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SUPREME COURT OF THE UNITED STATES
_________________
No. 21–1158
_________________
JOSEPH PERCOCO, PETITIONER
v. UNITED
STATES
on writ of certiorari to the united states
court of appeals for the second circuit
[May 11, 2023]
Justice Alito delivered the opinion of the
Court.[
1]*
In this case, we consider whether a private
citizen with influence over government decision-making can be
convicted for wire fraud on the theory that he or she deprived the
public of its “intangible right of honest services.”
18 U. S. C. §§1343, 1346. Petitioner Joseph Percoco was
charged with conspiring to commit honest-services wire fraud during
a period of time that included an eight-month interval between two
stints as a top aide to the Governor of New York. Percoco was
convicted of this offense based on instructions that required the
jury to determine whether he had a “special relationship” with the
government and had “dominated and controlled” government business.
2 App. 511. We conclude that this is not the proper test for
determining whether a private person may be convicted of
honest-services fraud, and we therefore reverse and remand for
further proceedings.
I
Percoco was a longtime political associate of
former New
York Governor Andrew Cuomo. Except for a brief
but important hiatus in 2014, Percoco served as the Governor’s
Executive Deputy Secretary from 2011 to 2016, and that position
gave him a wide range of influence over state decision-making. In
April 2014, Percoco resigned from this position to manage the
Governor’s reelection campaign, but after the Governor was
reelected, he resumed his role as Executive Deputy Secretary in
December 2014.
The question we address today arises from
Percoco’s activities during his break in government service. In
July 2014, Empire State Development (ESD), a state agency, informed
developer Steven Aiello that his real-estate company, COR
Development, needed to enter into a “Labor Peace Agreement” with
local unions if he wished to receive state funding for a lucrative
project.
Id., at 597. Interested in avoiding the costs of
such an agreement, Aiello reached out to Percoco through an
intermediary so that Percoco could “help us with this issue while
he is off the 2nd floor,”
i.e., the floor that housed the
Governor’s office.
Id., at 594. Percoco agreed and received
two payments totaling $35,000 from Aiello’s company in August and
October 2014. On December 3, mere days before returning to his old
job, Percoco called a senior official at ESD and urged him to drop
the labor-peace requirement. ESD promptly reversed course the next
day and informed Aiello that the agreement was not necessary.
Percoco’s dealings in this and other matters
later came to the attention of the United States Department of
Justice, which obtained a multi-count indictment against Percoco
and others for engaging in several allegedly illegal
schemes.[
2] Percoco was charged
with two counts of conspiring to commit honest-services wire fraud,
in violation of 18 U. S. C. §§1343, 1346, and 1349; two
counts of soliciting bribes and gratuities, in violation of
§666(a)(1)(B); and three counts of Hobbs Act extortion, in
violation of §1951. 1 App. 96–103. Only the wire fraud conspiracy
count relating to the labor-peace requirement (count 10) is
directly at issue before this Court.
That count alleged a conspiracy running “[f]rom
at least in or about 2014, up to and including in or about 2015,”
that is, both during the time when Percoco was formally employed in
the Governor’s office and during the period when he was working on
the Governor’s campaign. See
id., at 100 (incorporating ¶4
and ¶¶33–35 of the indictment). Before trial, Percoco moved for
dismissal of that count—and another conspiracy count overlapping
with the campaign period—on the ground that a private citizen
cannot commit or conspire to commit honest-services wire fraud
based on his own duty of honest services to the public. See
id., at 130, 133. The District Court denied that motion,
noting that the indictment alleged that Percoco, while formally
working on the Governor’s campaign, had “ ‘continued to
function in a senior advisory and supervisory role with regard to
the Governor’s Office’ ” and had “ ‘continued to be
involved in the hiring of staff and the coordination of the
Governor’s official events and priorities . . . among
other responsibilities.’ ”
Id., at 133 (quoting
id., at 77, Indictment ¶4).
At trial, the prosecution introduced evidence to
support the indictment’s allegations about Percoco’s activities
during his break in official service, as well as evidence that he
had expressed his intent and had made plans to resume official
service after the election. See 13 F. 4th 180, 201–203 (CA2
2021). At the end of the prosecution’s case, Percoco again moved
for judgment of acquittal on count 10, contending that no evidence
showed that he had taken any act in furtherance of that conspiracy
while serving in an official government capacity.
Id., at
187.
The court reserved decision on that motion,
ibid., and the case was submitted to the jury. Over defense
counsel’s objection, the court instructed that Percoco could be
found to have had a duty to provide honest services to the public
during the time when he was not serving as a public official if the
jury concluded, first, that “he dominated and controlled any
governmental business” and, second, that “people working in the
government actually relied on him because of a special relationship
he had with the government.” 2 App. 511. The jury convicted Percoco
on count 10, as well as two other charged counts relating to
additional conduct, but acquitted him on the other charges. The
court then denied Percoco’s motion for judgment of acquittal, and
he was sentenced to 72 months’ imprisonment. 13 F. 4th, at
187–188.
On appeal, the Second Circuit affirmed. The
court explained that the “fiduciary-duty [jury] instruction” given
by the trial judge “fi[t] comfortably” with, and in fact restated,
the understanding of honest-services fraud that the Second Circuit
had adopted many years earlier in
United States v.
Margiotta, 688 F.2d 108 (1982). See 13 F. 4th, at 194
(noting that Percoco and his co-defendants “seem to agree that the
district court’s fiduciary-duty instruct[ion] falls within
Margiotta”). Based on that precedent, the court also
rejected Percoco’s claim that there was insufficient evidence to
prove that he had “owed New York State a duty of honest services
while he was managing the Governor’s campaign.”
Id., at
201.
Percoco sought this Court’s review, asking us to
decide whether a private citizen who “has informal political or
other influence over governmental decisionmaking” can be convicted
of honest-services fraud. Pet. for Cert. i. We granted certiorari.
597 U. S. ___ (2022).[
3]
II
A
As noted, the decision below was based
squarely on the Second Circuit’s 1982 decision in
Margiotta,
and we therefore begin by briefly recounting the events that led up
to and followed that decision. The federal wire fraud statute,
§1343 (like the older federal mail fraud statute, §1341), targets
the use of certain instrumentalities to advance “any scheme or
artifice to defraud, or for obtaining money or property by means of
false or fraudulent pretenses, representations, or promises.”
Before 1987, “all Courts of Appeals had embraced” the view that
these statutes proscribe what came to be known as “honest-services
fraud.”
Skilling v.
United States,
561 U.S.
358, 401 (2010). In most of these cases, public employees had
accepted a bribe or kickback in exchange for dishonest conduct that
did not necessarily cause their employers to suffer a financial
loss, but this conduct was found to constitute mail or wire fraud
because it deprived the relevant government unit (and thus, by
extension, the public) of the right to receive honest services. See
id., at 400–401.
In
Margiotta, the Second Circuit faced a
case that departed from this pattern. Joseph Margiotta chaired the
Republican Party Committees for Nassau County and the town of
Hempstead, New York, and he used the influence that came with those
positions to carry out a kickback scheme. He was indicted for
honest-services mail fraud, and although he held “no elective
office,” the prosecution argued that he nevertheless breached a
duty to render honest services because his party positions
“afforded him sufficient power and prestige to exert substantial
control over public officials.” 688 F. 2d, at 113.
A divided Second Circuit panel agreed. The
majority found that “there is no precise litmus paper test” for
determining when a private person “owes a fiduciary duty to the
general citizenry” but that “two time-tested measures of fiduciary
status [were] helpful.”
Id., at 122. These were (1) whether
“others rel[ied] upon [the accused] because of [his] special
relationship in the government” and (2) whether he exercised
“de facto control” over “governmental decisions.”
Ibid.
Admitting that the case before it was “novel” and that determining
when a private person owes a duty of honest services was “a most
difficult enterprise,” the majority nevertheless concluded that a
private person could commit honest-services fraud if he or she
“dominate[d] government.”
Id., at 121–122. In a strongly
worded partial dissent, Judge Winter complained that the majority’s
interpretation lacked “the slightest basis in Congressional intent,
statutory language or common canons of statutory interpretation”
and that it erroneously treated a variety of “politically active
persons” who have informal but strong influence over government as
subject to the same duties as officeholders.
Id., at 142
(opinion concurring in part and dissenting in part).
This Court declined to review the Second
Circuit’s decision, 461 U.S. 913 (1983), but that decision’s life
as Second Circuit precedent was short-lived. In
McNally v.
United States,
483 U.S.
350 (1987), the Court considered a similar case, and rather
than addressing the application of honest-services fraud to private
persons, the Court rejected the entire concept of honest-services
fraud and held that the mail fraud statute was “limited in scope to
the protection of property rights.”
Id., at 358, 360.
McNally’s holding on honest-services
fraud, however, lasted for less time than
Margiotta’s.
“Congress responded swiftly” and enacted 18 U. S. C.
§1346, which provides that the “ ‘the term “scheme or artifice to
defraud,” ’ ” which appears in both §1341 and §1343, “ ‘includes a
scheme or artifice to deprive another of the intangible right of
honest services.’ ”
Skilling, 561 U. S., at 402
(quoting §1346).
Decades later, this Court considered and
rejected the broad argument that §1346 is unconstitutionally vague,
and in doing so, clarified the meaning of the phrase “the
intangible right of honest services.”
Id., at 402–405.
Noting §1346’s use of “ ‘[t]he definite article “the” ’ ” in the
phrase “
the intangible right of honest services,” we held
that §1346 covers the “core” of pre-
McNally honest-services
case law and did not apply to “ ‘
all intangible rights of
honest services whatever they might be thought to be.’ ” 561
U. S., at 404–405 (quoting
United States v.
Rybicki,
354 F.3d 124, 137–138 (CA2 2003) (en banc)). And we observed
that “[i]n the main, the pre-
McNally cases involved
fraudulent schemes to deprive another of honest services through
bribes or kickbacks supplied by a third party who had not been
deceived.” 561 U. S., at 404. We reasoned that those engaging in
such schemes had sufficient reason to know that their conduct was
proscribed.
Id., at 407, 410, 412.
Skilling’s approach informs our decision
in this case. Here, the Second Circuit concluded that “Congress
effectively reinstated the
Margiotta-theory cases by
adopting statutory language that covered the theory.” 13 F. 4th, at
196. But
Skilling was careful to avoid giving §1346 an
indeterminate breadth that would sweep in any conception of
“intangible rights of honest services” recognized by some courts
prior to
McNally.
This is illustrated by
Skilling’s
rejection of the Government’s argument that §1346 should be held to
reach cases involving “ ‘undisclosed self-dealing by a public
official or private employee—
i.e., the taking of official
action by the employee that furthers his own undisclosed financial
interests while purporting to act in the interests of those to whom
he owes a fiduciary duty.’ ” 561 U. S., at 409–410. Because
the pre-
McNally lower court decisions involving such conduct
were “inconsisten[t],” we concluded that this “amorphous category
of cases” did not “constitute core applications of the
honest-services doctrine.” 561 U. S., at 410.
Skilling’s teaching is clear. “[T]he
intangible right of honest services” must be defined with the
clarity typical of criminal statutes and should not be held to
reach an ill- defined category of circumstances simply because of a
smattering of pre-
McNally decisions. With this lesson in
mind, we turn to the question whether the theory endorsed by the
lower courts in this case gave §1346 an uncertain breadth that
raises “the due process concerns underlying the vagueness
doctrine.” See 561 U. S., at 408.
B
As noted, Percoco moved before trial for
dismissal of the honest-services conspiracy count at issue on the
ground that he was out of public office during part of the time
period within the indictment and that a private citizen cannot be
convicted of depriving the public of honest services. See
Defendant’s Memorandum of Law in Support of Motion To Dismiss the
Superseding Indictment in No. 1:16–cr–00776 (SDNY, May 19, 2017),
ECF Doc. 187, pp. 25–30. He advanced a similar theory in his motion
for acquittal, emphasizing that he was acting under “a short-term
agreement [with Aiello’s firm] within the period in which he was no
longer a state employee.” 1 App. 447.
On this point, Percoco’s arguments sweep too
broadly. To be sure, the pre-
McNally record on
honest-services fraud is clearest when the Government seeks to
prosecute actual public officials. Most of the pre-
McNally
honest-services prosecutions, including what appears to be the
first case to adopt that theory, involved actual public officials.
See
Skilling, 561 U. S., at 400–401 (citing
Shushan v.
United States, 117 F.2d 110, 115 (CA5
1941)). But we reject the argument that a person nominally outside
public employment can
never have the necessary fiduciary
duty to the public. Without becoming a government employee,
individuals not formally employed by a government entity may enter
into agreements that make them actual agents of the government. An
“agent owes a fiduciary obligation to the principal,” see,
e.g., 1 Restatement (Third) of Agency §1.01, Comment
e, p. 23 (2005), and therefore an agent of the
government has a fiduciary duty to the government and thus to the
public it serves. In this Court, Percoco has agreed that
individuals who are “delegated authority to act on behalf ” of a
public official and to perform government duties have a duty to
provide honest services. Tr. of Oral Arg. 12; see also Brief for
Petitioner 22, 24, 37; Reply Brief 9. This well-established
principle suffices to confirm that the lower courts correctly
rejected Percoco’s
per se rule and, in doing so, did
not stretch §1346 past heartland cases. See
Skilling, 561
U. S., at 408.
Rejecting this absolute rule, however, is not
enough to sustain Percoco’s convictions on the wire fraud
conspiracy counts. “[T]he intangible right of honest services”
codified in §1346 plainly does not extend a duty to the public to
all private persons, and whether the correct test was
applied in this case returns us to
Margiotta.
C
Percoco challenges the
Margiotta theory
that underlay the jury instructions in this case, and we must
therefore decide whether those instructions are correct. We hold
that they are not.
1
Directly applying
Margiotta, the trial
judge told the jury that Percoco owed a duty of honest services to
the public if (1) he “dominated and controlled any governmental
business” and (2) “people working in the government actually relied
on him because of a special relationship he had with the
government.” 2 App. 511; see
Margiotta, 688 F. 2d, at
122. But
Margiotta’s standard is too vague. From time
immemorial, there have been
éminence grises, individuals who
lacked any formal government position but nevertheless exercised
very strong influence over government decisions. Some of these
individuals have been reviled; others have been respected as wise
counselors. The
Margiotta test could be said to apply to
many who fell into both of these camps. It could also be used to
charge particularly well-connected and effective lobbyists. See 688
F.2d at 142 (opinion of Winter, J.).
Margiotta acknowledged
that “the public has no right to disinterested service” from
lobbyists and political party officials, but the rule it
developed—which was embodied in the jury instructions given in this
case—implies that the public
does hold such a right whenever
such persons’ clout exceeds some ill-defined threshold.
Id.,
at 122.
Margiotta set a low bar,
i.e., the point at
which a defendant’s influence goes beyond “minimum participation in
the processes of government.”
Ibid. The instructions in this
case demanded more, viz., proof of “dominat[ion],” but what does
that mean in concrete terms? Is it enough if an elected official
almost always heeds the advice of a long-time political adviser? Is
it enough if an officeholder leans very heavily on recommendations
provided by a highly respected predecessor, family member, or old
friend? Without further constraint,
Margiotta does not (and
thus, the jury instructions did not) define “the intangible right
of honest services” “ ‘with sufficient definiteness that ordinary
people can understand what conduct is prohibited,’ ” or “ ‘in a
manner that does not encourage arbitrary and discriminatory
enforcement.’ ”
McDonnell v.
United
States, 579 U.S. 550, 576 (2016) (quoting
Skilling, 561
U. S., at 402–403).
2
The Government does not defend these jury
instructions as an accurate statement of the law, but it argues
that their imprecision was harmless. Specifically, the Government
argues that a private individual owes a duty of honest services to
the public “in two discrete circumstances”: (1) “when the person
has been selected to work for the government” in the future and (2)
“when the person exercises the functions of a government position
with the acquiescence of relevant government personnel.” Brief for
United States 25; cf. 18 U. S. C. §201(b) (federal
bribery statute incorporating “person[s] selected to be a public
official”).[
4]
The first theory differs substantially from the
jury instructions, which did not tell the jury that Percoco could
be found to owe a duty of honest services because he had been
selected for future government service. While the prosecution
offered evidence that Percoco intended to return to government
service after the election and had made plans to do so, the jury
could have found that the requirements set out in the jury
instructions were satisfied without relying on that evidence. Thus,
even if we assume for the sake of argument that there is some merit
in the Government’s first new theory, it is far from clear that the
erroneous jury instructions would be harmless.
The Government’s second new theory—
i.e.,
that a private citizen owes a duty to render honest services “when
the person exercises the functions of a government position with
the acquiescence of relevant government personnel”—appears, as
defined in its brief, to restate
Margiotta’s erroneous
construction of the law. See Brief for United States 33
(instructions “as a whole and in the context of this case
. . . correctly conveyed” this test). Moreover, the jury
was not told that it was necessary to find that “relevant
government personnel” “acquiesce[d]” in Percoco’s exercise of
government functions.
In short, the jury instructions are
substantially different from either of the Government’s new
theories, and the Second Circuit—which treated even the language
the Government now disclaims in
Margiotta as good law—did
not affirm on either of these theories. We decline to do so
here.
* * *
For these reasons, the judgment of the Court
of Appeals is reversed, and the case is remanded for further
proceedings consistent with this opinion.
It is so ordered.
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