Prosecutors Likely To Have Fewer Tools After Upcoming High Court Rulings

Michael J. McCarthy, a former assistant DA in Manhattan now with the Kendall Brill & Kelly firm, anticipates two upcoming U.S. Supreme Court decisions weakening prosecutors in the areas of wire fraud and honest-services fraud, two related federal criminal statutes. The cases are Ciminelli v. United States and Percoco v. United States. In Ciminelli the petitioner was a CEO convicted of wire fraud for working with state insiders to obtain development contracts. Under the “right to control” doctrine accepted in some circuits, property can include potentially valuable economic information. The Government argued that the undisclosed information that the executive had obtained with inside assistance was property. Justices on both sides of the polarized Court seemed skeptical. Kagan remarked that she was surprised the prosecution had not pursued a more traditional argument that the state was deprived of its contract money. In Percoco, the Justices were wary of a proposed “functional government employee test.” Ciminelli will have the most immediate impact. Charges such as bid rigging, will be harder to prove if the Court rules for the petitioner. According to McCarthy, “the message of this Court has become clearer with each decision: ‘not every corrupt act . . . is a federal crime.’”