Bicentennial Commemoration of the Bill of Rights – Articles and Essays

Presentation by Mr. Joseph diGenova

American Criminal Law Review, Spring 1989

I would like to spend my time discussing and bringing to life the McNally1 case. Specifically, I would like to demonstrate why it was significant and why what it wrought was significant. I was frequently asked when I was United States Attorney for the District of Columbia what it was like to hold that job, and I opined at the time that it was a little bit like being chosen captain of the United States Olympic Javelin Team and electing to receive.

Well, on June 24, 1987, along with 92 other United States Attorneys, I awoke not knowing that we had been elected captain of the United States Olympic Javelin Team and had elected to receive, and we thought it was safe to go back into the water that day. Just when we thought it was safe to go back into the water, there appeared a large fin swimming around in our envi­rons and it was attached to a shark whose jaws belonged to Charles McNally. In a seven-to-two decision, the United States Supreme Court ruled that the mail fraud statute did not apply to actions of a former Kentucky state official and a private individual in requiring that an insurance agent who had been selected to provide policies for the state and had been required to share the premiums from that work with an insurance agency in which all of the defen­dants had an interest.

The reason was, according to the Supreme Court, that the mail fraud stat­ute does not prohibit schemes to defraud the public of their intangible rights to honest and impartial government.

Now, those of us who had been using the mail fraud statutes for many years had repeatedly heard arguments based on the theory of prosecuting peo­ple for depriving citizens of their intangible right to honest and impartial gov­ernment, repeatedly rejected by the federal Circuit Courts, and we had seen the Supreme Court deny certiorari on that very question in the case of United States v. Mandell.2 Some of us were a little confused because we couldn't find this particular interest spelled out in the statute.

The legislative history was abundantly clear that it had been designed to protect property rights. Indeed, in 1872, during the debate on the recodification, Representative Farnsworth, the sponsor of that recodification, in an ap­parent reference to the antifraud provision, said that the measures were needed to "prevent frauds which are mostly gotten up in the large cities by thieves, forgers, and rapscallions, generally for the purpose of deceiving and fleecing the innocent people in the country." Delightful congressional debate in those days. If we could only reconstruct it today.

The McNally case sent shock waves, as you might imagine, through federal prosecutors' offices all over the United States, and rightly so, because they had been relying on it quite properly, ethically, and wisely in the pursuit of official corruption, both state and federal.

The interesting thing about the individuals involved in the McNally case is that they were all private individuals. One of them had been the former Chairman of the Kentucky Democratic Party. Another had been the former Secretary of Public Protection and Regulation in Kentucky. And the other was a private citizen.

What they did was not a crime under Kentucky law. That is a very impor­tant point. What they did was construed to be a crime under federal law un­der the mail fraud statute and was properly so construed by the federal prosecutors in that case because they were following not only departmental policy, but also a long line of federal circuit cases from all over the country which said that this intangible right to honest and impartial government, was covered by the literal language of the mail fraud statute. Well, the Supreme Court said it wasn't.

It is a very short, but fascinating case. I would like to read to you one passage, which really then started the debate within the Department of Justice and the legal community and Congress about what should be done to "fix" McNally, what should be done by way of a governmental response from the Congress to put back into federal law an enforcement mechanism to cover that kind of deprivation of an intangible right. Mr. Justice White, speaking for the Court, said,

As the Court said in a mail fraud case years ago, there are no con­structive offenses. Furthermore, before one can be punished, it must be shown that the case is plainly within the statute. Rather than construe the statute in a manner that leaves its outer boundaries ambiguous and involves the federal government in setting standards of disclosure and good government for local and state officials, we read the mail fraud statute as limited in scope to the protection of property rights. If Congress desires to go further, it must speak more clearly than it has.3

Well, that began the debate as to what should be told to Congress by the Executive Branch. As Judge Buckley indicated in his introduction, there was an intense, interesting, and fascinating debate within the Department of Justice as to just  what  that response  should  be.  There were  those  who  felt very strongly that because the issues involved were state and local, not whether or not you could pursue federal corruption by federal officials, few tools were available  to  pursue  local  and  state  officials  who  were  violating  the  public trust. There was, of course, no doubt that people who violate the public trust and violate criminal laws simultaneously should be the subject of some con­cern. The question was how that should be done and by whom.

I think it is a tribute to those who are concerned about the significance of issues like what our Constitution means, not just in the abstract, but in our daily lives as lawyers and citizens, that the debate which occurred at the De­partment was a wholesome and, I think, from the broken glass and windows and various furniture which I saw strewn about the hallways on occasions, a vigorous one. I think both sides had an opportunity to have their cases heard.

There was deep concern about the use of various federal underpinnings for jurisdiction to be used in fashioning a new federal statute. The arguments were, I think, fascinating in the sense that here we were in 1987 discussing an issue of deep concern to the American people: public corruption, a subject with which I was not unfamiliar during my term as United States Attorney in the nation's capital. And it involved both local and federal corruption during my tenure.
 

So I must say that I was transfixed by the argument, not because I was involved in the actual debate, which I was not—I was one of those ninety-three United States Attorneys sitting on the sidelines wondering what, if any­thing, was going to be given to me in its place as a result of this battle—but because of its effect on our work. I must tell you that I was initially con­cerned about the McNally decision. I was deeply concerned that federal prose­cutors might be denied a very valuable tool in the pursuit of federal, state, and local corruption.
 

I went back and read McNally very carefully. I saw that the Court was making some very fine distinctions about the kinds of instructions that had been given to the jury because McNally is not only a statutory interpretation case; it is a case about the kinds of instructions the judge should give in cases tike this.
 

Indeed, the Court seemed to be hinting in some places that had different instructions been given, a different result might have been obtained. And, in­deed, in subsequent cases from various circuits, the courts are trying to make distinctions by reading into instructions given that differ from the McNally instructions the fact that certain property rights were caught up in the crimes which were charged. That battle is now underway in circuits all over this country, with courts going both ways.
 

At any rate, suffice it to say that within the Department, there were very strong views about whether or not the commerce clause should be used to try and grapple with this right to honest and impartial government.

But one argument was made which I found fascinating, and it was to grab the guarantee clause4 of the Constitution and use it as the basis for creating a federal interest and nexus to deal solely with local and state corruption, which would not have otherwise been "grabbable."

A number of individuals made the argument that state attorneys general and others have problems in prosecuting these cases, not just political problems, but real legal problems. In many instances, prosecutors' jurisdictions end at county lines. Their subpoenas are worthless beyond those borders. Most of them do not have grand juries. Most of them do not have the ability to compel people to testify before those grand juries without automatically giving them immunity.

So there were structural problems, it was being argued; not constitutional problems, but simply structural problems. There was a need here, a need to be filled. In addition, some states don't have grand juries, so that one of the most important tools for investigating corruption and schemes and artifices to defraud couldn't be used.

The argument went on that, indeed, in some instances, there not only is a lack of legal will, but there is a lack of political will to pursue such cases in the state, local, or county context because the subjects of the investigation are usually the individuals with whom party fundraising activities will be occurring within a matter of days. So the fear was, among one group in the Depart­ment, that states and localities would, in fact, be incapacitated because of their own legal structures.

The response to that was not that states were entitled to corrupt govern­ment, if that is what they wanted, but that states were entitled to structure their legal systems as they wished, and if those impediments existed in the State of Kentucky or anywhere else, that was a problem for the people of the State of Kentucky or any other state to solve through the ballot box, by ei­ther: (a) throwing the rascals out; or (b) restructuring their legal system.

It was an interesting argument. It is an argument which has great merit in the sense of viewing the relationship between the central government and a state.

The argument on the other side was that the federal government had an interest under the guarantee clause in seeing that there was honest, impartial government at the state and local level, and that the federal government needed to manifest that concern because of the growing public concern about corruption through a federal statute which would bring back into the federal criminal code protection of that intangible right through some amendments.

That occurred, and the Department submitted to Congress in May of 1988 a statute which does, in fact, criminalize, or I should say recriminalize, the kind of conduct which was originally thought to be prohibited by the intangible rights theory of prosecution under the mail fraud statute.5

I will simply read to you the proposed amendment to Chapter 11 of Title 18, a new Section 225 entitled, "Public Corruption."

Whoever, in a circumstance described, endeavors, by any scheme or artifice, corruptly to deprive or to defraud the inhabitants of a state or political subdivision of a state of the honest services of an offi­cial or employee of such state or subdivision shall be fined under the statute or imprisoned for not more than 10 years. . . .6

The decision was made on the part of the Department. The ninety-three United States Attorneys had let their views be known. They were very concerned that the absence of the intangible rights theory from the mail fraud statute would take something away from them that they needed very, very badly. The Criminal Division took the position that the statute was needed. The Office of Legal Policy and Legal Counsel, however, took the different view that the statute, even as proposed, really went too far in usurping what certain individuals viewed to be the legitimate prerogatives of states. It viewed the proposal as an unwarranted expansion of the federal role into this area.

Congress has not enacted that statute. The debate continues on how to "fix" McNally. The issue will remain a hot one because the issue of corrup­tion is a matter, necessarily and appropriately, of deep concern to not only public officials, but private citizens who do not want their tax money misspent.

But I submit to you, as a person who has not been a scholar interested in the notions of federalism until recently, that the issue is an important one, that how we resolve this question in terms of the kind of federal legislation we pass on the issue, if any, will tell us something about the way we will proceed in other areas.

I, for one, having dealt with the area of public corruption, feel very strongly that prosecutors, Assistant United States Attorneys, and United States Attorneys ought to have at their disposal appropriate tools to pursue these kinds of crimes. I have not made up my own mind as to whether or not this particular statute is the way to do it. I will probably get there by the time the vote is cast. That will be irrelevant to everyone in this room except me, of course. But the truth is: it is an interesting and important question.

In conclusion, in its aftermath, McNally demonstrates very strongly that the issue of the relationship between the United States government and the several states on the issue of how to deal with local and state conduct is alive and well and in need of our attention if it is to receive proper treatment.

1. 483 U.S. 350 (1987).
2. 525 F.2d 671 (7th Cir. 1975), cert, denied, 423 U.S. 1049 (1976).
3. 438 U.S. at 360.
4. U.S. const. art. IV, § 4. The guarantee clause requires that the United States "guarantee to every state a republican form of government."
5. The proposed "Anti-Corruption Act" was introduced in the Senate on September 15, 1988. See S. 2793, 100th Cong., 2d Sess., 134 cong. rec. S12581-04 (1988).
6. Id.