The Supreme Court on Thursday overturned two convictions for fraud during the administration of New York Governor Andrew M. Cuomo, with prosecutors facing the latest in a series of setbacks in their attempts to pursue federal charges of public corruption in the state government.
The cases were among the blockbuster public corruption prosecutions brought by Preet Bharara, the former U.S. Attorney for the Southern District of New York, which fueled Albany’s reputation as a cesspool of corruption.
A case Joseph Percoco, a former assistant to Mr. Cuomo, was convicted of taking illegal payments to a developer in Syracuse.
The other implicated Louis Ciminelli, the owner of a Buffalo construction company convicted of fraud in a bidding scandal related to Buffalo Bill, a development project championed by Mr. Cuomo, a Democrat.
The question in the first, Percoco v. United States, No. 21-1158, was whether Mr. Percoco could be prosecuted under a federal law that makes it a crime to deprive the government of “honest services” for conduct that took place after he stepped down from his official position to head the governor’s reelection campaign in 2014.
Mr. Percoco was a former campaign manager and longtime confidant of Mr. Cuomo. They were so close that the former governor compared him to a brother.
In 2018, Mr. Percoco was convicted of several crimes, including soliciting and accepting more than $300,000 from executives of two state-owned companies in exchange for taking official actions on their behalf.
Mr Percoco’s lawyers argued that the Honest Services Act only applies to people exercising government authority, a power they said he did not have when he received the payments. Prosecutors said the distinction was artificial.
Mr. Percoco returned to government about eight months after his departure, following Mr. Cuomo’s re-election.
Justice Samuel A. Alito Jr. wrote for seven members of the court, saying the jury’s instructions in the case were flawed and that an appeals court would have to review the case.
The jury was told they could convict Mr Percoco of honest services fraud while he was a private individual, if “he dominated and controlled government affairs” or if “people who worked in government actually relied on him because of a special relationship that he had with the government.”
The instructions were too broad and vague, Judge Alito wrote, because they could apply to people who are no longer in government and were influential only because of their long careers.
“Some of these individuals have been reviled,” he wrote. “Others were respected as wise counselors.”
The jury’s instructions, he wrote, “could be said to apply to many who fell into both camps. It can also be used to charge particularly well-connected and effective lobbyists.”
Still, Judge Alito wrote that some of Mr. Percoco “going too wide”.
“We reject the argument that a person who nominally does not hold a public job can never have due fiduciary duty to the public,” Judge Alito wrote. “Without becoming a government employee, individuals who are not formally employed by a government agency may enter into agreements that effectively make them agents of the government.”
Mr Percoco had urged judges to overturn two other convictions in a separate plan, saying there had been “adverse spillovers” from the honest services charge. Justice Alito said the Supreme Court would not hear the argument and let the other convictions stand.
In a concurring opinion, Judge Neil M. Gorsuch, joined by Judge Clarence Thomas, said the court should have gone further and defined exactly when a duty to provide “honest services” arose.
Yaakov Roth, a lawyer for Mr Percoco, welcomed the ruling. “The Supreme Court has issued a unanimous opinion that the government should not use vague fraud statutes to advance new and sweeping theories in prosecuting political actors,” Mr Roth said in a statement.
A spokesman for the Southern District of New York declined to comment.
Daniel C. Richman, a Columbia law professor and former federal prosecutor, said the court’s decision was the latest in a series of rulings expressing skepticism about federal efforts to impose ethical standards on state officials. “As in so many of its other corruption cases,” he said, “the court acted to prevent federal criminal law from reaching the ‘politics as usual,’ defined here as shadowy figures who wield significant influence over government decisions without any formal power or responsibility to the public.”
The second case, Ciminelli v. United States, No. 21-1170, involved what prosecutors said was a conspiracy to commit wire fraud by matching requests for proposals for work on the Buffalo development with qualifications that would ensure that the contracts to Mr Ciminelli’s company.
Mr. Ciminelli, a developer and donor to Mr. Cuomo’s campaigns, was prosecuted for his role in a scheme to manipulate bids for contracts awarded for the state’s economic development project that targeted an investment of $1 billion in Buffalo. The project was the target of federal investigations that led to the arrest of several officials and government contractors.
The prosecutors’ legal theory was that Mr. Ciminelli committed fraud by depriving the government of its “right to control” the use of its assets by not disclosing potentially valuable information.
But by the time the case reached the Supreme Court, the government had rejected the theory. That made for an uncomfortable argument when the judges heard the case in November, one focused on how and how badly the government would lose.
Judge Thomas, writing for the court, said bluntly that “the right-to-control theory is invalid,” and sent the case back to the appeals court for further proceedings.
“Because the theory considers mere information as the protected interest, almost any deceptive act can be criminal,” he wrote.
Professor Richman said the decision would have “wide-reaching implications” given that the underlying theory was one that prosecutors and lower courts had turned to in a range of cases, including those involving “lies about student-athletes’ compliance with the NCAA rules against ammunition buyers who lie to sellers about complying with arms export control laws.
An attorney for Mr. Ciminelli, Michael R. Dreeben, praised the court’s decision. “We welcome the Supreme Court’s unanimous finding today that the government’s theory of Louis Ciminelli’s prosecution was invalid, root and branch,” he said in a statement.
The judges do not always divide along the usual lines in public corruption cases. court in 2020 unanimously destroyed the convictions of two defendants in the so-called Bridgegate scandal, in which associates of New Jersey Republican governor Chris Christie closed access roads to the George Washington Bridge in 2013 to punish one of the governor’s political opponents. That was abuse of power, the court ruled, but not a federal crime.
So did the court in 2016 unanimously destroyed the conviction of Bob McDonnell, a former Republican governor of Virginia who accepted luxury goods, loans and vacations from a businessman. Chief Justice John G. Roberts Jr., writing for the court, narrowed the definition of what kind of conduct can serve as a basis for prosecution of corruption.
He said only formal and concrete government action counted. In contrast, what Mr. McDonnell had done, the Chief Justice wrote, was to arrange meetings for and attend events with his benefactor.
The rulings on Thursday marked the latest turning point for a state capitol long defined by its scandal-ridden history of public corruption that led to the convictions of once-powerful Albany legislative leaders.
But enforcing some of those convictions has proven difficult under a Supreme Court that has cracked down on abuses of public trust. Sheldon Silver, the former Speaker of the State Assembly, was imprisoned for nearly five years after being arrested in 2015 and convicted twice on corruption charges. After a series of overturned convictions, Mr Silver was finally sentenced in 2020 to more than six years in prison. Mr Silver, a Democrat, died last year at the age of 77 while serving his sentence.
In a separate case, Dean G. Skelos, the former Senate Republican Majority Leader, was also arrested on federal corruption charges a few months after Mr. Silver in 2015. But in 2017, shortly after the Supreme Court heard Mr. McDonnell’s case had destroyed. conviction in Virginia, Mr. Skelos’ conviction was vacated on appeal. Like Mr. Silver, he was retried, convicted and sentenced to prison.