Criminal Justice Insider

In an unsurprising decision released on May 7, 2020, the Supreme Court has further limited the application of the fraud statutes in the political arenas. In Kelly v. United States, No. 18-1059, a unanimous Supreme Court overturned the convictions of Bridget Ann Kelly and William Baroni for their role in the infamous “Bridgegate” scandal.

The Supreme Court has been notoriously hard on the federal government for its attempts to root out political corruption using the fraud statutes. Political corruption schemes do not easily fit into the basic elements of fraud, which outlaws attempts to obtain money or property by means of deception. Political corruption often seeks benefits that are intangible, and not exclusively monetary, and the victim of the alleged fraud is sometimes unclear. Moreover, there can be a thin line between political maneuvering and criminally dishonest governmental conduct. For these reasons, the Supreme Court has loathe to extend the reach of the fraud statutes, and by extension the criminal jurisdiction of the federal government, as a means of regulating state and local governmental disclosure and best practices. The convictions of Ms. Kelly and Mr. Baroni treaded the thin line between bad political behavior and criminal conduct.

By way of background, Ms. Kelly and Mr. Baroni, members of the reelection campaign of former NJ Governor Chris Christie. participated in a scheme to punish the mayor of Fort Lee, NJ for his failure to support the Mr. Christie’s campaign. Specifically, Mr. Baroni and Ms. Kelly limited traffic access to the George Washington Bridge under the guise of a “traffic study” causing gridlock throughout Fort Lee for four days. After the scheme was uncovered, Mr. Baroni and Ms. Kelly were convicted of wire fraud and fraud on a federally funded program or entity. The conviction was upheld by the Court of Appeals for the Third Circuit.

Oral argument is generally a poor predictor of an outcome. However, in this particular case, it was particularly prescient. At argument, the Justices of the Supreme Court seemed skeptical of the Government’s position from the outset. The Court specifically questioned whether the purpose of the scheme was to obtain property or whether was to simply cause political problems for the mayor of Fort Lee. The latter would be dishonest and corrupt, but not criminal.

Accordingly, it came as no surprise when the decision, authored by Justice Kagan, focused on exactly this point in overturning the fraud convictions. The Supreme Court found that the primary aim of the scheme was not to obtain money or property, but rather to sow disruption in Fort Lee, and that Mr. Baroni and Ms. Kelly did, in fact, commandeer part of the George Washington Bridge was not sufficient to sustain the conviction. This taking was only incidental to the scheme, not the aim of the scheme. Had there been another way to cause traffic problem without the George Washington Bridge, they would have done so. Similarly, the fact that the Port Authority lost money and the right to control its employees’ time and labor during the scheme, was incidental to, and not the object of, the fraud.

The Supreme Court noted that it has consistently interpreted the fraud statutes narrowly when it comes to the political arena in an effort to avoid allowing federal prosecutors to use the fraud statutes “to set standards of disclosure and good government for local and state officials.” The Court does not wish to allow the federal government to use the criminal law to enforce its own views of integrity at the state and local level. If federal prosecutors could simply point to an incidental loss of money or property, it would constitute an end-run around this proscription, and allow for the very expansion of federal power that the doctrine is designed to avoid. Accordingly, the Court found that the loss of property or money must be the object of the scheme, and in “Bridgegate,” such losses were only incidental. Such losses were thus insufficient to support the fraud convictions. While the conduct by Ms. Kelly and Mr. Baroni in “Bridgegate” represented was “wrongdoing – deception, corruption and abuse of power…,” it was not criminal.

This decision represents the latest in a continuing trend of narrowing the reach of the fraud statutes to avoid their use as a means of federal government oversight over a wide variety of political conduct. Starting with U.S. v. McNally, 483 U.S. 350 (1987), continuing through Cleveland v. United States, 51 U.S. 12 (2000), and as recently as 2010 in U.S. v. Skilling, 561 U.S. 358 (2010), the Supreme Court has balked at broadly extending the reach of the fraud statutes into the political arena. We expect more such opinions going forward.

For more information on the topic discussed, contact:

• Adam M. Felsenstein  |  felsenstein@thsh.com  |  212-508-7533