Public Corruption Prosecutions in New York

A brief review of New York's bribery law is a useful backdrop to the Hevesi case.

Instead of a unitary bribery statute, New York splits the crime into bribery, for the payer, and bribe receiving, for the public servant. N.Y. Penal Law ” 200.00, 200.10. Unlike certain other states and the federal anti-bribery statute, 18 U.S.C. ' 201, which require only proof that a payment was intended corruptly to influence the recipient in his official position, under New York law, an individual is guilty of bribery “when he confers, or offers or agrees to confer, any benefit upon a public servant upon an agreement or understanding that such public servant's vote, opinion, judgment, action, decision or exercise of discretion as a public servant will thereby be influenced.” N.Y. Penal Law ' 200.00. The illicit “agreement or understanding” is key, whether or not the corrupt payment ever happens. People v. Tran, 80 N.Y.2d 170 (1992). To be sure, these requirements are exacting, and they are often difficult to prove absent a contemporaneous recording or appropriate cooperating witness.

But differently than honest services prosecutions of state and local officials, New York cases that fall shy of this kind of quid pro quo bribery may, in the appropriate case, be prosecuted under other state statutes, as the Hevesi case makes clear.

People v. Hevesi: Prosecutorial Creativity Where Bribery Is Not Present

In April 2011, Hevesi, the third most powerful statewide elected official in New York, was sentenced to a term in state prison of up to four years following his plea of guilty to one count of Receiving Reward for Official Misconduct, a felony. He had accepted nearly $1 million in gifts and campaign contributions for having improperly approved investments of public pension money in a private equity fund run by his friend. Although Hevesi accepted things of value for himself and others, and took various official actions that favored his friend, the parties did not appear to come to a formal agreement or understanding. There was no simple quid pro quo, but rather a corrupt accommodation that both parties informally expected of each other. In such a factual setting, proving the crimes of bribery and bribe receiving beyond a reasonable doubt would have been difficult, if not impossible.

But Hevesi's conduct in knowingly giving preferential treatment to his friend by approving the public pension investments in the friend's company were acts “relating to his office but constituting an unauthorized exercise of his official functions.” Thus, Hevesi was guilty of the misdemeanor of Official Misconduct. N.Y. Penal Law ' 195.00(1). Charging a misdemeanor alone, however, would not have adequately punished Hevesi for his breach of the public trust.

What turned Hevesi's conduct into the felony of Receiving Reward for Official Misconduct was the receipt of money and other benefits. To violate that statute, a public servant must “solicit, accept or agree to accept any benefit from another person for having violated his duty as a public servant.” N.Y. Penal Law ' 200.25. The converse crime, Rewarding Official Misconduct, is committed by “knowingly confer[ing], or offer[ing] or agree[ing] to confer, any benefit upon a public servant for having violated his duty as a public servant.” N.Y. Penal Law ' 200.20. Although both are felonies, neither crime requires the same meeting of the minds between the giver and receiver as bribery and bribe receiving do. Charging Hevesi with receiving rewards allowed the felony-level prosecution that was appropriate without needing to prove the impossible.

False Document Crimes

Almost without fail, when public servants accept secret payments from those who own or operate legitimate businesses ' whether or not they are provable bribes or rewards ' the way such payments are characterized violates other laws. Consider a high-value bribe, in which the bribe giver typically must account for the payment in his financial books. But malefactors typically do not record such payments truthfully, lest they attract unwanted suspicion. For that reason, very much like the books and records provisions of the federal Foreign Corrupt Practices Act (FCPA), 15 U.S.C. ' 78m, and the federal false statements statute, 18 U.S.C. ' 1001, New York has enacted various laws to punish the falsification of business records and the filing of false statements with state or local public offices.

The crime of Falsifying Business Records, at its basic misdemeanor level, punishes a person who, with intent to defraud, “makes or causes a false entry in the business records of an enterprise.” N.Y. Penal Law ' 175.05. The crime is raised to a felony when the “intent to defraud includes an intent to commit another crime or to aid or conceal” its commission, whether or not that other crime is in fact committed. N.Y. Penal Law ' 175.10. In the appropriate case, where intent can be shown, both the business owner and the public servant who receives the payment may be charged with falsifying business records.

The crime of Offering a False Instrument for Filing is also used broadly to prosecute a wide variety of crimes committed by public servants and those who corruptly try to influence them. For example, public servants who illegally accept benefits in connection with official duties are vulnerable to prosecution under this statute in several ways. Sometimes, they may accept something of value precisely for the purpose of falsifying the records of the agency where they work. Depending on the specific facts, those public servants may also be charged with the separate crime of Tampering with Public Records, or in the case of a corrupt official who illegally issues licenses or other official documents, may be charged with Issuing a False Certificate under N.Y. Penal Law ' 175.40.

Other times, public servants who accept money or some other thing of value may face prosecution if they falsify their required financial disclosure forms filed with a state or local agency. New York State and many municipalities require certain public servants to file financial disclosure forms listing the receipt of money, gifts and other payments. Experience has shown that most public servants are unlikely to self-report a corrupt payment or the illegal receipt of some valuable gift on the financial disclosure statements. Depending on the omissions or false statements made by the public servants, prosecutors may be able to charge these false disclosure reports as false filings.

Crucially, for purposes of false filing and falsifying business records crimes, the required “intent to defraud” is not equivalent to that required in federal mail and wire fraud prosecutions ' that is, intent to inflict economic harm on the intended victim. Rather, all that is required is that the defendant act “for the purpose of frustrating the State's power to fulfill” its “obligation faithfully to carry out its own law.” People v. Kase, 76 A.D.2d 532, 537-38 (N.Y. App. Div. 1st Dept. 1980). In most cases of false filing, the reason for the falsity will be readily apparent from the facts and circumstances, and this element will be satisfied.

Finally, although in the early days of the honest services doctrine ' before its 1988 codification in 18 U.S.C. ' 1346 ' federal prosecutors would prosecute state election law and campaign finance violations as mail and wire fraud, that is no longer the case. In New York, the false filing statutes offer a powerful tool where, in the case of political candidates, their true donors or the true amounts of their donations or expenses are intentionally concealed. Absent a broader scheme to defraud, such acts do not violate any federal criminal statute.

Conclusion

Despite the difficulty of proving certain crimes, the creative New York prosecutor is not without effective statutory tools to combat public corruption, and remains the first line of defense against corrupt public servants and those who assist them.

Daniel G. Cort is the Chief of the Public Integrity Unit in the New York County District Attorney's Office. Daniel R. Alonso, a member of this newsletter's board of editors, is the Chief Assistant District Attorney in that office.

The Supreme Court's decision in Skilling v. United States , 561 U.S. ___ (2010), in which the Court limited the federal honest services mail fraud doctrine to cases involving bribes and kickbacks, dealt the federal government a setback. For years, the Justice Department (DOJ) had delved into local public corruption matters under the guise of protecting the citizenry from schemes designed to deprive them of the faithfulness of their officials. Whereas earlier honest services prosecutions tackled undisclosed self-dealing in public contracts and other secret financial interests that did not necessarily rise to the level of quid pro quo bribery, Skilling ensures that the federal government will now be as circumscribed as state prosecutors have been, limited to actual bribery and kickbacks.

In other words, to prosecute state actors for bribery, the government now needs to live, essentially, by state rules. The contours of the Skilling decision are beyond the scope of this article, which will focus instead on the example of New York State and the prosecution of public corruption offenses under that state's law. Although federal and state prosecutors in New York who wish to prosecute state and local officials after Skilling are now on similar footing with respect to bribery, New York prosecutors have several additional tools in their arsenal. A case in point is the recent prosecution of former New York State comptroller Alan Hevesi, discussed below, in which then Attorney General Andrew Cuomo effectively used a statute other than bribery to prosecute public corruption.

Bribery in New York

A brief review of New York's bribery law is a useful backdrop to the Hevesi case.

Instead of a unitary bribery statute, New York splits the crime into bribery, for the payer, and bribe receiving, for the public servant. N.Y. Penal Law ” 200.00, 200.10. Unlike certain other states and the federal anti-bribery statute, 18 U.S.C. ' 201, which require only proof that a payment was intended corruptly to influence the recipient in his official position, under New York law, an individual is guilty of bribery “when he confers, or offers or agrees to confer, any benefit upon a public servant upon an agreement or understanding that such public servant's vote, opinion, judgment, action, decision or exercise of discretion as a public servant will thereby be influenced.” N.Y. Penal Law ' 200.00. The illicit “agreement or understanding” is key, whether or not the corrupt payment ever happens. People v. Tran , 80 N.Y.2d 170 (1992). To be sure, these requirements are exacting, and they are often difficult to prove absent a contemporaneous recording or appropriate cooperating witness.

But differently than honest services prosecutions of state and local officials, New York cases that fall shy of this kind of quid pro quo bribery may, in the appropriate case, be prosecuted under other state statutes, as the Hevesi case makes clear.

People v. Hevesi: Prosecutorial Creativity Where Bribery Is Not Present

In April 2011, Hevesi, the third most powerful statewide elected official in New York, was sentenced to a term in state prison of up to four years following his plea of guilty to one count of Receiving Reward for Official Misconduct, a felony. He had accepted nearly $1 million in gifts and campaign contributions for having improperly approved investments of public pension money in a private equity fund run by his friend. Although Hevesi accepted things of value for himself and others, and took various official actions that favored his friend, the parties did not appear to come to a formal agreement or understanding. There was no simple quid pro quo, but rather a corrupt accommodation that both parties informally expected of each other. In such a factual setting, proving the crimes of bribery and bribe receiving beyond a reasonable doubt would have been difficult, if not impossible.

But Hevesi's conduct in knowingly giving preferential treatment to his friend by approving the public pension investments in the friend's company were acts “relating to his office but constituting an unauthorized exercise of his official functions.” Thus, Hevesi was guilty of the misdemeanor of Official Misconduct. N.Y. Penal Law ' 195.00(1). Charging a misdemeanor alone, however, would not have adequately punished Hevesi for his breach of the public trust.

What turned Hevesi's conduct into the felony of Receiving Reward for Official Misconduct was the receipt of money and other benefits. To violate that statute, a public servant must “solicit, accept or agree to accept any benefit from another person for having violated his duty as a public servant.” N.Y. Penal Law ' 200.25. The converse crime, Rewarding Official Misconduct, is committed by “knowingly confer[ing], or offer[ing] or agree[ing] to confer, any benefit upon a public servant for having violated his duty as a public servant.” N.Y. Penal Law ' 200.20. Although both are felonies, neither crime requires the same meeting of the minds between the giver and receiver as bribery and bribe receiving do. Charging Hevesi with receiving rewards allowed the felony-level prosecution that was appropriate without needing to prove the impossible.

False Document Crimes

Almost without fail, when public servants accept secret payments from those who own or operate legitimate businesses ' whether or not they are provable bribes or rewards ' the way such payments are characterized violates other laws. Consider a high-value bribe, in which the bribe giver typically must account for the payment in his financial books. But malefactors typically do not record such payments truthfully, lest they attract unwanted suspicion. For that reason, very much like the books and records provisions of the federal Foreign Corrupt Practices Act (FCPA), 15 U.S.C. ' 78m, and the federal false statements statute, 18 U.S.C. ' 1001, New York has enacted various laws to punish the falsification of business records and the filing of false statements with state or local public offices.

The crime of Falsifying Business Records, at its basic misdemeanor level, punishes a person who, with intent to defraud, “makes or causes a false entry in the business records of an enterprise.” N.Y. Penal Law ' 175.05. The crime is raised to a felony when the “intent to defraud includes an intent to commit another crime or to aid or conceal” its commission, whether or not that other crime is in fact committed. N.Y. Penal Law ' 175.10. In the appropriate case, where intent can be shown, both the business owner and the public servant who receives the payment may be charged with falsifying business records.

The crime of Offering a False Instrument for Filing is also used broadly to prosecute a wide variety of crimes committed by public servants and those who corruptly try to influence them. For example, public servants who illegally accept benefits in connection with official duties are vulnerable to prosecution under this statute in several ways. Sometimes, they may accept something of value precisely for the purpose of falsifying the records of the agency where they work. Depending on the specific facts, those public servants may also be charged with the separate crime of Tampering with Public Records, or in the case of a corrupt official who illegally issues licenses or other official documents, may be charged with Issuing a False Certificate under N.Y. Penal Law ' 175.40.

Other times, public servants who accept money or some other thing of value may face prosecution if they falsify their required financial disclosure forms filed with a state or local agency. New York State and many municipalities require certain public servants to file financial disclosure forms listing the receipt of money, gifts and other payments. Experience has shown that most public servants are unlikely to self-report a corrupt payment or the illegal receipt of some valuable gift on the financial disclosure statements. Depending on the omissions or false statements made by the public servants, prosecutors may be able to charge these false disclosure reports as false filings.

Crucially, for purposes of false filing and falsifying business records crimes, the required “intent to defraud” is not equivalent to that required in federal mail and wire fraud prosecutions ' that is, intent to inflict economic harm on the intended victim. Rather, all that is required is that the defendant act “for the purpose of frustrating the State's power to fulfill” its “obligation faithfully to carry out its own law.” People v. Kase , 76 A.D.2d 532, 537-38 (N.Y. App. Div. 1st Dept. 1980). In most cases of false filing, the reason for the falsity will be readily apparent from the facts and circumstances, and this element will be satisfied.

Finally, although in the early days of the honest services doctrine ' before its 1988 codification in 18 U.S.C. ' 1346 ' federal prosecutors would prosecute state election law and campaign finance violations as mail and wire fraud, that is no longer the case. In New York, the false filing statutes offer a powerful tool where, in the case of political candidates, their true donors or the true amounts of their donations or expenses are intentionally concealed. Absent a broader scheme to defraud, such acts do not violate any federal criminal statute.

Conclusion

Despite the difficulty of proving certain crimes, the creative New York prosecutor is not without effective statutory tools to combat public corruption, and remains the first line of defense against corrupt public servants and those who assist them.

Daniel G. Cort is the Chief of the Public Integrity Unit in the New York County District Attorney's Office. Daniel R. Alonso, a member of this newsletter's board of editors, is the Chief Assistant District Attorney in that office.