Second Circuit (again) reverses Sheldon Silver’s corruption conviction (in part) − and brings some clarity to the “as opportunities arise” theory of liability

For the second time in two years, the Second Circuit has reversed high-profile convictions of former New York State Assembly Speaker Sheldon Silver.  And, for the second time in two years, the circuit court has provided important clarification to the law around illicit payments to public officials, while also reining in yet again aggressive prosecution efforts in this area. 

This time, exactly five years after Silver's arrest, the Court of Appeals reversed three of seven counts of conviction, again finding that the district court at retrial erred in instructing the jury on the elements of honest services fraud and Hobbs Act extortion.  See United States v. Silver, No. 18-2380, 2020 WL 284426, at *2 (2d Cir. Jan. 21, 2020).  The decision by the Court of Appeals offers much-needed clarity with respect to the narrow “as opportunities arise” theory of liability in cases involving allegations of bribery.  As in several other recent cases, Silver argued in part that prosecutors had not identified with sufficient specificity the particular acts he was to perform in return for accepting a bribe.

Silver worked part-time as a lawyer during his tenure as Speaker of the Assembly, which the government alleged served as the vehicle for Silver to exploit his elected position for unlawful personal gain.  Id. at *2.  The government alleged Silver orchestrated two separate bribery schemes in which he received referral fees from law firms in exchange for official actions.  Id.  In one scheme, Silver performed official acts to benefit a medical doctor who referred mesothelioma patients to Silver’s law firm (the Mesothelioma Scheme).  Id.  In the other, Silver performed official acts benefiting two real estate developers who had hired a different law firm that paid referral fees to Silver (the Real Estate Scheme).  Id.

Silver was first convicted in 2016 of accepting illegal bribes, in violation of the mail and wire fraud statutes, 18 U.S.C. §§ 1341, 1343, and the Hobbs Act, 18 U.S.C. § 1951, and of laundering the related proceeds, in violation of 18 U.S.C. § 1957.  Id. at *1.  A year later, the Second Circuit reversed Silver’s conviction in its entirety, finding that the district court’s jury instruction “failed to meet the narrowed definition of ‘official act’ set forth in the intervening Supreme Court decision,” McDonnell v. United States, 136 S. Ct. 2355, 2371–72 (2016).  Id. (citing United States v. Silver (Silver I), 864 F.3d 102, 119 (2d Cir. 2017), cert. denied, 138 S. Ct. 738 (2018)).  Silver was subsequently retried and, in May 2018, the jury again convicted him on all seven counts.  Id.

Silver’s two arguments

This time around, Silver advanced two principal arguments on appeal, both of which challenged the district court’s jury instructions at retrial:  (1) that Hobbs Act extortion under color of official right and honest services fraud require evidence of an “agreement,” ie, a meeting of the minds, between the alleged bribe payor and receiver; and (2) that the “as the opportunities arise” theory of bribery recognized by the Second Circuit in United States v. Ganim, 510 F.3d 134, 142 (2d Cir. 2007), did not survive McDonnell, which requires identification of the particular act to be performed at the time the official accepts a payment or makes a promise.  Id.

The court rejected Silver’s first argument, finding that Silver was “incorrect in asserting that Hobbs Act extortion under color of right and honest services fraud require evidence of a meeting-of-the-minds ‘agreement[.]’”  Id.  The court held that “[e]xtortion under color of right and honest services fraud require that the official reasonably believe, at the time the promise is made, that the payment is made in return for a commitment to perform some official action.  Neither crime requires that the official and payor share a common criminal intent or purpose.”  Id.  Indeed, the law has long been that the “quid pro quo element” of both extortion under color of right and honest services fraud does not include a “requirement that the official actually intended to follow through on his commitment.  What matters is that the official manifested a willingness to take payment for official action or inaction.”  Id. at *5 (emphasis in original).  Given that, as a matter of logic there cannot be a requirement for the type of “meeting of the minds” for which Silver argued on appeal.

A public official must understand “the particular question or matter to be influenced”

While neither color-of-right extortion nor honest services fraud requires “advance identification of the particular act to be undertaken,” the court held that “they do require that the official understand − at the time he accepted the payment − the particular question or matter to be influenced.”  Id. at *1 (emphasis in original).  As the Second Circuit also put it:  “In other words, a public official must do more than promise to take some or any official action beneficial to the payor as the opportunity to do so arises;  she must promise to take official action on a particular question or matter as the opportunity to influence that same question or matter arises.”  Id. at *8 (emphasis in original).  The court’s decision emphasizes that a vague promise to do something − anything − that benefits the payor won’t cut it; that is “a promise so vague as to be meaningless” and would make clear that the “official has failed to offer a quo.”  Id. at *11.

Accordingly, the court agreed with Silver’s second argument, finding that “each offense demands more than a nonspecific promise to undertake official action on any future matter beneficial to the payor.”  Id. at *1 (emphasis in original).  The jury here was told that to convict it had to find that Silver believed that the payor expected him to take “official action [to] the benefit of the payor . . . as specific opportunities arose[.]”  Id. at *14.  The jury instruction “did not require that the specific matter . . . be identified, or even understood by Silver, at the time he accepted the bribe.”  Id.  The court found this instructional error was harmless with respect to three of Silver’s seven counts of conviction (pertaining to the Real Estate Scheme), but that the evidence was insufficient to sustain the verdict against Silver on three other counts (relating to the Mesothelioma Scheme).  Id. at *2.  Specifically, the court found that the convictions “related to the Mesothelioma Scheme falter because the Government, which opted to proceed solely on an ‘as opportunities arise’ theory, failed to identify a sufficiently specific, focused, and concrete question or matter relating to conduct falling within the statute of limitations.”  Id. at *29. 

So far, so good.  But then, in what is presumably an effort to clarify its holding, the court offers up a gloss on the facts of McDonnell that arguably obfuscates more than it illuminates what it means for the promised official action to be related to a “question or matter” that is sufficiently “concrete” and “specific.”  The panel opines that questions such as “whether state universities will research a particular drug, or whether the state will provide funding to research a particular disease” are sufficiently concrete.  Id. at *12 (emphasis added).  Conversely, a vague promise to “‘benefit the payor,’ without more, . . . amounts to no promise at all.”  Id.  In that scenario, “there is no quid pro quo.”  Id.  There would seem to be a wide chasm between these extremes.  What about similar promises not in respect to a “particular” drug (or construction contract, or pension fund investment, or whatever), but more generally?

But the “as opportunities arise” doctrine remains alive and well

Judge Raymond G. Lohier’s separate concurring opinion makes clear that “the ‘as opportunities arise’ doctrine remains alive and well in [the Second] Circuit, and neither Hobbs Act extortion nor honest services fraud requires a meeting‐of‐the‐minds agreement or the identification, at the time of the agreement, of the particular act to be performed.”  Id. at *29.  The concurrence further stresses the narrow scope of the court’s ruling, noting that the majority opinion does not address “how specific ‘either the payor or the official’ must be in defining ‘the relevant matter or question’ at the time of the promise[,]” and that “all the opinion requires is that there be more than a vague and ‘open‐ended’ promise to do whatever the official later decides might benefit the payor.”  Id. at *30.  Noting that “[w]hat more is required is best left to district courts or future panels to iron out over time[,]” Judge Lohier explained “we determine only that the promise identified by the Government to anchor the counts of conviction for the Mesothelioma Scheme in this case falls short of supporting a bribery conviction.”  Id.

The concurrence explains that the majority “opinion is confined to the ‘as opportunities arise’ theory of bribery” as defined in Ganim, and “does not implicate other schemes, such as the ‘stream of benefits’ or ‘retainer’ theories of bribery.”  Id.; see id. Majority Opinion at *8 n.7 (“We express no opinion and need not reach the issue of whether the acceptance of a bribe with a promise to perform an official act in the future upon designation of the official act by the bribe payor at that later date (in essence a retainer) would run afoul of the honest services fraud statutes or the Hobbs Act.  That case is simply not before us.”).

While the majority opinion does not distinguish the various theories of bribery in detail − and notes that other courts use the terms “as the opportunities arise,” “stream of benefits,” and “retainer” interchangeably − Judge Lohier asserts “[i]t nonetheless recognizes each theory as different from the ‘as opportunities arise’ theory in doctrinally significant ways.”  Id.  The concurrence offers two examples of such alternative theories of bribery not at issue in the present case, but which otherwise demonstrate the requisite corrupt intent: 

Consider one example of a theory of bribery not at play in this case: a bribe to an official in exchange for a future favor, in the form of a future official act (a vote, for instance) that will be identified by the payor at a later date.  []  That bribery scheme, the majority explains, is not before us.  Consider another example not captured by the “as opportunities arise” theory:  a payment in exchange for a promise to take all future official actions to benefit the payor.  The payment is not in exchange for a vague promise to act in the payor’s general interests at discrete moments to be determined only at the official’s discretion (as alleged in the Mesothelioma Scheme).  Instead, it solicits a promise that the official will filter every official act through the lens of the payor’s interests.  In other words, the promise is not vague, amorphous, or subject only to the official’s discretion of when and where to act.  Although the matter that is the subject of the promise is broad in scope, its contours are clearly defined.

Id. (emphasis in original).  While these examples do not fit the “as opportunities arise” theory analyzed by the majority opinion, the concurrence notes that in each example an official “‘is in the pocket’ of a private individual, and the requisite corrupt intent is beyond reasonable doubt.”  Id.  (quoting Ganim, 510 F.3d at 147).  As a result, the concurrence asserts that “[s]urely, for that reason, nothing in the majority opinion forecloses criminal liability, based on other theories of bribery, for engaging in these schemes.”  Id.  Although the question of “whether and to what extent the requirement that a specific question or matter must be identified at the time of the promise applies to such schemes” is one for a later time, the concurrence offers the ominous conclusion that “[f]or now, the Government keeps the same ‘wide berth to combat’ public corruption that it has long enjoyed.” Id.

A much-needed step toward clarity

While the court’s decision is undoubtedly limited in scope, it nonetheless takes a much-needed step towards clarifying what must be proven to sustain convictions under the “as opportunities arise” theory of bribery.  It remains to be seen what impact, if any, the decision will have, but the requirement that an official understand, at the time payment is accepted, the particular question or matter to be influenced, delineates a somewhat clearer boundary moving forward − especially in light of the government’s continued efforts to stretch the cognizable theories of liability under the Hobbs Act and mail and wire fraud statutes.  See, eg, Kelly v. United States, 18-1059 (2019); United States v. Percoco, 19-1272 (2d Cir. 2019).

Notably, however, the concurrence goes out of its way to offer examples of how other theories of liability − in addition to the “as opportunities arise” theory at issue in Silver − survive under McDonnell.  The concurrence may thus offer a sobering forecast of the continued validity of all “stream of benefits” theories of liability in light of McDonnell.  The majority opinion further explicitly rejected any notion that McDonnell required evidence of a meeting-of-the-minds agreement − untethering even further the requirement that a specific quid be tied to an identifiable quo.

A number of high-profile cases coming out of the “Buffalo Billion” bribery prosecutions will be heard in the coming months that will hopefully provide additional clarity.  See, eg, Kelly v. United States, 18-1059 (2019); United States v. Percoco, 19-1272 (2d Cir. 2019).  What is clear is that the federal courts continue to grapple with McDonnell, the ramifications of which will continue to impact federal cases for the foreseeable future.

To learn more about the implications of these developments, please contact any of the authors.