In the Courts

In support of this charge, the government sought to introduce evidence that Weyrauch had not disclosed this conflict of interest, despite requirements that he do so.

The district court denied the government's motion, and the government appealed. The Ninth Circuit reversed, and the appeal made it to the U.S. Supreme Court, which remanded it back to the Ninth Circuit following its ruling in Skilling v. United States, 130 S.Ct. 2971 (Jun. 24, 2010).

The Ninth Circuit found that Skilling held that a prosecution under 18 U.S.C. ' 1346 (honest services fraud) could no longer be sustained based on a conflict of interest. United States v. Weyhrauch, 2010 WL 3733553 at *1. As a result, the government could not offer evidence of such a non-disclosure to prove a violation of that statute. The Ninth Circuit specifically noted that it did not opine on whether the government had alleged facts sufficient to establish a violation or whether the government would have an alternate basis for introducing the evidence.

In United States v. DeCay, — F.3d –, 2010 WL 3621084, *1 (5th Cir. Sept. 20, 2010), the Fifth Circuit affirmed the lower court's determination that defendants' pension funds could be garnished by the government to satisfy a restitution order under the Mandatory Victims Restitution Act (MVRA). but found that garnishment was limited to 25% of the monthly benefits.

The defendants, Kerry DeCay and Stanford Barre, each pleaded guilty to mail fraud, conspiracy to commit mail fraud, and obstruction of justice as a part of their roles in a scheme to defraud the City of New Orleans.

The sentencing judge found the two jointly and severally liable for $1,064,362.15 in restitution under the MVRA. Thereafter, the government sought to seize the defendants' pension funds to satisfy that order, and the district court issued writs of garnishment to the Louisiana Sheriffs Pension and Relief Fund (LSPRF). After objections from LSPRF and the defendants, the district court ordered that the entire pensions could be garnished, and the parties appealed.

The Fifth Circuit first found that state-run pensions were not expressly excluded from the MVRA. The court also dismissed the parties' arguments that the pension benefits could not be garnished. Specifically, it applied statutory construction principles to find that the strong language of the MVRA (“Notwithstanding any other Federal law ' “) was sufficient to overcome the Internal Revenue Code language that made retirement benefits inalienable. In addition, it found that the MVRA did not violate the Tenth Amendment of the U.S. Constitution. Although the Tenth Amendment reserved for the States “powers not delegated to the United States by the Constitution,” Congress had, in this case, “properly exercised its authority under an enumerated constitutional power.” Contrary to the appellants' claims, the federal government had not improperly interfered with state powers by attempting to garnish a state-run pension plan. Finally, the court found that Louisiana law was preempted by the MVRA to the extent that it was inconsistent.

The court did find that the amount of garnishment available under the MVRA for Barre (who was receiving monthly pension benefits) was limited by the Consumer Credit Protection Act (CCPA). The court reviewed the language of the CCPA, which provided that “the maximum part of the aggregate disposable earnings of an individual for any workweek which is subjected to garnishment may not exceed (1) 25 per centum of his disposable earnings for that week ' . ” It found some division among courts divided over whether monthly pension benefits were “ earnings” as defined by the CCPA. But it determined that the pension benefits were “earnings” and thus were subject to the CCPA's limits. Thus, the government could not garnish more than 25% of Barre's benefits.

Conflict of Interest Evidence Inadmissible
In Honest-Services Prosecution

In United States v. Weyhrauch, — F.3d –, 2010 WL 3733553, *1 (9th Cir. Sept. 27, 2010), the Ninth Circuit affirmed the lower court's denial of the government's motion in limine to introduce evidence to prove “'a knowing concealment of a conflict of interest.'”

The government had alleged that Bruce Weyhrauch, while a member of Alaska's House of Representatives, had solicited future legal work from VECO Corporation in exchange for voting on tax legislation per VECO's instruction. United States v. Weyhrauch , 548 F.3d 1237, 1239 (9th Cir. Nov. 26, 2008). The government charged Weyhrauch with, among other things, honest-services fraud based on “devising 'a scheme and artifice to defraud and deprive the State of Alaska of its intangible right to [his] honest services ' performed free from deceit, self-dealing, bias, and concealment' and attempting to execute the scheme by mailing his resume to VECO.”

In support of this charge, the government sought to introduce evidence that Weyrauch had not disclosed this conflict of interest, despite requirements that he do so.

The district court denied the government's motion, and the government appealed. The Ninth Circuit reversed, and the appeal made it to the U.S. Supreme Court, which remanded it back to the Ninth Circuit following its ruling in Skilling v. United States , 130 S.Ct. 2971 (Jun. 24, 2010).

The Ninth Circuit found that Skilling held that a prosecution under 18 U.S.C. ' 1346 (honest services fraud) could no longer be sustained based on a conflict of interest. United States v. Weyhrauch, 2010 WL 3733553 at *1. As a result, the government could not offer evidence of such a non-disclosure to prove a violation of that statute. The Ninth Circuit specifically noted that it did not opine on whether the government had alleged facts sufficient to establish a violation or whether the government would have an alternate basis for introducing the evidence.

In United States v. DeCay, — F.3d –, 2010 WL 3621084, *1 (5th Cir. Sept. 20, 2010), the Fifth Circuit affirmed the lower court's determination that defendants' pension funds could be garnished by the government to satisfy a restitution order under the Mandatory Victims Restitution Act (MVRA). but found that garnishment was limited to 25% of the monthly benefits.

The defendants, Kerry DeCay and Stanford Barre, each pleaded guilty to mail fraud, conspiracy to commit mail fraud, and obstruction of justice as a part of their roles in a scheme to defraud the City of New Orleans.

The sentencing judge found the two jointly and severally liable for $1,064,362.15 in restitution under the MVRA. Thereafter, the government sought to seize the defendants' pension funds to satisfy that order, and the district court issued writs of garnishment to the Louisiana Sheriffs Pension and Relief Fund (LSPRF). After objections from LSPRF and the defendants, the district court ordered that the entire pensions could be garnished, and the parties appealed.

The Fifth Circuit first found that state-run pensions were not expressly excluded from the MVRA. The court also dismissed the parties' arguments that the pension benefits could not be garnished. Specifically, it applied statutory construction principles to find that the strong language of the MVRA (“Notwithstanding any other Federal law ' “) was sufficient to overcome the Internal Revenue Code language that made retirement benefits inalienable. In addition, it found that the MVRA did not violate the Tenth Amendment of the U.S. Constitution. Although the Tenth Amendment reserved for the States “powers not delegated to the United States by the Constitution,” Congress had, in this case, “properly exercised its authority under an enumerated constitutional power.” Contrary to the appellants' claims, the federal government had not improperly interfered with state powers by attempting to garnish a state-run pension plan. Finally, the court found that Louisiana law was preempted by the MVRA to the extent that it was inconsistent.

The court did find that the amount of garnishment available under the MVRA for Barre (who was receiving monthly pension benefits) was limited by the Consumer Credit Protection Act (CCPA). The court reviewed the language of the CCPA, which provided that “the maximum part of the aggregate disposable earnings of an individual for any workweek which is subjected to garnishment may not exceed (1) 25 per centum of his disposable earnings for that week ' . ” It found some division among courts divided over whether monthly pension benefits were “ earnings” as defined by the CCPA. But it determined that the pension benefits were “earnings” and thus were subject to the CCPA's limits. Thus, the government could not garnish more than 25% of Barre's benefits.