Deprivation of Honest Services as a Basis for
Federal Mail and Wire Fraud Convictions
Charles Doyle
Senior Specialist in American Public Law
July 28, 2010
Congressional Research Service
7-5700
www.crs.gov
R40852
CRS Report for Congress
P
repared for Members and Committees of Congress

---

Deprivation of Honest Services as a Basis for Federal Mail and Wire Fraud Convictions

Summary
The United States Supreme Court in Skilling v. United States construed the honest services branch
of the federal mail and wire fraud statutes to reach no more than cases involving bribery or
kickbacks. The mail and wire fraud statutes, 18 U.S.C. §§ 1341 and 1343, impose criminal
penalties for the use of mail or interstate wire communications to deprive another of money or
property through a “scheme or artifice to defraud.” In its 1987 McNally decision, the Court had
held that while the fraud statutes reached schemes to deprive another of property rights, they did
not cover “the intangible right of the citizenry to good government.” Congress responded almost
immediately by enacting the “honest services” statute, 18 U.S.C. § 1346, which declares that
phrase “scheme or artifice to defraud” in the mail and wire statutes also encompasses depriving
“another of the intangible right of honest services.”
In its 2009 term, the Court was presented with three honest services cases—Skilling, Black and
Weyhrauch. Each offered the Court a slightly different prerequisite for an honest services
conviction –for Weyhrauch, a public official, it was an underlying state law violation; for Black,
in the private sector, it was foreseeable harm; for Skilling, an Enron executive, it was private gain.
The Court instead returned to the pre-McNally case law which it felt Congress intended the
honest services statute to revive. In the pre-McNally world, most of the honest services cases, the
core cases, involved bribery or kickbacks. This, the Court said, is what Congress meant when it
spoke of honest services: the deprivation of honest services, public or private, by bribery or
kickbacks.
To construe the statute otherwise, the Court felt, would ground the statute on “a vagueness shoal.”
In fact, three members of the Court refused to endorse the majority opinion in full because they
thought the honest services statute unconstitutionally vague on due process grounds. Should
Congress desire a more inclusive definition of honest services fraud, the Court urged that it
“employ standards of sufficient definiteness and specificity to overcome due process concerns.”
The Court sent each of the three cases back to the lower courts—Black and Skilling, for a
determination of whether erroneous jury instructions on honest services fraud had so tainted their
convictions as to require a new trial or whether the instructions simply constituted harmless error;
Weyhrauch, for the reconsideration in light of the Court’s Skilling decision.
This report was originally prepared by Anna C. Henning.

Congressional Research Service

---

Deprivation of Honest Services as a Basis for Federal Mail and Wire Fraud Convictions

Contents
Introduction ................................................................................................................................ 1
Background: Mail and Wire Fraud............................................................................................... 2
Honest Services Statute............................................................................................................... 4
Historical Context ................................................................................................................. 5
Prosecutions.......................................................................................................................... 6
Constitutional Considerations...................................................................................................... 7
Federalism ............................................................................................................................ 7
Void-for-Vagueness ............................................................................................................... 8
Judicial Limitations on the Scope of the Honest Services Statute ............................................... 10
Private Gain ........................................................................................................................ 11
State Law Limiting Principle............................................................................................... 13
Foreseeable Harm ............................................................................................................... 15
Cases in Which the Supreme Court Granted Certiorari .............................................................. 16
United States v. Skilling....................................................................................................... 17
United States v. Black.......................................................................................................... 19
United States v. Weyhrauch.................................................................................................. 20
Conclusion................................................................................................................................ 21

Contacts
Author Contact Information ...................................................................................................... 21

Congressional Research Service

---

Deprivation of Honest Services as a Basis for Federal Mail and Wire Fraud Convictions

Introduction
The Supreme Court recently held that the definition of honest services for purposes of the federal
mail and wire fraud statutes encompasses only those cases that involve bribery or kickbacks,
Skilling v. United States, 78 U.S.L.W. 4735 (U.S. June 24, 2010). In doing so, the Court took the
middle ground between those who had urged that the definition be found unconstitutionally vague
and those who favored sweeping and severe condemnation of public and private corruption.
The federal mail and wire fraud statutes, 18 U.S.C. §§ 1341 and 1343, have been described as
federal prosecutors’ “true love,” because they provide a basis for criminal liability in a broad
spectrum of instances.1 For the purpose of mail and wire fraud prosecutions, federal jurisdiction is
triggered when a person utilizes the federal postal service or an interstate carrier or sends a wire
or radio communication. For example, the statutes may apply to schemes in which a FedEx
package or an e-mail was sent. Convictions are obtained after a prosecutor achieves the more
difficult step of proving that an intent to further a “scheme or artifice to defraud” accompanied
the use of mail or wire. Over time, the scope of “scheme or artifice to defraud” has been a subject
of contentious debate, particularly with regard to schemes to defraud victims of rights unrelated
to pecuniary assets.
Congress enacted the honest services statute, 18 U.S.C. § 1346, in 1988 to incorporate within the
ambit of the federal mail and wire fraud statutes schemes infringing on a victim’s right to an
official’s or employee’s “honest services” (i.e., an employee’s honest work on behalf of a
company or an official’s honest public service). High-profile examples include a guilty plea by
the lobbyist Jack Abramoff to conspiracy to commit honest services fraud and the indictment of
former Illinois Governor Rod Blagojevich on honest services fraud and related charges.2 In the
private sector, a notable case involves the conviction of Jeffrey Skilling, a former Enron
executive.3
Although it is generally agreed that Congress has the authority to regulate the federal mail system
and interstate wire communications, the sparse text and potential breadth of the honest services
statute have prompted concerns regarding its constitutionality. Critics of the statute have argued
that its mere “28 words” form a vague and unfair basis for federal criminal jurisdiction in many
cases.4 Likewise, in an opinion dissenting from the Supreme Court’s decision to deny review in a
2008 honest services case, Justice Scalia suggested that the statute’s vague language invites
federal prosecution of seemingly commonplace actions, such as “a mayor’s attempt to use the
prestige of his office to obtain a restaurant table without a reservation.”5 Prompted by these and
other considerations, federal courts have employed judicial interpretation techniques to avoid an
overly broad reading of the statute. However, the federal courts of appeals disagreed regarding
the appropriate approach.

1 See Geraldine Szott Moohr, Mail Fraud Meets Criminal Theory, 67 U. Cin. L. Rev. 1, 1 (1998-1999) (citing Jed S.
Rakoff, The Federal Mail Fraud Statute (Part I), 18 Duq. L. Rev. 771, 771-72 (1980)).
2 See Susan Schmidt and James V. Grimaldi, Abramoff Pleads Guilty to Three Counts: Lobbyist to Testify About
Lawmakers in Corruption Probe, Wash. Post, Jan. 4, 2006, at A1; U.S. Fed. News Service, Former Illinois Gov.
Blagojevich, His Brother, Two Former Top Aides, Two Businessmen Indicted, Apr. 4, 2009.
3 See United States v. Skilling, 554 F.3d 529 (5th Cir. 2009), vac’d and rem’d, 78 U.S.L.W. 4735 (U.S. June 24, 2010).
4 See, e.g., Mike Robinson, Federal Law Under Attack, Dubuque Telegraph-Herald, Sep. 13, 2009, at A20.
5 Sorich v. United States, 129 S. Ct. 1308 (2009) (Scalia, J., dissenting from the denial of certiorari).
Congressional Research Service
1

---

Deprivation of Honest Services as a Basis for Federal Mail and Wire Fraud Convictions

Perhaps in part to address the disagreement among the courts of appeals, the U.S. Supreme Court
granted writs of certiorari in three cases, Weyhrauch v. United States,6 Black v. United States,7 and
Skilling v. United States,8 which present questions regarding the scope of the honest services
statute. The cases provided the Court’s first opportunity to interpret the honest services fraud
statute since it was enacted. Particularly with the decision to review Skilling, a highly publicized
case connected with the collapse of Enron, the grants of certiorari garnered significant media
attention.9 The Court’s granting of the three writs within a relatively short time frame, less than a
year after Justice Scalia’s strongly worded dissent from the denial of certiorari in a case from the
Court’s 2008 term, prompted speculation that the Supreme Court might narrow the scope of the
statute.10
Background: Mail and Wire Fraud
The Court hardly wrote upon a clean slate. In 1872, Congress enacted the mail fraud statute “to
curtail an epidemic of ‘large-scale swindles, get-rich-quick schemes, and financial frauds.’”11 In
1952, it established an analogous federal crime, wire fraud, which applies to frauds committed by
the use of wire, radio, or television communications in interstate commerce. Because the
triggering activities for federal jurisdiction—use of mail or wire, including the Internet—are very
common modes of communication, the federal mail and wire fraud statutes, 18 U.S.C. §§ 1341
and 1343, provide federal criminal jurisdiction over a broad range of fraudulent schemes.12
Except for the instrument (the mail system versus radio or wire) used to trigger federal
jurisdiction, the mail and wire fraud statutes involve identical criminal conduct and are generally
interpreted in the same manner by the federal courts.13 The mail fraud statute subjects anyone to

6 129 S. Ct. 2863 (2009) (No. 08-1196).
7 129 S. Ct. 2379 (2009) (No. 08-876).
8 130 S. Ct. 393 (2009) (No. 08-1394).
9 See, e.g., John R. Emshwiller, Supreme Court to Hear Appeal of Enron’s Skilling, Wall St. J., Oct. 14, 2009.
10 See, e.g., David Stout, Justices Will Hear Appeal of Former Enron Chief, N.Y. Times, Oct. 14, 2009 (“It is clear that
the Supreme Court intends to take a close look at the statute.”); Greg Burns, Skilling, Black and Blagojevich: Honest
Services Fraud?, Chicago Trib., Oct. 14, 2009 (“The U.S. Supreme Court has set the stage for reining in a widely used
fraud statute.... ”).
11 United States v. Svete, 556 F.3d 1157, 1162 (11th Cir. 2009) (quoting Jed S. Rakoff, The Federal Mail Fraud Statute
(Part I), 18 Duq. L. Rev. 771, 780 (1980)). The focus in the legislative history on financial frauds provides some
indication that Congress initially intended to limit the statute’s scope to those activities involving money or property. In
1909, it appeared to codify this limitation when it amended the statute to clarify that it covered schemes for the purpose
of “obtaining money or property” through fraud. Act of Mar. 4, 1909, 35 Stat. 1130.
12 See Jack E. Robinson, The Federal Mail and Wire Fraud Statutes: Correct Standards for Determining Jurisdiction
and Venue, 44 Willamette L. Rev. 479, 479 (2007-2008) (noting that “[t]he federal mail and wire fraud statutes,
particularly since their amendment in 2002, have become the most prevalent and lethal weapon in the federal
prosecutor’s arsenal” and have enabled the U.S. Department of Justice to “root out new and increasingly more
sophisticated frauds,” but arguing that the expanded federal authority “has also led to the ‘federalization’ of fraudulent
conduct that is more appropriately dealt with by state prosecutors under state law”).
13 See Pasquantino v. United States, 544 U.S. 349, 355 n.2 (2005) (“we have construed identical language in the wire
and mail fraud statutes in pari materia”) (citing Neder v. United States, 527 U.S. 1, 20 (1999), Carpenter v. United
States, 484 U.S. 19, 25 and n.6 (1987)). See also United States v. Ward, 486 F.3d 1212, 1221 (11th Cir. 2007) (“Aside
from the means by which a fraud is effectuated, the elements of mail fraud, 18 U.S.C. 1341, and wire fraud, 18 U.S.C.
1343, are identical.”). However, one difference is that the wire fraud provision is based on Congress’s commerce clause
authority, whereas the mail fraud statute also applies in cases involving only intrastate communications. See United
States v. Elliott, 89 F.3d 1360, 1364 (8th Cir. 1996); United States v. Photogrammertric Data Services, Inc., 259 F.3d
(continued...)
Congressional Research Service
2

---

Deprivation of Honest Services as a Basis for Federal Mail and Wire Fraud Convictions

criminal liability who, “having devised or intending to devise any scheme or artifice to defraud,
or for obtaining money or property by means of false or fraudulent pretenses, representations, or
promises,” deposits or causes to be deposited, knowingly causes to be delivered, or takes or
receives, any “matter or thing whatever” in a post office or “authorized mail depository” or with
“any private or commercial interstate carrier ... for the purpose of executing [a fraudulent]
scheme.”14 The wire fraud statute includes the same “having devised or intending to devise any
scheme or artifice to defraud ...” and “for the purpose of executing such scheme” language but
applies to transmittals of “any writings, signs, signals, pictures, or sounds” “by means of wire,
radio, or television communication in interstate or foreign commerce.”15
Generally speaking, criminal convictions require the government to prove both an actus reus
(action) and a mens rea (mental state). As mentioned, the actus reus component of the federal
mail and wire fraud statutes is satisfied with proof of a relatively innocuous action—namely, the
very common act of using mail or telecommunications. For example, in United States v.
Weyhrauch,16 the defendant’s alleged scheme involved voting a particular way on state legislation
regarding taxation of oil companies in exchange for an oil company hiring the defendant to
provide legal services. However, the event triggering jurisdiction for purposes of the mail fraud
statute was the defendant mailing his resumé to the oil company. Furthermore, in most cases, a
prosecutor need not prove that a person actually used the mail or sent a wire or radio
communication. Instead, it is generally sufficient that a defendant knew or should have foreseen
that mail or wire would be used.17 In addition, it is usually not necessary to prove that a victim
was actually harmed (i.e., that a person was deprived of property or other rights).18
Thus, the success of mail or wire fraud prosecutions typically turns on whether a defendant had
the requisite mental state—namely, whether he or she intended to devise a “scheme or artifice to
defraud.” For both crimes, a prosecutor must prove that a defendant had specifically intended to
perpetrate a fraud.19 Thus, the statutes are sometimes described as having a “specific intent”
requirement.20 In the public corruption context, some courts of appeals have adopted relatively
strict interpretations of this requirement. For example, the U.S. Court of Appeals for the First
Circuit has noted that the intent requirement in the mail and wire fraud statutes requires that a

(...continued)
229, 247 (4th Cir. 2001).
14 18 U.S.C. §1341.
15 18 U.S.C. §1343.
16 548 F.3d 1237 (9th Cir. 2008), cert. granted, 129 S. Ct. 2863 (2009).
17 See Pereira v. United States, 347 U.S. 1, 8-9 (1954) (“Where one does an act with knowledge that the use of the
mails will follow in the ordinary course of business, or where such use can reasonably be foreseen, even though not
actually intended, then he ‘causes’ the mails to be used.”) (citing United States v. Kenofskey, 243 U.S. 440 (1917)).
18 In that regard, the mail and wire fraud statutes resemble “inchoate offenses,” such as attempt and conspiracy, for
which a prosecutor must prove only that a defendant took sufficient steps toward the commission of a crime and had
the requisite intent to commit the crime, rather than any particular outcome. However, unlike the crimes of attempt and
conspiracy, the federal mail and wire fraud crimes also address crimes in which the fraud was “successful” (i.e., where
harm actually occurred).
19 See United States v. Galex, 341 Fed. Appx. 775, 776 (3d Cir. 2009) (requiring proof beyond a reasonable doubt that
a defendant knowingly and willfully participated in a scheme or artifice to defraud “‘with specific intent to defraud.’”)
(quoting United States v. Antico, 275 F.3d 245, 261 (3d Cir. 2001); United States v. Sloan, 492 F.3d 884, 891 (7th Cir.
2007) (“To show an intent to defraud, we require a willful act by the defendant with the specific intent to deceive or
cheat, usually for the purpose of getting financial gain for one’s self or causing financial loss to another.”).
20 See United States v. Sawyer, 239 F.3d 31, 46-47 (1st Cir. 2001).
Congressional Research Service
3

---

Deprivation of Honest Services as a Basis for Federal Mail and Wire Fraud Convictions

prosecutor “indicate wrongdoing by a public official, [but] also demonstrate that the wrongdoing
at issue [was] intended to prevent or call into question the proper or impartial performance of that
public servant’s official duties.”21 Other decisions have tempered the extent of the specific intent
hurdle, however. In a later case, the First Circuit allowed that the “prosecution may prove this
requisite intent to defraud through circumstantial evidence.”22 In addition, the scope of activities
which may constitute fraud for the purpose of fulfilling the intent requirement is relatively broad.
The Supreme Court has held that “scheme or artifice to defraud” extends to “any act or omission
that ‘wrong[s] one in his property rights by dishonest methods or schemes and usually signif[ies]
the deprivation of something of value by trick, deceit, chicane or overreaching.’”23
Materiality presents a final component to the analysis in mail and wire fraud cases. In general,
federal courts require that a scheme to defraud must be material; that is, it must have a natural
tendency to induce reliance to the victim’s detriment or to the offender’s benefit.24 However, as
discussed, mail and wire fraud are typically punishable regardless of the ultimate success of a
fraudulent scheme.25
Congress substantially increased the penalties associated with the federal mail and wire fraud
statutes as part of the Sarbanes-Oxley Act of 2002.26 The maximum penalties for the statutes,
including in cases proceeding under an honest services theory, now include imprisonment for up
to 20 years.27
Honest Services Statute
The honest services statute, 18 U.S.C. § 1346, states that for the purposes of the federal crimes of
mail and wire fraud, “the term ‘scheme or artifice to defraud’ includes a scheme or artifice to
deprive another of the intangible right of honest services.” As discussed, because of the sparse
text but broad application, questions remain regarding the scope of the statute and the range of
situations to which it applies.28 The provision’s historical context, together with case law
predating the provision and various constitutional considerations, inform judicial interpretation of
the statute.

21 United States v. Czubinski, 106 F.3d 1069, 1076 (1st Cir. 1997). But see United States v. Woodward, 149 F.3d 46,
61-62 (1st Cir. 1998) (distinguishing Czubinski where the defendant had received tangible benefits in the form of
gratuities and a “connection between the gratuities and [the defendant]’s official acts could have been justifiably
inferred from the fact that [he] had discretion to act or not act in ways that would further the insurance industry’s
interests”).
22 Sawyer, 239 F.3d at 46-47 (citing United States v. Ervasti, 201 F.3d 1029, 1037 (8th Cir. 2000)).
23 McNally v. United States, 483 U.S. 350, 358 (1987) (quoting Hammerschmidt v. United States, 265 U.S. 182, 188
(1924)).
24 See, e.g., Neder v. United States, 527 U.S. 1, 21-22 (1999) (holding that materiality is an element of mail, wire, and
bank fraud because the statutory language drew from common law, and at common law, “fraud” had to be material).
25 See United States v. Gale, 468 F.3d 929, 937 (6th Cir. 2006); United States v. Schuler, 458 F.3d 1148, 1153 (10th Cir.
2006); United States v. Reifler, 446 F.3d 65, 96 (2d Cir. 2006).
26 P.L. 107-204, 116 Stat. 745, 800 (2002).
27 18 U.S.C. §§ 1341, 1343. Prior to the passage of the Sarbanes-Oxley Act, the maximum prison sentence that could be
imposed was five years.
28 See, e.g., United States v. Urciuoli, 513 F.3d 290, 294 (1st Cir. 2008) (“as one moves beyond core misconduct
covered by the statute (e.g., taking a bribe for a legislative vote), difficult questions arise in giving coherent content to
the phrase through judicial glosses”).
Congressional Research Service
4

---

Deprivation of Honest Services as a Basis for Federal Mail and Wire Fraud Convictions

Historical Context
Beginning in the 1930s and 1940s, federal courts applied the federal mail fraud statute to frauds
stemming from a breach of fiduciary duty.29 During the late 1970s and 1980s, using fiduciary
duty as an analogy, federal courts first included public corruption within the types of activities
which could give rise to a mail or wire fraud conviction.30 A theory suggested to justify honest
services convictions in the public sector context “relie[d] on the idea that a public official acts as
trustee for the citizens and the State ... and thus owes the normal fiduciary duties of a trustee, e.g.,
honesty and loyalty to them.”31
In 1987, the Supreme Court halted such “honest services” convictions when it held, in McNally v.
United States,32 that the definition of “any scheme or artifice to defraud” extends only to schemes
targeting tangible property rights, not intangible ones, such as a breach of fiduciary duty.33 The
Court explained that it had chosen the narrow interpretation, “[r]ather 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.”34 It added that
“[i]f Congress desires to go further, it must speak more clearly than it has.”35
The following year, in response to the McNally decision,36 Congress amended the statutory
definition of “scheme or artifice to defraud” for purposes of mail and wire fraud, as discussed, to
encompass any “scheme or artifice to deprive another of the intangible right of honest services.”37
Some courts have interpreted the new statute as having “reinstated the line of cases preceding

29 See, e.g., Alexander v. United States, 95 F.2d 873 (8th Cir. 1938) (affirming the conviction for mail fraud of
defendants who had mailed fictitious medical licenses, where they were found to have “devised a scheme and artifice to
defraud numerous persons, including the public generally, and particularly those persons who would in the future desire
the services of legally licensed and professionally competent doctors, surgeons, and chiropractors”); United States v.
Procter & Gamble Co., 47 F.Supp. 676, 678 (D.Mass. 1942) (applying the mail fraud statute to a private sector
employee’s breach of his fiduciary duty).
30 See, e.g., United States v. Mandel, 591 F.2d 1347 (4th Cir. 1979); United States v. Silvano, 812 F.2d 754 (1st Cir.
1987).
31 United States v. Kincaid-Chauncey, 556 F.3d 923, 939 (9th Cir. 2009) (quoting United States v. Silvano, 812 F.2d
754, 759 (1st Cir. 1987), United States v. Mandel, 591 F.2d 1347, 1363 (4th Cir. 1979) (internal quotation marks
omitted)). However, in general, breach of a fiduciary duty is not considered a necessary element for a mail or wire
fraud conviction proceeding on an honest services theory. See United States v. Ervasti, 201 F.3d 1029, 1036 (8th Cir.
2000).
32 483 U.S. 350, 358 (1987).
33 Id. at 358. The Court relied on the legislative history of the mail fraud statute.
34 Id. at 360.
35 Id.
36 See 134 Cong. Rec. S 17,376 (Nov. 10, 1988) (section-by-section analysis inserted into the record by Senator Biden
on behalf of the Senate Judiciary Committee) (“This section overturns the decision in McNally v. United States in
which the Supreme Court held that the mail and wire fraud statutes protect property but not intangible rights. Under the
amendment, those statutes will protect any person’s intangible right to the honest services of another, including the
right of the public to the honest services of public officials. The intent is to reinstate all of the pre-McNally caselaw
pertaining to the mail and wire fraud statutes without change.”).
37 P.L. 100-690, § 7603, 102 Stat. 4181 (codified at 18 U.S.C. §1346) (emphasis added).
Congressional Research Service
5

---

Deprivation of Honest Services as a Basis for Federal Mail and Wire Fraud Convictions

[McNally]”38 with respect to the honest services theory, whereas other courts have concluded that
Congress could not have intended to reinstate the pre-McNally case law.39
The honest services fraud amendment was interpreted by some as overruling McNally only with
regard to the right of honest services, and not with regard to other intangible rights.40 Before
Congress enacted the honest services statute, the Supreme Court, in United States v. Carpenter,41
applied the mail fraud statute to intangible property—specifically, to confidential information that
would affect stock trading. However, the Carpenter holding appeared to extend only to interests
that could be construed as property interests, rather than to other intangible rights, such as those
contemplated by the honest services provision. Thus, it could be argued that three categories of
mail and wire fraud now exist—traditional fraud affecting tangible pecuniary interests, fraud
affecting intangible pecuniary interests, and honest services fraud—whereas other types of
intangible rights are not included within the ambit of mail and wire fraud. For example, in a 2000
case, Cleveland v. United States,42 the Court overturned a conviction in which the lower courts
found that the State of Louisiana was fraudulently induced to issue a video poker license. The
Court held that the mail and wire fraud statutes were inapplicable because the license was not
“money or property” while in the state’s hands, nor was a deprivation of honest services
implicated.
Prosecutions
Based in part on the pre-McNally case law, federal courts had interpreted the honest services
provision as encompassing services owed by both publicly elected officials and private
employees. In both private sector and public corruption cases, prosecutions were not limited to
the public official or employee who owed honest services.43 For example, a third party may be
criminally liable for concealing a conflict of interest on behalf of a public official or engaging in a
conspiracy with an employee to defraud a corporation.44
In the private sector, defendants in a typical case might include various people involved in a
fraudulent scheme (e.g., to award a company’s contracts or services in exchange for kickbacks).45
The statute has been described as applying to schemes that would “enable an officer or employee
of a private entity ... purporting to act for and in the interests of his or her employer ... secretly to

38 United States v. Sorich, 523 F.3d 702, 707 (7th Cir. 2008) (citing United States v. Rybicki, 354 F.3d 124, 136-37 (2d
Cir. 2003) (en banc)).
39 See, e.g., United States v. Brumley, 116 F.3d 728, 733 (5th Cir. 1997) (“Congress could not have intended to bless
each and every pre-McNally lower court ‘honest services’ opinion.”).
40 See Cleveland v. United States, 531 U.S. 12 (2000) (“Congress amended the law specifically to cover one of the
‘intangible rights’ that lower courts had protected under § 1341 prior to McNally: ‘the intangible right of honest
services.’”).
41 484 U.S. 19 (1988).
42 531 U.S. 12 (2000).
43 See United States v. Sorich, 523 F.3d 702, 707 (7th Cir. 2008) (describing the private sector type of honest services
fraud as that in which “an employer is defrauded of its employee’s honest services by the employee or by another”)
(emphasis added).
44 Alternatively, a third party is sometimes charged as an accessory in an honest services case. For example, in United
States v. Panarella, 277 F.3d 678 (3d Cir. 2002), the Third Circuit upheld the conviction of an owner of a tax collection
business on charges of having been an accessory after the fact to an official’s commission of honest services fraud.
45 See, e.g., United States v. George, 477 F.2d 508 (7th Cir. 1973).
Congressional Research Service
6

---

Deprivation of Honest Services as a Basis for Federal Mail and Wire Fraud Convictions

act in his or her or the defendant’s own interests instead.”46 Over time, it has been applied to
corporate officers, purchasing agents, stock brokers, “and others with clear fiduciary duties to
their employees or unions.”47
In the public corruption context, honest services cases arose when a defendant is alleged to have
deprived the public of its right to an elected official’s honest services.48 Lower courts noted that
the two most common situations in which the honest services statute is implicated include bribery
of a public official and undisclosed conflicts of interest.49 Convictions for both types of schemes,
as well as patronage schemes, were upheld in various cases prior to McNally.50 Bribery of a
public official has been described as the “most obvious” form of honest services fraud,51 but
courts occasionally characterized the receipt of benefits as a result of an undisclosed conflict of
interest as a more subtle version of having accepted a bribe.52
Constitutional Considerations
The sparse yet broad text of the honest services statute prompts some special constitutional
considerations. Related to the specific issues discussed below are overarching separation-of-
powers questions. For example, which branch—Congress or the judiciary—is best suited to
delineate the scope of federal criminal jurisdiction in honest services cases?
Federalism
Congress’s authority to enact the mail and wire fraud statutes is derived from its Article I powers
to establish a postal system and regulate interstate commerce.53 Principles of federalism may

46 United States v. Rybicki, 354 F.3d 124, 126-27 (2d Cir. 2003) (en banc), cert. denied, 543 U.S. 809 (2004).
47 See McNally v. United States, 483 U.S. 350, 364 (1987).
48 See, e.g., United States v. Silvano, 812 F.2d 754, 759 (1st Cir. 1987) (describing courts’ pre-McNally interpretation of
the mail and wire fraud statutes as including an honest services component “premised upon an underlying theory that a
public official acts as trustee for the citizens and the State ... and thus owes the normal fiduciary duties of a trustee, e.g.,
honesty and loyalty to them” (internal quotations omitted)).
49 See, e.g., United States v. Gordon, 183 Fed.Appx. 202, 208 (3d Cir. 2006) (“Honest services fraud typically is found
in two situations: ‘(1) bribery, where a legislator was paid for a particular decision or action; or (2) failure to disclose a
conflict of interest resulting in personal gain,’ which, ‘[i]n the public sector ... is oftentimes prescribed by state and
local ethics laws.’”) (quoting United States v. Antico, 275 F.3d 245, 262-63 (3d Cir. 2001))).
50 See, e.g., United States v. Isaacs, 493 F.2d 1124 (5th Cir. 1975) (upholding a conviction for the accepting of bribes);
United States v. Keane, 522 F.2d 534 (7th Cir. 1975) (upholding a Chicago Alderman’s honest services fraud conviction
for, among other things, failing to disclose his personal interest in property); United States v. Bush, 522 F.2d 641 (7th
Cir. 1975) (upholding the conviction of a Chicago mayor’s Press Secretary, who failed to disclose his ownership
interest in a business that had an exclusive contract with the city); United States v. Margiotta, 688 F.2d 108 (2d Cir.
1982) (upholding the conviction of a political party official in connection with his alleged distribution of insurance
commission positions to his political allies).
51 United States v. Carbo, 572 F.3d 112, 115 (3d Cir. 2009).
52 United States v. Panarella, 277 F.3d 678, 697 (3d Cir. 2002) (“The only difference between a public official who
accepts a bribe and a public official who receives payments while [taking steps to benefit from an undisclosed conflict
of interest] is the existence of a quid pro quo whereby the public official and the payor agree that the discretionary
action taken by the public official is in exchange for payment. Recognizing the practical difficulties in proving the
existence of such a quid pro quo, disclosure laws permit the public to judge for itself whether an official has acted on a
conflict of interest.”).
53 See U.S. Const. art. I, § 8 (“The Congress shall have Power ... To regulate Commerce with foreign Nations, and
(continued...)
Congressional Research Service
7

---

Deprivation of Honest Services as a Basis for Federal Mail and Wire Fraud Convictions

impose outer limits on the reach of federal authority, particularly as applied to state political
activities. Federalism, derived from the constitutional structure which creates a federal
government of limited powers, and from the Tenth Amendment to the Constitution,54 recognizes
that the states and the federal government exist as dual sovereigns. Although the extent to which
the Tenth Amendment or general principles of federalism impose an affirmative limit on the
federal government is somewhat unsettled, the Supreme Court has historically invoked these
principles to justify a narrow reading of federal criminal statutes.55 Likewise, in the mail and wire
fraud context, in particular, the Court has indicated that it requires a clear statement from
Congress before it will interpret the statutes as intruding on areas traditionally governed by the
states.56
As mentioned, such concerns are perhaps most strongly implicated by the honest services statute
in the context of federal prosecutions against state and local officials. They may have informed
the Supreme Court’s decision in Weyhrauch, in which the Court granted certiorari to resolve the
question “[w]hether, to convict a state official for depriving the public of its right to the
defendant’s honest services through the disclosure of material information, in violation of the
mail-fraud statute ... the government must prove that the defendant violated a disclosure duty
imposed by state law.”57 In other cases, lower federal courts had argued that an approach to the
honest services fraud statute that is not subject to the state law limiting principle, rejected by the
lower court in Weyhrauch and discussed infra, might be inconsistent with principles of
federalism.58 The Supreme Court, however, elected to return Weyhrauch to the Ninth Circuit for
reconsideration in light of the Court’s decision in Skilling.
Void-for-Vagueness
In Skilling and Weyhrauch, appellants argued that the honest services statute is unconstitutionally
vague.59 Criminal statutes are held to violate the due process clauses of the Fifth and Fourteenth
Amendments60 when they are sufficiently vague that people “of common intelligence must
necessarily guess at [their] meaning.”61 This “void-for-vagueness” doctrine is rooted in due

(...continued)
among the several States ... [and] To establish Post Offices and post Roads”).
54 U.S. Const. amdt. X (“The powers not delegated to the United States by the Constitution, nor prohibited by it to the
States, are reserved to the States respectively, or to the people”).
55 See, e.g., Linder v. United States, 268 U.S. 5, 17 (1925) (“[W]e accept as established doctrine that any provision of
an act of Congress ostensibly enacted under power granted by the Constitution, not naturally and reasonably adapted to
the effective exercise of such power but solely to the achievement of something plainly within power reserved to the
States, is invalid and cannot be enforced.”).
56 See Cleveland v. United States, 531 U.S. 12, 25 (2000) (“unless Congress conveys its purpose clearly, it will not be
deemed to have significantly changed the federal-state balance in the prosecution of crimes”).
57 129 S. Ct. 2863 (2009).
58 See, e.g., United States v. Gordon, 183 Fed. Appx. 202, 210 (3d Cir. 2006) (describing a broad interpretation of the
statute as “inconsistent with principles of federalism that are preserved when federal honest services fraud is tied to a
violation of a fiduciary relationship arising under state or local law”) (citing United States v. Murphy, 323 F.3d 102,
117 (3d Cir. 2003)).
59 See Petition for a Writ of Certiorari, Skilling v. United States, No. 08-1394 (filed May 11, 2009); Petition for a Writ
of Certiorari, Weyhrauch v. United States, No. 08-1196 (filed Mar. 25, 2009).
60 U.S. Const. amdt. V; U.S. Const. amdt. XIV, § 1.
61 Connally v. General Construction Co., 269 U.S. 385, 391 (1926).
Congressional Research Service
8

---

Deprivation of Honest Services as a Basis for Federal Mail and Wire Fraud Convictions

process concerns regarding notice to citizens and the arbitrary enforcement of laws.62 Courts may
declare statutes void if the conduct giving rise to criminal liability, the persons to which it applies,
or the punishment which may be imposed are unclear.
However, assessments of vagueness are determined in light of judicial precedents that have
construed a statute’s scope or meaning. Thus, a key question with regard to the honest services
statute is whether existing judicial precedents—including case law before and after the Supreme
Court’s decision in McNally—provide a sufficient degree of clarity to satisfy due process
requirements. Some commentators argue that the case law is inconsistent and does not provide
any firm boundaries for the scope of the statute.63 As a theoretical matter, vagueness questions
arise in part because judicial opinions in honest services cases have relied upon concepts such as
fiduciary duty, which are borrowed from the context of civil liability. Such concepts arguably do
not provide sufficient clarity to satisfy the constitutional requirements for penal statutes, which
are subject to a heightened level of scrutiny before the government may place a defendant’s life,
liberty, or property at stake.
Prior to the Supreme Court decision in Skilling, the federal courts of appeals which had addressed
the issue have rejected void-for-vagueness challenges.64 The most notable case was United States
v. Rybicki,65 a 2003 decision in which the U.S. Court of Appeals for the Second Circuit, sitting en
banc, upheld the honest services statute against such a challenge. The court noted that case law
predating the enactment of the honest services statute clarifies the scope of the crime. In contrast,
several dissenting judges argued that the judicial doctrines that the court characterized as having
formed the backdrop for the honest services fraud provision are “as standardless as the statute
itself.”66 However, that characterization would appear to apply to standards governing the
application of the mail and wire fraud statutes, generally, rather than only honest services cases.

62 The Supreme Court has noted that the threat of arbitrary or discriminatory enforcement of the laws is the more
pressing of the two concerns. See Kolender v. Lawson, 461 U.S. 352, 357-58 (1983) (“Although the doctrine focuses
both on actual notice to citizens and arbitrary enforcement, we have recognized recently that the more important aspect
of the vagueness doctrine ‘is not actual notice, but the other principal element of the doctrine—the requirement that a
legislature establish minimal guidelines to govern law enforcement.’” (quoting Smith v. Goguen, 415 U.S. 566, 574
(1974)).
63 See, e.g., Andrew B. Matheson, A Critique of United States v. Rybicki: Why Foreseeable Harm Should Be an Aspect
of the Mens Rea of Honest Services Fraud, 28 Am. J. Trial Advoc. 355, 356 (2004-2005).
64 See, e.g., United States v. Inzunza, 580 F.3d 894, 903-906 (9th Cir. 2009); United States v. Hargrove, 579 F.3d 752,
754 (7th Cir. 2009); United States v. Hasner, 340 F.3d 1261, 1268-269 (11th Cir. 2003); United States v. Welch, 327
F.3d 1081, 1109 n.29 (10th Cir. 2003); United States v. Rybicki, 354 F.3d 124, 141-44 (2d Cir. 2003)(en banc); United
States v. Frost, 125 F.3d 346, 370-71 (6th Cir. 1997); United States v. Gray, 96 F.3d 769, 776-77 (5th Cir. 1996). Justice
Scalia had suggested that void-for-vagueness issues are implicated by the honest services fraud provision, see Sorich v.
United States, 129 S. Ct. 1308 (2009) (Scalia, J., dissenting from the denial of certiorari), but the Court had not yet
ruled on the issue.
65 354 F.3d 124 (2d Cir. 2003) (en banc).
66 Rybicki, 354 F.3d at 161 (Jacobs, J., dissenting).
Congressional Research Service
9

---

Deprivation of Honest Services as a Basis for Federal Mail and Wire Fraud Convictions

Judicial Limitations on the Scope of the
Honest Services Statute
The courts of appeals had generally recognized a “need to find limiting principles to cabin the
broad scope of § 1346.”67 When explaining the need for such standards, courts have referenced
the constitutional concerns discussed supra.68 Some courts had also asserted that the text of the
honest services statute would otherwise seemingly justify absurd convictions. For example, at
least one court has suggested that in private sector cases, “the plain language of the ‘honest
services’ doctrine codified in § 1346 suggests that ‘dishonesty by an employee, standing alone, is
a crime.’”69 Thus, although “[u]nder such an application of the statute, [a defendant’s] conduct
[might be] clearly within the scope of § 1346 ... courts generally [had] been reluctant to apply
§ 1346 in a way that would expose employees to mail fraud prosecution for ‘every breach of
contract or every misstatement made in the course of dealing.’”70 Dissenting to denial of certiorari
in an honest services case, Justice Scalia appeared to agree that a limiting principle was
necessary. He stated: “Without some coherent limiting principle to define what ‘the intangible
right of honest services’ is, whence it derives, and how it is violated, this expansive phrase invites
abuse by headline-grabbing prosecutors in pursuit of local officials, state legislators, and
corporate CEOs who engage in any manner of unappealing or ethically questionable conduct.”71
Despite a general agreement that some limiting principle was necessary, however, the federal
courts had adopted differing approaches. Some established special requirements before a
defendant could be convicted for mail and wire fraud based on an honest services theory. As
discussed, the three most prominent requirements include the “private gain,” a “state law
violation,” and a “foreseeable harm” requirement.
Other courts of appeals had declined to adopt tests which apply only in honest services cases.
They relied instead on specific intent and materiality requirements, required elements for mail
and wire fraud convictions generally. The U.S. Court of Appeals for the Tenth Circuit has perhaps
articulated this view most forcefully. In United States v. Welch,72 it criticized the special tests as
requiring courts “to judicially legislate by adding an element to honest services fraud which the
text and the structure of the fraud statutes do not justify.”73 Defendants in the case were members
of the Salt Lake City Olympic Bid Committee who allegedly bribed members of the International
Olympic Committee in an effort to secure Salt Lake City’s chances to host the 2002 Winter

67 See United States v. Inzunza, 2009 WL 2750488, *9 (9th Cir. 2009). See also Andrew B. Matheson, A Critique of
United States v. Rybicki: Why Foreseeable Harm Should Be an Aspect of the Mens Rea of Honest Services Fraud, 28
Am. J. Trial Advoc. 355, 372 (2004-2005) (noting that a “broad consensus” exists that “there must be a limiting
element for honest services fraud, lest every ethical lapse be treated as a crime”).
68 See, e.g., United States v. McGeehan, 584 F.3d 560, 568 (3d Cir. 2009) (describing void-for-vagueness concerns as
one justification for employing a limiting principle—that is, “the exercise of interpreting a malleable term in a criminal
statute which applies to a wide variety of activity may generate nebulous standards that are not discernable to people of
ordinary intelligence”).
69 United States v. Vinyard, 266 F.3d 320, 326-27 (4th Cir. 2001) (quoting United States v. Frost, 125 F.3d 346, 368 (6th
Cir. 1997)).
70 Id. (quoting United States v. Cochran, 109 F.3d 660, 667 (10th Cir. 1997)).
71 Sorich v. United States, 129 S. Ct. 1308 (2009) (Scalia, J., dissenting from the denial of certiorari).
72 327 F.3d 1081 (10th Cir. 2003).
73 Id. at 1107.
Congressional Research Service
10

---

Deprivation of Honest Services as a Basis for Federal Mail and Wire Fraud Convictions

Olympic Games. In rejecting various proposed limiting principles, the Tenth Circuit stated that
the honest services statute “‘must be read against a backdrop of the mail and wire fraud statutes,
thereby requiring fraudulent intent and a showing of materiality’” and concluded that these
existing requirements provided sufficient checks against the statute’s potential overbreadth.74 In
September 2009, the U.S. Court of Appeals for the Ninth Circuit took a similar approach in
United States v. Inzunza,75 a case involving former members of the San Diego City Council. It
joined what it characterized as the “majority rule,” holding that the intent and materiality
requirements implicit in the mail and wire fraud statutes rendered special tests unnecessary.
Although courts sometimes characterize materiality and specific intent requirements as
alternatives to the limiting principles established for honest services, they tend to emphasize that
such tests are “inherent” in the mail and wire fraud framework rather than having been judicially
created specifically for honest services cases, as are the following tests.76
Private Gain
The “private gain” or “personal gain”77 test, which had been most fully adopted by the U.S. Court
of Appeals for the Seventh Circuit, would have limited the scope of the honest services provision
by requiring a showing that a defendant aimed to secure a private gain for himself or another. In
United States v. Bloom,78 a Chicago alderman, who also worked as a private attorney, had advised
a client to plant a proxy buyer at a real estate auction as part of a scheme to obtain tax advantages.
The court dismissed the honest services count because the prosecutor had not alleged that these
actions had been intended for the alderman’s personal gain. The Seventh Circuit held that the
“[m]isuse of office (more broadly, misuse of position) for private gain is the line that separates
run of the mill violations of state-law fiduciary duty ... from federal crime.”79
A later Seventh Circuit case, United States v. Sorich,80 involved a “corrupt and far-reaching
scheme, based out of the [Chicago mayor’s office], that doled out thousands of city civil service
jobs based on political patronage and nepotism.”81 The court upheld a jury instruction which
required proof that the defendants intended “to deprive a governmental entity of the honest
services of its employees for personal gain to a member of the scheme or another.”82

74 Id. at 1107 (quoting United States v. Cochran, 109 F.3d 660, 667 (10th Cir. 1997)).
75 2009 WL 2750488 (9th Cir. 2009).
76 See, e.g., United States v. Rybicki, 354 F.3d 124, 146 (2003) (en banc) (adopting a “materiality test” in lieu of the
foreseeable harm test, “because it has the virtue of arising out of fundamental principles of the law of fraud: A material
misrepresentation is an element of the crime”).
77 Although other courts of appeals’ opinions and earlier Seventh Circuit opinions have in some cases referred to the
test as requiring a showing of “personal gain,” the Seventh Circuit stated in its most recent honest services case that
“private gain” is the more appropriate term for the test. See United States v. Sorich, 523 F.3d 702, 709 (7th Cir. 2008)
(noting that although the “semantic difference between ‘private’ and ‘personal’ gain may be insignificant ... to the
extent that ‘personal’ connotes gain only by the defendant, it is misleading”).
78 149 F.3d 649 (7th Cir. 1998).
79 Id. at 655.
80 523 F.3d 702 (7th Cir. 2008).
81 Id. at 705.
82 Id. at 708-09. The court determined that the phrases “private gain” and “personal gain” were not meaningfully
different.
Congressional Research Service
11

---

Deprivation of Honest Services as a Basis for Federal Mail and Wire Fraud Convictions

Bloom left unresolved whether conviction may be obtained where a defendant has sought gain on
behalf of a third party. In Sorich, the court clarified that “private gain ... simply mean[s]
illegitimate gain, which usually will go to the defendant, but need not.”83 It then affirmed the
convictions resulting from the patronage scheme, signaling that at least in some circumstances,
private gain may include gain sought on behalf of third parties. The test’s application to third
parties has not been further explored.
Other parameters of the Seventh Circuit’s conception of “private gain” are not clearly defined.
The Seventh Circuit appears to have limited the definition to benefits that are received in secret or
outside of regular procedures. In a 2007 case, United States v. Thompson,84 the defendant, a
section chief in a state procurement office, was alleged to have influenced the selection process
for a state travel agent contract for political reasons. However, the gain that the defendant was
alleged to have obtained was characterized as favor with her supervisor and a pay raise through
the ordinary compensation process. The court held that strengthened job security and the pay
raise could not be construed as a private gain for the purpose of a mail fraud conviction. In
reaching this conclusion, the court contrasted these alleged gains with examples of private gain
given in Bloom, all of which involved “payoffs outside the proper channels.”85 However, one
could imagine factual scenarios in which a gain might be difficult to categorize as being clearly
inside or outside the boundaries of typical compensation procedures. For example, it is unclear
how the standard would apply in conflict-of-interest cases in which a payment related to an
undisclosed interest might be received through “proper channels” within the meaning of that
phrase as articulated in Bloom and Thompson—e.g., in the form of ordinary compensation for
services rendered to satisfy a legal contract obligation.
Although a few other federal courts of appeals appeared to have alluded to the private gain
analysis, others had explicitly rejected it.86 Reasons for the rejection include a view that it simply
“substitut[es] one ambiguous standard for another” and a concern that the private gain test has the
potential to make § 1346 under-inclusive, for example by failing to apply in conflict-of-interest
cases.87 As mentioned, in some cases, courts of appeals had rejected the private gain test in favor
of reliance on the specific intent requirement inherent in the mail and wire fraud framework. For
example, the U.S. Court of Appeals for the Ninth Circuit, in Inzunza, stated that “careful attention
to the intent element dispels concerns about the statute’s overbreadth.”88 In other cases, courts of
appeals have rejected the test in favor of other limiting principles. Most notably, the Court of
Appeals for the Fifth Circuit in Skilling declined to apply the test.89

83 Id. at 709.
84 484 F.3d 877, 882 (7th Cir. 2007).
85 Id. at 883.
86 See, e.g., United States v. Gordon, 183 Fed.Appx. 202, 210 (3d Cir. 2006) (noting that the Third Circuit has
“specifically refused to limit the offense to situations in which a public official uses his or her office for personal
gain”).
87 United States v. Panarella, 277 F.3d 678, 691-92, 699 (3d Cir. 2002).
88 2009 WL 2750488, *10 (9th Cir. 2009) (“Evidence of private gain may bolster a showing of deceptive intent, but
such a showing could also rest heavily on evidence of harm and deceit.”). However, it held that evidence of intent to
obtain a private gain, although not a necessary prerequisite for conviction, provides some evidence of the requisite
mental state.
89 United States v. Skilling, 554 F.3d 529 (5th Cir. 2009), cert. granted, 130 S. Ct. 393 (2009).
Congressional Research Service
12

---

Deprivation of Honest Services as a Basis for Federal Mail and Wire Fraud Convictions

State Law Limiting Principle
A few federal courts of appeals adopted the “state law limiting principle,” which dictated that a
conviction for mail or wire fraud on an honest services theory required a showing that a
defendant’s activity violated state law. Courts that adopted the principle emphasized the
principles of federalism and the importance of state law as a dividing line between criminal
behavior and common political maneuvering.90
The Fifth Circuit first adopted the principle in United States v. Brumley,91 in which it noted the
importance of federalism concerns for its holding.92 The defendant in Brumley had served on the
Texas Industrial Accident Board, which administered workers compensation claims in the state.93
He allegedly borrowed money from several lawyers who represented claimants whose claims
were to be resolved by the Board. The court held that “services must be owed under state law”
and that “the government must prove in a federal prosecution that they were in fact not
delivered.”94 It concluded that the defendant’s behavior violated a state statute which prohibited
“a public servant with judicial authority” from accepting “any benefit” from a person with an
interest in a matter before the public servant.95 The Fifth Circuit has reaffirmed the principle in
later cases, most recently in United States v. Skilling,96 discussed infra.
Although it has declined to formally adopt it,97 the U.S. Court of Appeals for the Third Circuit
also followed the state law limiting principle. In United States v. Panarella,98 a state senator had
allegedly failed to disclose compensation he had obtained from the owner of a tax collection
business. The Third Circuit concluded that “[s]tate law offers a better limiting principle for
purposes of determining when an official’s failure to disclose a conflict of interest amounts to
honest services fraud” than is offered by the private gain test or other alternatives.99 Applying the
principle, it upheld the conviction of an accessory to the senator’s crime, holding that the senator
had taken a discretionary action which he knew would directly benefit a financial interest that he
had concealed in violation of a state criminal law. In a subsequent case, the court clarified that the

90 See, e.g., United States v. Carbo, 572 F.3d 112, 118 (3d Cir. 2009) (“[T]he violation of state law is critical to
distinguishing between acceptable political deal-making and criminal deprivation of the public’s right to the honest
services of public officials—in other words, between normal politics and fraud.”).
91 116 F.3d 728 (5th Cir. 1997).
92 See Id. at 735 (“The federalism arguments that inform the definition of ‘honest services’ under federal criminal law
are powerful, and we acknowledge them in our holdings today.”).
93 Id. at 730-31.
94 Id. at 734.
95 Id. at 735-36.
96 554 F.3d 529, 544 (5th Cir. 2009) (referring to the state law limiting principle established in Brumley as “the rule for
this circuit”).
97 See United States v. McGeehan, 584 F.3d 560, 568 (3d Cir. 2009) (noting it has endorsed the state law limiting
principle but has reserved the question whether a violation of a state or federal fiduciary duty is necessary to sustain an
honest services fraud conviction); United States v. Carbo, 572 F.3d 112, 117 n. 4 (3d Cir. 2009) (stating that the court
has so far viewed the violation of state law as sufficient to support an honest services conviction but has not yet
resolved the question of whether such a violation is necessary).
98 277 F.3d 678 (3d Cir. 2002).
99 Id. at 692-93.
Congressional Research Service
13

---

Deprivation of Honest Services as a Basis for Federal Mail and Wire Fraud Convictions

violation of state law “does not require a violation of criminal law, but rather a violation of a
state-created fiduciary duty.”100
In a 2009 case, United States v Carbo,101 the Third Circuit considered what mental state is
required in connection with the violation of a state law. As in Panarella, the case involved a
failure to disclose a conflict of interest. However, in Carbo, the defendant was a third party, rather
than a public official or his accessory. Specifically, he was a business owner in Norristown,
Pennsylvania, who was charged with honest services fraud as a result of a scheme with the
borough administrator in which favors were allegedly provided in return for government
contracts. The administrator allegedly failed to disclose his interest in the business in violation of
state law.102 An issue on appeal was whether a knowledge requirement—that is, a showing that a
defendant knew that a public official’s failure to disclose would violate state law—should be
applied in cases involving a third party defendant.103 The court adopted such a requirement, but it
construed it so as not to present an “insurmountable obstacle to prosecutors.”104 Specifically, the
court stated that “it is not necessary to demonstrate that the defendant knew the fine details of an
official’s reporting requirements.”105 It further clarified that “if the evidence is sufficient for a
reasonable jury to conclude that the defendant participated in a scheme to assist a public official
in hiding a conflict of interest, and that the defendant knew that the law forbade the official from
engaging in that form of undisclosed conflict of interest, a conviction for honest services mail
fraud should be upheld.”106
In United States v. Murphy,107 a 2003 case, the Third Circuit characterized a sister circuit’s
rejection of the state law limiting principle as an outlier approach and criticized it as having
“extend[ed] the mail fraud statute beyond any reasonable bounds.”108 However, thereafter, a
majority of federal courts which considered the issue declined to adopt the principle.109 A notable
example is the opinion by the U.S. Court of Appeals for the Ninth Circuit in Weyhrauch.110
In the federal circuits in which the state law limiting principle was rejected, some applied a
“federal common law standard of good government” to determine whether a defendant’s actions
are covered by the statute.111 Even in such cases, however, the violation of state law was often

100 United States v. Gordon, 183 Fed.Appx. 202, 211 (2006) (emphasis in original).
101 572 F.3d 112 (3d Cir. 2009).
102 The administrator had purchased a truck, which he rented to local contractors, whom he had the authority to choose
for contracts with the borough. The administrator failed to disclose his income from the truck rental business on an
annual disclosure form required by the Pennsylvania Public Official and Employee Ethics Act, 65 Pa. Cons. Stat.
§ 1104(a), and he failed to disclose his interest in businesses proposing to contract with the borough and to recuse
himself from decisions regarding such contracts, as was required by the borough’s charter.
103 The court acknowledged that the issue had not arisen in Panarella because that case focused on the wrongdoing of a
public official, who was presumably aware of state disclosure requirements.
104 Carbo, 572 F.3d at 118.
105 Id.
106 Id.
107 323 F.3d 102 (3d Cir. 2003).
108 Id. at 104, 111 (characterizing the Second Circuit’s rejection of the state law limiting principle in United States v.
Margiotta, 688 F.2d 108 (2d Cir. 1982)).
109 See, e.g., United States v. Walker, 490 F.3d 1282, 1299 (11th Cir. 2007) (“an honest services mail fraud or mail
fraud conviction does not require proof of a state law violation”).
110 548 F.3d 1237 (9th Cir. 2008), cert. granted, 129 S. Ct. 2863 (2009).
111 See Michael K. Avery, Whose Rights? Why States Should Set the Parameters for Federal Honest Services Mail and
(continued...)
Congressional Research Service
14

---

Deprivation of Honest Services as a Basis for Federal Mail and Wire Fraud Convictions

viewed as relevant evidence to establish that a defendant had the requisite intent to deprive a
government or employer of its right to an official or employee’s honest services. This principle
was been demonstrated most clearly in the context of conflict-of-interest cases. For example, in
United States v. Woodward,112 the U.S. Court of Appeals for the First Circuit held that specific
intent was demonstrated by the defendant’s failure to disclose a conflict of interest which he was
required by law to disclose.
It was unclear whether courts of appeals that rejected the state law limiting principle in public
corruption cases might be willing to apply the principle in private sector honest services cases.113
Some federal courts “crafted special requirements in the limited context of honest services fraud
in the private sector.”114
Foreseeable Harm
Several federal circuit courts had adopted a “foreseeable harm” test to limit the scope of the
honest services provision.115 The U.S. Court of Appeals for the Sixth Circuit adopted the test in
United States v. Frost,116 a case involving a professors and graduate students at the University of
Tennessee who allegedly defrauded the University and government agencies in order to secure
government research contracts. It held that in order for a conviction on an honest services theory
to stand, “the prosecution must prove that the employee foresaw or reasonably should have
foreseen that his employer might suffer an economic harm as a result of [a] breach” of fiduciary
duty.117 In United States v. Vinyard,118 the U.S. Court of Appeals for the Fourth Circuit applied the
Sixth Circuit’s approach to a case involving two brothers who allegedly misrepresented their joint
venture’s relationship with one brother’s employer for the purpose of defrauding the employer.
Some courts had characterized the foreseeable harm test as an alternative to a “materiality” test,
which appears to be the same as or similar to the test for materiality applied in mail and wire
fraud cases generally.119 Both the Fourth and Sixth Circuits have asserted that the foreseeable
harm test is superior to the materiality test for two reasons: (1) its focus on a defendant’s mental
state ensures that only criminal behavior is included; and (2) it excludes what the Fourth Circuit
termed “trivial frauds”—that is, infractions that are minor but nonetheless instigate a material
change in business practices—from the scope of the honest services fraud statute.120

(...continued)
Wire Fraud Prosecutions, 49 B.C.L. Rev. 1431 (2008).
112 149 F.3d 46 (1st Cir. 1998).
113 See, e.g., Id. at 1245 n. 5 (“Although we reject the state law limiting principle in the context of honest services
prosecutions of public officials, we express no opinion on the role of state law in honest services fraud prosecutions in
the private context.”) (emphasis in original).
114 United States v. Sorich, 523 F.3d 702, 708 (7th Cir. 2008).
115 See, e.g., United States v. Vinyard, 266 F.3d 320 (4th Cir. 2001), cert. denied, 536 U.S. 922 (2002) ; United States v.
Sun-Diamond Growers, 138 F.3d 961 (D.C. Cir. 1998).
116 125 F.3d 346 (6th Cir. 1997).
117 Id. at 368.
118 266 F.3d 320 (4th Cir. 2001), cert. denied, 536 U.S. 922 (2002).
119 See, e.g., United States v. Vinyard, 266 F.3d 320, 327 (4th Cir. 2001).
120 See Frost, 125 F.3d at 368-69; Vinyard, 266 F.3d at 328-29.
Congressional Research Service
15

---

Deprivation of Honest Services as a Basis for Federal Mail and Wire Fraud Convictions

Courts’ formulations of the foreseeable harm test have varied somewhat.121 However, the most
common approach appears to integrate the test within an examination of a defendant’s mental
state. A representative articulation requires “that the defendant was at least reckless as to the
likelihood that his breach of the duty of honest services would harm the party to whom the duty is
owed.”122
Although some judicial opinions suggested that the foreseeable harm test applied only in private
sector cases,123 some suggested that the test was to be employed in all honest services cases.124 In
the private sector cases in which it was applied, the “harm” contemplated by the test was
generally characterized as harm to economic or property interests.125 However, “property” in this
context was been interpreted to include confidential information such as trade secrets.126
Some of the courts of appeals had explicitly rejected the foreseeable harm test.127 Most notably,
the U.S. Court of Appeals for the Seventh Circuit joined this latter group in Black.
Cases in Which the Supreme Court Granted
Certiorari
The United States Supreme Court heard argument in the honest services cases of Weyhrauch v.
United States,128 Black v. United States,129 and Skilling v. United States,130 in its 2009 term. In
their petitions for review, some appellants argued that the honest services statute was
unconstitutionally vague.131 Although, as mentioned, Justice Scalia had signaled some willingness

121 See Andrew B. Matheson, A Critique of United States v. Rybicki: Why Foreseeable Harm Should Be an Aspect of
the Mens Rea of Honest Services Fraud, 28 Am. J. Trial Advoc. 355 (2004-2005) (asserting that some courts have
employed a foreseeable harm test as part of a mens rea requirement, whereas others, by introducing an element of
“reasonableness” to the foreseeable harm requirement, appear to require foreseeable harm as an element of actus reus).
122 Id. at 357.
123 See, e.g., Vinyard, 266 F.3d at 327-328 (describing the foreseeable harm test as its approach “in the private
employment context”); United States v. Martin, 228 F.3d 1, 17 (1st Cir. 2000) (characterizing the foreseeable harm test
as a court-imposed limit on the honest services statute in cases involving alleged frauds by employees against their
employers).
124 See, e.g., Matheson, 28 Am. J. Trial Advoc. 355.
125 See, e.g., Defendants’ Petition for a Writ of Certiorari at 19, Black v. United States, No. 08-876 (Jan. 9, 2009)
(“Nearly half of the federal courts of appeals that have addressed [the honest services statute] in the private sector
context have concluded that the statute requires proof that the defendant intended, or at least reasonably could have
foreseen, that the scheme would cause economic or property harm to the victim.”).
126 See Martin, 228 F.3d at 16 (requiring that “either some articulable harm must befall the [corporation or other entity]
as a result of the defendant’s activities, or some gainful use must be intended by the [employee]”).
127 See, e.g., United States v. Brown, 459 F.3d 509 (5th Cir. 2006); United States v. Welch, 327 F.3d 1081 (10th Cir.
2003).
128 129 S. Ct. 2863 (2009).
129 129 S. Ct. 2379 (2009).
130 No. 08-1394, 2009 U.S. LEXIS 7359 (Oct. 13, 2009).
131 See Petition for a Writ of Certiorari, Skilling v. United States, No. 08-1394 (filed May 11, 2009); Petition for a Writ
of Certiorari, Weyhrauch v. United States, No. 08-1196 (filed Mar. 25, 2009).
Congressional Research Service
16

---

Deprivation of Honest Services as a Basis for Federal Mail and Wire Fraud Convictions

to consider that issue,132 a majority of the Court ultimately decided to construe the statute
narrowly in order to avoid due process vagueness concerns.
United States v. Skilling
The Supreme Court used Skilling for its principal decision; it issued a separate confirming
opinion in Black; and ordered Weyhrauch returned to the lower courts for disposition consistent
with its Skilling opinion. Six members of the Court joined in Justice Ginsburg’s majority opinion
which limited honest services mail and wire fraud to those cases that involve either bribery or
kickbacks; the other three members of the Court would have found the honest services definition
unconstitutionally vague.
In the lower court, the U.S. Court of Appeals for the Fifth Circuit upheld the conviction of former
Enron executive Jeffrey Skilling.133 As Enron’s former Chief Operating Officer and former Chief
Executive Officer, Skilling was convicted of engaging in a conspiracy to overstate the company’s
financial position in order to artificially inflate the company’s short-run stock price. Before the
Fifth Circuit, Skilling argued that his actions did not breach his fiduciary duty to Enron, because
he had acted in the company’s interest. The court of appeals rejected that argument, primarily
because it appeared that Enron had not approved the deceptive measures taken by Skilling. The
court clarified that where an employer did not sanction a fraudulent scheme, a defendant may be
found to have violated an underlying state law fiduciary duty even if he purports to have acted in
his employer’s best interest.134
In his petition for certiorari, Skilling argued that the Supreme Court should adopt the “private
gain” test to limit the scope of the statute, and that without such a construction, the statute is
unconstitutionally vague.135 As conceived by the Seventh Circuit in Bloom and Thompson, the
private gain test appeared to require an illicit intended gain or a gain otherwise outside of normal
channels of compensation.136 Skilling’s argument was that “there is no allegation ... that Skilling
sought to advance private interests instead of Enron’s,” and any gain he received was through
proper channels and thus would not qualify as “private gain” under the Seventh Circuit’s test.137
The Supreme Court neither endorsed the private gain test nor found the honest services statute
unconstitutionally vague. Instead, it determined, as it announced at the outset of its opinion, that,
“[i]n proscribing fraudulent deprivations of ‘the intangible right to honest services,’ §1346,
Congress intended at least to reach schemes to defraud involving bribes and kickbacks.
Construing the honest-services statute to extend beyond that core meaning . . . would encounter a
vagueness shoal.”138

132 Sorich v. United States, 129 S. Ct. 1308 (2009) (Scalia, J., dissenting from the denial of certiorari).
133 United States v. Skilling, 554 F.3d 529 (5th Cir. 2009), rev’d and rem’d , 78 U.S.L.W. 4735 (U.S. June 24, 2010).
134 Id. at 545-47.
135 Petition for a Writ of Certiorari, Skilling v. United States, No. 08-1394 (filed May 11, 2009).
136 See discussion of the private gain test, supra.
137 See Petition for a Writ of Certiorari at 20-21.
138 78 U.S.L.W. at 4738.
Congressional Research Service
17

---

Deprivation of Honest Services as a Basis for Federal Mail and Wire Fraud Convictions

Beginning in the mid-nineteenth century, the Court observed, an intangible honest services theory
of fraud had gained some acceptance among the lower federal courts.139 In 1987, however, the
Court “stopped the development of the intangible-rights doctrine in its tracks” with McNally v.
United States.140 Concerned about the “ambiguous” nature of the doctrine and its implications for
federal-state relations, the Court in McNally confined the mail and wire fraud statutes to the
prosecution of schemes designed to deprive victims of money or other property, not merely
honest services.141
“Congress responded swiftly” with the honest services statute which provides that, “For purposes
of th[e] chapter [of the United State Code that prohibits, inter alia, mail fraud, §1341, and wire
fraud §1343], the term ‘scheme or artifice to defraud’ includes a scheme or artifice to deprive
another of the intangible right of honest services.”142
The Court in Skilling declined to find the honest services statute unconstitutionally vague. It
looked rather to pre-McNally cases to ascertain how to accommodate Congress’s intent with the
amorphous wording of the statute.143 There it found the bribery and kickback fraud cases the most
common and most consistently applied, and concluded that “[c]onfined to these paramount
applications, §1346 presents no vagueness problem.”144 Beyond those cases, however, the Court
found the chaos and uncertainty incompatible with due process.145
The government urged that the third most common among the pre-McNally fraud cases—the self-
dealing-conflicts-of-interest (private gain) cases—be admitted to the fold. This, the Court rejected
in light of splits among the pre-McNally lower federal courts and in the interests of lenity (i.e.,
when a criminal statute admits to two interpretations, the more lenient should prevail).146
Congress might of course include this category of offenses within the definition of honest
services, but the Court recommended that it do so with care:

139 Id. at 4747.
140 Id. at 4747-748.
141 Id. at 4748.
142 Id. quoting 18 U.S.C. 1346 (parentheticals of the Court).
143 Id. (“We agree that §1346 should be construed rather than invalidated [grounds of vagueness]. First, we look to the
doctrine developed in the pre-McNally cases in an endeavor to ascertain the meaning of the phrase ‘intangible right o
honest services.’ Second, to preserve what Congress certainly intended the statute to cover, we pare that body of
precedent down to its core”).
144 Id.
145 Id. at 4749-750(emphasis of the Court)(“[H]onest services decisions preceding McNally were not models of clarity
or consistency. . . . While the honest-services cases preceding McNally dominantly and consistently applied the fraud
statute to bribery and kickback schemes—schemes that were the basis for most honest-services prosecutions—there
was considerable disarray over the statute’s application to conduct outside that core category. . . . In view of this
history, there is no doubt that Congress intended §1346 tor each at least bribes and kickbacks. Reading the statute to
proscribe a wider range of offensive conduct, we acknowledge , would raise the due process concerns underlying the
vagueness doctrine”).
146 Id. at 4750 (internal citations omitted)(“Nor are we persuaded that the pre-McNally conflict-of-interests cases
constitute core applications of the honest-services doctrine. Although the Courts of Appeals upheld honest-services
convictions for some schemes of non-disclosure and concealment of material information, they reached no consensus
on which schemes qualified. In light of the relative infrequency of conflict-of-interest prosecutions in comparison to
bribery and kickback charges, and the intercircuit inconsistencies they produced, we conclude that a reasonable limiting
construction of §1346 must exclude this amorphous category of cases. Further dispelling doubt on this point is the
familiar principle that ‘ambiguity concerning the ambit of criminal statutes should be resolved in favor of lenity’”).
Congressional Research Service
18

---

Deprivation of Honest Services as a Basis for Federal Mail and Wire Fraud Convictions

If Congress desires to go further, we reiterate, it must speak more clearly than it has” If
Congress were to take up the enterprise of criminalizing undisclosed self-dealing by a public
official or private employee, it would have to employ standards of sufficient definiteness and
specificity to overcome due process concerns. The Government proposes a standard that
prohibits 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, so long as the employee acts with a specific intent to deceive and the
undisclosed conduct could influence the victim to change its behavior. That formulation,
however, leaves many questions unanswered. How direct or significant does the conflicting
financial interest have to be? To what extent does the official action have to further that
interest in order to amount to fraud? To whom should the disclosure be made and what
information should it convey? These questions and others call for particular care in
attempting to formulate an adequate criminal prohibition in this context.147
As for Skilling himself, it was clear to the Court that the conduct with which he was charged and
for which he was convicted did not constitute honest services fraud as construed by the Court. It
left for the lower courts the question of whether this tainted his conviction on other grounds.148
Skilling raised a second constitutional issue—namely, that pre-trial publicity made Skilling’s trial
presumptively unfair.149 Here, the Court affirmed the holding of the lower court.150 The Court felt
the trial court committed no error when it denied Skilling’s motion for a change of venue given
the steps it took to ensure selection of an impartial panel.151 Nor, the Court concluded, did actual
prejudice taint the jury that convicted Skilling.152 Justices Sotomayor, Stevens, and Breyer
contended that the trial court’s voir dire of prospective jurors should have been more thorough
and accordingly dissented from that portion of the opinion.153
United States v. Black
The Court’s Skilling construction of the honest services statute doomed the jury instructions in
Black’s honest services case as well. The Court wrote a second opinion, however, to address a
separate issue raised there. The Seventh Circuit had held that Black forfeited his right to
challenge the erroneous honest services jury instruction when he objected to separate jury
verdicts on the government’s alternate honest services fraud and money or property fraud
theories.154 Not so, ruled the Supreme Court. “[B]y properly objecting to the honest-services jury

147 Id. & n.45 (internal quotation marks citations omitted).
148 Id. at 4751 (internal quotation marks and citations omitted) (“Because the indictment alleged three objects of the
conspiracy—honest-services wire fraud, money-or-property wire fraud, and securities fraud—Skilling’s conviction is
flawed. . . . The parties vigorously dispute whether the error was harmless. . . . Whether potential reversal on the
conspiracy count touches any of Skilling’s other convictions is also an open question. All of his convictions, Skilling
contends, hinged on the conspiracy count and, like dominoes, must fall if it falls. The District Court, deciding Skilling’s
motion for bail pending appeal, found this argument dubious, but the Fifth Circuit had no occasion to rule on it”).
149 See, e.g., Tony Mauro, Court Grants Jeff Skilling Appeal, The Blog of Legal Times (Oct. 13, 2009).
150 Id. at 4747. The question occasioned a realignment of the Court, however. Justices Scalia, Thomas and Kennedy,
who dissented on the honest services question, endorsed Justice Ginsburg’s opinion for the Court. Justices Sotomayor,
Stevens, and Breyer, who endorsed the honest services portion of the opinion for the Court, dissented on the pre-trial
publicity question.
151 Id. at 4743.
152 Id. at 4747.
153 Id. at 4755.
154 United States v. Black, 530 F.3d 596, 603 (7th Cir. 2008), vac’d and rem’d, 78 U.S.L.W. 3732 (U.S. June 24, 2010).
Congressional Research Service
19

---

Deprivation of Honest Services as a Basis for Federal Mail and Wire Fraud Convictions

instructions at trial, Defendants secured their right to challenge those instructions on appeal. They
did not forfeit that right by declining to acquiesce in the Government-proposed special-verdict
forms.”155
Black afforded the Supreme Court an opportunity to pass on the foreseeable harm limitation on
the honest services statute. The defendants were executives of a publicly held corporation,
Hollinger International, Inc. They were also majority stockholders in an Canadian private
corporation, Ravelston Corp. Ltd., which in turn held a controlling interest in Hollinger. Rather
than receive their compensation from Hollinger directly, the executives were paid by Ravelston
out of management fees that Ravelston charged Hollinger. In order to take greater advantage of
Canadian tax laws, the executives arranged for, and were compensated from, non-compete
agreements between themselves and a Hollinger subsidiary. There was a factual dispute regarding
the extent to which Hollinger’s board had knowledge of this arrangement. The defendants argued
that the board had been aware of the deal and that the payments they received constituted
legitimate compensation for the do-not-compete agreements. In contrast, the government alleged
that the do-not-compete payments were actually management payments received without
corporate approval.
The defendants urged the court to adopt the foreseeable harm test. They argued that their
convictions would fail under that test because they had arranged for the do-not-compete
agreements in order to take advantage of a favorable Canadian tax ruling rather than to harm their
employer corporation. However, the Seventh Circuit rejected the test, which it characterized as an
argument equivalent to “no harm, no foul.”156 Instead, the court applied the private gain test.
Thus, it focused on whether the defendants intended to reap a private gain by fraudulent means.
Affirming a jury instruction which relied on the private gain test, the court upheld the defendants’
convictions. Skilling established that the Seventh Circuit’s ruling on the honest services jury
instruction was clearly wrong.157 The Court left for the lower courts the determination of whether
the error was harmless or warranted overturning the convictions of the Black defendants and
ordering a new trial.158
United States v. Weyhrauch
Weyhrauch presented only a honest services issue and consequently the Court simply returned it
to the lower court with instructions to dispose of the case in manner consistent with the Court’s
opinion in Skilling. In United States v. Weyhrauch,159 the U.S. Court of Appeals for the Ninth
Circuit had declined to adopt the state law limiting principle. The defendant was an Alaska state
legislator who allegedly failed to disclose a conflict of interest regarding his relationship with an
oil company prior to his vote on a bill addressing the taxation of oil production. At trial, federal
prosecutors sought to introduce legislative ethics publications which recommend that such
conflicts be disclosed, together with evidence suggesting that Alaskan legislators customarily
disclose them. However, there was no evidence that the defendant had violated any state statute.
The question on appeal was whether a mail fraud conviction on an honest services theory

155 Black v. United States, 78 U.S.L.W. at 4735.
156 United States v. Black, 530 F.3d at 600.
157 Black v. United States, 78 U.S.L.W. at 4735 .
158 Id.
159 548 F.3d 1237 (9th Cir. 2008), vac’d and rem’d, 78 U.S.L.W. 4766 (U.S. June 24, 2010).
Congressional Research Service
20

---

Deprivation of Honest Services as a Basis for Federal Mail and Wire Fraud Convictions

required a showing that a defendant’s actions violated state law. The court of appeals found that
no evidence in the statutory text or the legislative history indicated a congressional intent to limit
the honest services statute to only those cases that involve a breach of a state-law duty. It also
emphasized that Congress has sufficient constitutional authority to regulate and punish the use of
mail and interstate wire communications when they are used for fraudulent purposes and that the
circuit had “never limited the reach of the federal fraud statutes only to conduct that violates state
law.”160 In his petition for certiorari to the Supreme Court, Weyhrauch argued, in part, that as
interpreted by the Ninth Circuit, the honest services statute allows a federal common law basis for
conviction in conflict with principles of federalism.161
Conclusion
Skilling holds that an honest services fraud prosecution must involve bribery or a kickback.
Congress may prefer more expansive coverage, modeled perhaps after one of the standards
previously suggested by the lower courts. If so, the Court recommends that Congress speak with
clarity and precision.

Author Contact Information

Charles Doyle

Senior Specialist in American Public Law
cdoyle@crs.loc.gov, 7-6968



160 Id. at 1245.
161 Petition for a Writ of Certiorari, Weyhrauch v. United States, No. 08-1196 (filed Mar. 25, 2009).
Congressional Research Service
21

---