Wednesday, June 26, 2013

Supremes Strike Down the Government's Attempt to Stretch The Hobbs Act

In Sekhar v. United States, the Supreme Court looked at the question of "whether attempting to compel a person to recommend that his employer approve an investment constitutes 'the obtaining of property from another' under 18 U.S.C. s 1951(b)(2),"  the Hobbs Act.  The Hobbs Act has been a statute of choice for federal prosecutors in many white collar cases.  Its heavy penalty provisions offer increased sentence posibilities when the defendant knowingly and willfully induced someone to part with property by extorionate means and there has been interstate commerce. 

In Sekhar, the issue arose from an alleged threat to disclose an alleged affair following a general counsel's written recommendation to a state comptroller not to invest in a fund. Although the jury form offered three options of the possible property of the attempted extortion, the jury selected only the third option - "the General Counsel's recommendation to approve the Commitment." The Supreme Court reversed the Second Circuit finding that this was not extortion.

The Court issued an unanimous holding with three concurrences.  Justice Scalia, writing for the Court, stated that:

"As far as is known, no case predating the Hobbs Act - English, federal, or state - ever identified conduct such as that charged here as extiotionate.  Extortion required the obtaining of items of value, typically cash, from the victim."

 The opinion provides a wonderful history of the Hobbs Act, and highlights how "extortion" requires "obtaining property from another." The Court holds that "[t]he property extorted must therefore be transferable - that is, capable of passing from one person to another." Finding that the alleged property fails here, the Court reverses the convictions. The Court also goes on to say that you need "something of value." The Court states:

"The principle announced there [referencing its prior opinion in Scheidler] - that a defendant must pursue something of value from the victim that can be exercised, transferred, or sold - applies with equal force here. Whether one considers the personal right at issue to be property in a broad sense or not, it certainly was not obtainable property under the Hobbs Act." (footnotes omitted).

Citing to the prior decision in Cleveland, the Court holds that "an employee's yet-to-be-issued recommendation" is not obtainable property. Intangible property is not enough, it must be "obtainable property."

The Court emphasizes that coercion is not extortion, and Congress has not criminalized coercion in the Hobbs Act.

The three-person concurrence (Justices Alito, Kennedy, and Sotomayor), focuses on property and tries to limit the decision by saying that this case is an "outlier and that the jury's verdict stretches the concept of property beyond the breaking point." They reference the rule of lenity and although this concurrence agrees that Congress did not "classify internal recommendations pertaining to government decisions as property," they leave open the possibility that the government could perhaps have prosecuted "under some other theory."

My Commentary -  

Bottom line - the government stretched the statute and they were caught.

This decision offers defense counsel strong arguments and requests for instructions in Hobbs Act cases.  Limiting the definition of property to "obtainable property" and requiring a clear definition of when "something is of value" are likely to be requests coming from defense counsel in the future.

My advice to the government - -  there is real crime out there, please put our valuable resources into prosecuting it! 

(esp)  

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Comments

"My advice to the government - - there is real crime out there, please put our valuable resources into prosecuting it!"

Evidently, these facts could have resulted in conviction of a "real crime," indeed, a Hobbs Act violation. Justice Alito states in his concurrence: "This is not to say that the Government could not have prosecuted petitioner for extortion on these same facts under some other theory."

The problem here appears to have been the answer to the interrogatory of the jury that specified the property as "the General Counsel's recommendation to approve the Commitment," rather than the Commitment or the approval of the Commitment itself. Suggesting that the Government was not prosecuting "real crime" seems a bit hyperbolic.

Posted by: Guest | Jun 27, 2013 8:30:02 AM

A basic question here, especialy given the reliance in part on fraud cases in discussin gproperty, is whether Sekhar calls into question the prosecution for fraud in cases invoving "intangible property" "intangible rights" which are not "transferrable" or "obtainable" in some way. Or do we have two types of "property" under federal criminal law?

Posted by: Mark Mahoney | Oct 3, 2013 10:51:10 AM

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