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In the Courts

By ljnstaff | Law Journal Newsletters |
May 02, 2017

Third Circuit Affirms Issues Opinion Clarifying 'Official Act' in PA Bribery Case

On March 28, 2017, a three-judge panel in the U.S. Court of Appeals for the Third Circuit affirmed the conviction and 42-month sentence of Ronald Repak, the Executive Director of the Johnstown Redevelopment Authority (JRA), for violating two counts of extortion under the Hobbs Act, 18 U.S.C. § 1951, and two counts of federal program bribery, 18 U.S.C. § 666. In its published opinion, the Third Circuit applied recent Supreme Court precedent in McDonnell v. U.S. to determine that Repak's actions constituted an “official act” under the federal bribery statute. Repak had accepted gifts and free personal contracting services from contractors who were working on JRA projects in exchange for awarding them JRA contracts.

Repak served as the Executive Director of the JRA's voluntary Board of Directors from 1977 to 2013. The JRA promotes economic development in Johnstown, PA, and is the recipient of federal and state funding. It awards grants to companies and to improve industrial properties. Though these decisions are made by the Board as a whole, testimony established that it was Repak as the Executive Director who made the majority of the decisions and who would recommend to the Board the companies that should be awarded contracts.

Repak would often request gifts, including sports and concert tickets, from the contractors working with JRA, though these gifts were not included in his conviction. Instead, the conviction focused on contracting work that Repak had received free of charge from contractors who were working with, and seeking future work from, the JRA. Repak received a new roof for his house and excavating services for his son's gym, both totaling roughly $20,000, from JRA contractors — but did not provide payment for either project. At Repak's trial, the contractors testified that Repak had made it clear through an “unspoken understanding” that if they did not provide their services to him for free, they would not receive future contracts from the JRA. Repak further instructed the contractors to hide the invoices for his personal work in the invoices submitted to the JRA, though the contractors refused to do this and simply accepted the losses from this work. Eventually, the Board members of the JRA instituted rules forbidding gratuities between its employees and contractors, and requiring Board approval for expenditures exceeding $500.

On appeal, Repak argued that his behavior did not constitute an “official act” under Section 201(a)(3) of the federal bribery statute. Repak relied on McDonnell v. U.S., a unanimous 2016 Supreme Court decision that interpreted the term. In that case, the Court adopted a more limited definition of the term than the Government had urged in its prosecution of former Virginia Governor Robert McDonnell for bribery. The Court explained that the job of many public officials is to listen to constituents and take action based on these conversations, and that Section 201 is concerned only with “quid pro quo” situations, in which something of value is exchanged for a specific official action. The Court made clear that it did not wish to discourage appropriate contacts between constituents and public officials by adopting an overly broad definition of “official act.”

In McDonnell, the Court stated that there are two requirements to demonstrate an “official act” has occurred. First, there must be a specific “question, matter, cause, suit, proceeding or controversy” that either is pending or may be brought before a public official which involves a “formal exercise of governmental power that is similar in nature to a lawsuit before a court, a determination before an agency, or a hearing before a committee.” Second, the public official “must make a decision or take an action on that 'question, matter, cause, suit, proceeding or controversy,' or agree to do so. The Court said that agreeing to set up a meeting or meeting with another public official wouldn't qualify as an “official act” without evidence of more.

Repak argued that these requirements were not fully met in his case, and suggested that the decision to award contracts was not a “formal exercise of government power” as defined by the Supreme Court. However, in its published opinion, the Third Circuit found that the JRA's decision to award contracts and pay contractors was “plainly, an agency determination,” therefore satisfying the requirement that a formal exercise of government power occurred.

Repak also argued on appeal that the decision to award contracts was not a pending, specific issue under the McDonnell test. The Third Circuit distinguished this type of action from action that was held to be insufficiently “specific and focused” in McDonnell. Unlike McDonnell, in which the Court found that hosting an event for “economic development” was neither specific, focused, not pending, the Third Circuit found that the agency award of a contract satisfied all three requirements.

The three-judge panel found none of Repak's arguments on appeal compelling, and ultimately affirmed his conviction and sentence under the new McDonnell standard for an “official act.”

*****
In the Courts was written by Katherine Monks, an associate at Mayer Brown LLP, Washington, DC.

Third Circuit Affirms Issues Opinion Clarifying 'Official Act' in PA Bribery Case

On March 28, 2017, a three-judge panel in the U.S. Court of Appeals for the Third Circuit affirmed the conviction and 42-month sentence of Ronald Repak, the Executive Director of the Johnstown Redevelopment Authority (JRA), for violating two counts of extortion under the Hobbs Act, 18 U.S.C. § 1951, and two counts of federal program bribery, 18 U.S.C. § 666. In its published opinion, the Third Circuit applied recent Supreme Court precedent in McDonnell v. U.S. to determine that Repak's actions constituted an “official act” under the federal bribery statute. Repak had accepted gifts and free personal contracting services from contractors who were working on JRA projects in exchange for awarding them JRA contracts.

Repak served as the Executive Director of the JRA's voluntary Board of Directors from 1977 to 2013. The JRA promotes economic development in Johnstown, PA, and is the recipient of federal and state funding. It awards grants to companies and to improve industrial properties. Though these decisions are made by the Board as a whole, testimony established that it was Repak as the Executive Director who made the majority of the decisions and who would recommend to the Board the companies that should be awarded contracts.

Repak would often request gifts, including sports and concert tickets, from the contractors working with JRA, though these gifts were not included in his conviction. Instead, the conviction focused on contracting work that Repak had received free of charge from contractors who were working with, and seeking future work from, the JRA. Repak received a new roof for his house and excavating services for his son's gym, both totaling roughly $20,000, from JRA contractors — but did not provide payment for either project. At Repak's trial, the contractors testified that Repak had made it clear through an “unspoken understanding” that if they did not provide their services to him for free, they would not receive future contracts from the JRA. Repak further instructed the contractors to hide the invoices for his personal work in the invoices submitted to the JRA, though the contractors refused to do this and simply accepted the losses from this work. Eventually, the Board members of the JRA instituted rules forbidding gratuities between its employees and contractors, and requiring Board approval for expenditures exceeding $500.

On appeal, Repak argued that his behavior did not constitute an “official act” under Section 201(a)(3) of the federal bribery statute. Repak relied on McDonnell v. U.S., a unanimous 2016 Supreme Court decision that interpreted the term. In that case, the Court adopted a more limited definition of the term than the Government had urged in its prosecution of former Virginia Governor Robert McDonnell for bribery. The Court explained that the job of many public officials is to listen to constituents and take action based on these conversations, and that Section 201 is concerned only with “quid pro quo” situations, in which something of value is exchanged for a specific official action. The Court made clear that it did not wish to discourage appropriate contacts between constituents and public officials by adopting an overly broad definition of “official act.”

In McDonnell, the Court stated that there are two requirements to demonstrate an “official act” has occurred. First, there must be a specific “question, matter, cause, suit, proceeding or controversy” that either is pending or may be brought before a public official which involves a “formal exercise of governmental power that is similar in nature to a lawsuit before a court, a determination before an agency, or a hearing before a committee.” Second, the public official “must make a decision or take an action on that 'question, matter, cause, suit, proceeding or controversy,' or agree to do so. The Court said that agreeing to set up a meeting or meeting with another public official wouldn't qualify as an “official act” without evidence of more.

Repak argued that these requirements were not fully met in his case, and suggested that the decision to award contracts was not a “formal exercise of government power” as defined by the Supreme Court. However, in its published opinion, the Third Circuit found that the JRA's decision to award contracts and pay contractors was “plainly, an agency determination,” therefore satisfying the requirement that a formal exercise of government power occurred.

Repak also argued on appeal that the decision to award contracts was not a pending, specific issue under the McDonnell test. The Third Circuit distinguished this type of action from action that was held to be insufficiently “specific and focused” in McDonnell. Unlike McDonnell, in which the Court found that hosting an event for “economic development” was neither specific, focused, not pending, the Third Circuit found that the agency award of a contract satisfied all three requirements.

The three-judge panel found none of Repak's arguments on appeal compelling, and ultimately affirmed his conviction and sentence under the new McDonnell standard for an “official act.”

*****
In the Courts was written by Katherine Monks, an associate at Mayer Brown LLP, Washington, DC.

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