918 sub-standard true, rates. It curiam), denied, may also be as the (per majority cert. out, points that there is a question whether 143 L.Ed.2d 79 duty contractual alone should be (1999). Sancho, enough In which we are bound to here, to allow a conviction. But as in (as court), follow was the district we af Sancho, there were duties other than sim- jury firmed a finding guilt under 18 ply contractual imposed ones on Handa- §§ panel U.S.C. 1346. The first ob kas. Article Section 17 of the New York served that the “essential element of a Constitution, State example, prohibits § violation” of 1346 “is a scheme to de “laborer, workman or mechanic in the prive another of the ‘intangible right ” employ of a contractor or subcontractor honest services.’ 157 F.3d at 921. The engaged in performance any public (1) court then looked to New York law to being “paid work” from less than the rate” discover legal duty whether there was a of the prevailing wage. That constitutional (actual by that case a so-called consultant implemented mandate by New York La- ly an FBI agent) not to conceal from a § bor seq Law 220 et (McKinney 1986 & (TCC) company construction discovery his Supp.2001-2002), West imposes which (2) proposed TCC; of a fraud on concluded upon duties various entities to enforce the there was such a legal duty under prevailing wage requirement. (3) law; New York and held that Sancho majority points used interstate telephone communications out that paying sub- wages standard furtherance of a is a criminal deprive scheme to misdemeanor TCC under N.Y. Majority Lab. Law 220. op. of its intangible right to the consultant’s at But imposes 110. state law even honest services. Id. more extensive duties on contractors such This fairly distinguished case cannot be instance, as Handakas. For under N.Y. from Sancho. Here jury there was a find- 220(3 a.a.), Lab. Law contractors “shall ing guilt charge on a of violating keep original payrolls transcripts there- Sancho, (1) §§ 1346. As in we look of, subscribed and himby affirmed as true to state law to determine whether Handa- penalties perjury,” under the showing legal duty kas was under a to refrain from days by” the “hours and worked and intentionally paying wages those re- below “hourly paid” “workman, wage rate to each quired by state falsely certifying law and laborer or mechanic.” Another section of payroll records that compliance reflected the statute further extends the criminal (2) wage requirements; with the applicable penalties for false statements. See N.Y. New York law makes clear that there was (“Any Lab. Law 220-c contractor or duty; such a Handakas used the upon subcontractor who shall his oath veri- mails in furtherance of a scheme to de- fy any required statement to be filed un- prive City the New York School Construc- by der this act which is known him to be (SCA) tion Authority intangible of its right shall guilty perjury punish- false law.”).4 to his honest provided services. penal able as It is addition, multiple charges cause the contrary regulations require were 4. In state qualifications SCA to evaluate a contractor's body directly well-established relevant case (as pre-qualification application stated in a Majorily op. law. at 97-99. required regula- of the contractor the same vague of unconstitutional holding its port falsified felony to submit therefore state “implicated the But Chatin here. ness any filing required information material religion,” of an individual’s exercise Law free Penal See N.Y. statute. by the labor Amendment free First 1999) thus involved perju- (defining (McKinney § 210.10 affirming the district E Id. a “class doms. degree in the ry second York De that a New State finding law duties court’s the state felony”). Because Rule Services of Correctional governed partment explicit, this case here are so practices religious regulated inmates’ in Sancho. analysis used by the recog vague, we unconstitutionally distinguish to attempts majority The pro is “[vjagueness particularly that nized only progeny,” and “Sancho’s Sancho ar upon it sensitive when ‘abuts blematic Middlemiss, ” Amendment freedoms.’ of basic First eas ground that (2d Cir.2000), on the dubious City Rock Grayned v. (quoting Id. law duties the state limited those cases 104, 109, 92 S.Ct. ford, 408 U.S. breached, support a con- may that, when (1972)); Chapman also see L.Ed.2d 222 another of a scheme to defraud viction for States, only duties actionable “honest services” (1991) (holding that 114 L.Ed.2d However, Majority op. at 106. in tort. evaluated as claim must be vagueness a is there or in Sancho Middlemiss nowhere when facts of case” “applied [the] to the Rather, each principle. limiting a such freedoms are not in Amendment “First there was a looked whether case Amendment have no First fringed”). We services, with- provide honest legal duty to Furthermore, unlike Handa- here. issue the na- any requirements imposing out actions, religious practices Chatin’s kas’s fact, In Sancho held duty. ture of that state criminal not violate additional did duty required fiduciary is not that a statutes, Chatin was af and therefore conviction, an honest services support level of notice about forded the same duty type of that the strongly suggesting Handakas his behavior as was. illegality of in the limiting factor is not a breached majority is analysis. The honest services addition, that Han- the record In shows from Sancho gigantic leap making thus notice that his conduct dakas had clear that holding and Middlemiss penalties under subjected to criminal him duty required tort of a law breach state mail statute. The Government fraud a conviction support this to in a case like at trial Handakas presented evidence event, Handakas any under pre-qualifica- on a false statements made and criminal contractual violated both form state application (required tion duties, acknowl- majority law as the state SCA) with the part of his contract law and notice that A has more edges. defendant stated, false material specifically “[a] and there is violated his behavior in connection or omission made statement dis- prosecutorial risk of abuse less an subject a may ... application this with cretion, also consti- that behavior when charges, including ... criminal person simply rather than crime tutes a state U.S.Code, false Title Section tort. ISfl, statement, and mail fraudulent Therefore, (emphasis supplied). Chatin v. majority also cites fraud” was uncon- argument that the statute sup- Coombe, F.3d 82 (1999). Regs. § Comp.Codes & "wage, R. 9602.2 tions), N.Y. including compliance with fair labor standards.” hour and other vague applied to Handakas ízed their conduct it

stitutionally when revived the hon- he lacked notice must fail. because est-services doctrine!’ 116 F.3d at 733. concluded, however, The Fifth Circuit Moreover, assuming that there was even Brumley among defendants, was not such plain proposition reject— I error below—a (like Handakas’s) because his conduct appellate we as an question whether “inconsistent with his duties under [state] error,” court should “notice a forfeited agree law.” Id. I Fifth Circuit’s Johnson, committed to our discretion. conclusion that while “the boundaries of 467, 117 U.S. at S.Ct. 1544. We have been intangible rights may difficult to dis- “only such an instructed to “notice” error cern, does not mean [that] is diffi- fairness, seriously if ... [it] affeet[s] cult to determine whether [a defendant] integrity, public reputation judicial particular violated them.” Id. It is clear to (citations proceedings.” Id. and internal me that in this case Handakas did violate omitted). quotation imprudent marks It is intangible right SCA’s his honest .to for us to exercise that discretion to reach I justification services. therefore see no far-reaching and decide a issue of constitu allegedly plain “notice” the in error order tional in a law case where the defendant’s forge in this approach case new for clearly services were so not “honest ser § our on Court 1346. statutory vices” under 1346. That term mean, least, very pro must at the that in sum, I dissent from the holding that viding person such sign services a does not § 1346 unconstitutionally vague ap- as perjurious falsely certify statements plied above, in this case because as noted padded payrolls in violation of state law. Supreme has Court instructed us not persuasively Handakas cannot say he pass questions on of constitutionality provided the honest SCA with services or adjudication unless such is unavoidable. fairness, public rep that “the integrity, or here, any, The constitutional error utation” of the district court proceedings eminently plain avoidable: it was not seriously affected his mail fraud it, we should not reach out to “notice” conviction on the facts of this case. Id. particularly governed because this case is Sancho, analysis I in in majority’s understand the Sancho. As concern that we need allowing convictions on the decide whether Handakas’s basis deprive conduct “constituted a dishonesty the course of scheme performing a services,” of a might right [the SCA] contract trivial honest criminalize breaches and I it of contract. But that concern “have no doubt did.” 157 is unfound- case, ed in this at 922. clearly where Handakas imposed by

violated duties state laws respectfully part I dissent as set forth breaching addition to his contractual portions and concur in the other above duties. As the Fifth Circuit noted in majority opinion.5 Brumley, Congress “[b]ecause was not faced awith uniform formulation of the

precise contours of the [honest-services] 1346], passed

doctrine some [when

defendants the outer reaches of the might complain

statute be able to that they Congress

were not on notice that criminal- Although disagree majority’s regarding constitutionality 5. I with the view I America, STATES UNITED

Appellee, Anthony FELIZ,

Anthony also known Feliz;

Felix, as Otoniel also known Defendants-Appel- Mercedes,

Tony

lants. 01-1260(CON). 01-1254(L), Nos.

Docket Appeals, States Court Circuit.

Second March

On Submission: 3, 2002. April

Decided Maringer, F. Assistant United

Elizabeth White, United Attorney; Mary Jo States Attorney District Southern Lewis, York, As- Raymond of New David York, Attorney, New sistant United NY, brief, Appellee. for on the Park, Sterling, New Tai H. Shearman & Nishikawa, York, NY; Y. Sandra brief, Appellant Mercedes. PARKER, CARDAMONE, F.I. Before PARKER, JR., Judges. and B.D. Circuit PER CURIAM. judg-

Tony appeals from the Mercedes Court ment of United States District York, for the District of New Southern (John Keenan, Judge), April entered on F. (1) 23, 2001, following plea guilty robbery in violation to commit conspiracy (2) Act, of the 18 U.S.C. Hobbs Act, of the robbery violation Hobbs brandishing a fire- U.S.C. to a crime of during arm relation 924(c).1 18 U.S.C. violence in violation of mail fraud analysis regarding once it that the conviction majority's holds in the concur reversed. should be laundering charge money reversal Anthony Defendant-appellant also Feliz

Case Details

Case Name: United States v. Vassilios K. Handakas

Court Name: Court of Appeals for the Second Circuit

Date Published: Mar 22, 2002

Citation: 286 F.3d 92

Docket Number: Docket 00-1751

Court Abbreviation: 2d Cir.