Wire Fraud

Federal prosecutors in the wire fraud trial of former Illinois Governor George Ryan have argued that they do not need to prove that Gov. Ryan took payoffs to make their case against him.^[1] They were responding to a recent interview given by Gov. Ryan in which he said “the federal government can’t name one person who gave me a corrupt dollar.”^[2]

The prosecutors have asked District Court Judge to make it clear to the jury that specific sums of cash given to Gov. Ryan do not need to be proven.^[3] Instead, they argue, it would be enough to show that Gov. Ryan failed to provide the state with his “honest services”; in other words, he was influenced by other factors that didn’t necessarily amount to a “quid pro quo.”^[4]

Gov. Ryan and his co-defendant, Larry Warner, are on trial for allegedly engaging in corrupt activity when Larry Warner, a lobbyist, was given “free reign to steer big-money contracts and leases to [Warner’s] clients.”^[5]

The statute under which the federal prosecutors are making their argument is 18 U.S.C. § 1346, which works in conjunction with a wire fraud charge.

Wire Fraud
Wire fraud is criminalized by 18 U.S.C. § 1343, which makes it a crime for a person to devise a scheme or artifice to defraud and then use the wires, radio, or television to carry this fraud out.

A violation of section 1343 can result in a fine up to $1,000,000, imprisonment for up to 20 years, or both.

Section 1346 becomes involved because it provides a statutory definition of “scheme or artifice to defraud” that makes it clear that the phrase includes “a scheme or artifice to deprive another of the intangible right of honest services.” This particular statute has a somewhat controversial lifespan. The various Circuits are not entirely in agreement about what exactly constitutes “honest services” and the statute does not provide a definition. However, most seem to agree that where there is a relationship that gives rise to a duty of loyalty, and that person acts in his own self-interest instead, which is generally what is alleged in Gov. Ryan’s case, that constitutes a deprivation of honest services.^[6]

Note: this theory is likely not to be applied to Gov. Ryan’s codefendant, Larry Warner. The District Court for the Northern District of Illinois, in earlier proceedings regarding Mr. Warner, has explicitly rejected “a construction of the mail fraud statute so expansive as to require a jury to decide whether a private individual acted enough like a government official to make him criminally liable under § 1346.”^[7]

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[1] Mike Robinson, We Don’t Have to Prove Ryan Took an Outright Payoff, Prosecutors Say, Chi. Tribune, Sept. 1, 2005, available here.
[2] Id.
[3] Id.
[4] Id.
[5] Id.
[6] See, e.g., United States v. Rybicki, 354 F.3d 124, 141-42 (2d Cir. 2003).
[7] United States v. Warner, 292 F. Supp. 2d 1051, 1061 (N.D. Ill. 2003), not readily available online.