What is Honest Services Fraud?

Bribery involved in honest services fraudWith the current news cycle covering the “college admissions scandal” a somewhat obscure term has been introduced into our collective water cooler chat in recent months: honest services fraud. Let’s take a look at what honest services is and a bit about what the fraud charges in these cases mean.

In March of this year, United State federal prosecutors revealed an investigation into, and indictments of, at least 50 people (so far) accused of criminal conspiracy to influence the admission of students to a number of prominent universities in the U.S. At this time thirty-three parents of college applicants, coaches or admission test administrators have been charged with paying more than $25 million to Rick Singer, a Newport Beach based college admission consultant and businessman who helped college-bound students get accepted into elite universities. More indictments are expected to come in the on-going investigation.

Mr. Singer pleaded guilty to fraud, money laundering, and obstruction of justice charges in federal court in March. He admitting he had bribed SAT and ACT test administrators to correct student answers to attain “guaranteed” scores, and college coaches to certify that certain students had been recruited for schools sports teams when they had not. He also admitted to falsifying student biographies and doctoring images used in college admissions documents. Much of the money paid to Mr. Singer by parents was paid through a nonprofit foundation Mr. Singer’s associates controlled.

Honest Services Fraud

Although each of the 50 cases is unique, and overall the criminal charges are complex, nearly all of the cases involve a charge of “honest services fraud.”

The concept of “honest services” is that an individual or entity owes to another a duty to render services honestly. Typically there is some type of service or duty to act for the benefit of someone else.

Honest services fraud is a type of mail (or wire) fraud defined in federal statute as “scheme or artifice to deprive another of the intangible right of honest services.” Within the statute there is no exact definition of honest services. The statute is vague, and has left it open for the courts to interpret. The Supreme Court has most recently interpreted the statute to cover “fraudulent schemes to deprive another of honest services through bribes or kickbacks supplied by a third party.”

In general, to be guilty of honest services fraud, prosecutors must show that:

  • a duty of honest services was owed to someone;
  • mail or wire fraud was committed as part of the execution the scheme;
  • there was a bribe or kickback involved;
  • there was intent to deceive for the purpose of personal gain;
  • someone was harmed by the transaction.

Honest services fraud is a broad tool prosecutors use to charge corruption offenses in both public and private arenas. The federal mail and wire fraud statute that defines honest services fraud, 18 U.S.C. § 1346, has had its share of legal controversy in the courts. In these recent charges we will likely see the courts grappling with exactly what fits into the definition of honest services fraud.

These cases will be newsworthy for a long while as court verdicts, rulings and opinions will continue to test the limits and application of the statute in each individual case.

Many of the cases will undoubtedly raise legal and legislative implications that the legal and law enforcement community will be discussing and debating for years to come.

Conviction on honest services fraud charges can result in a federal prison sentence of up to 20 years and a fine of up to $250,000 for individuals.

 

Jeremy N. Goldman is a distinguished criminal defense attorney and trial lawyer.   He has a more than 20-year track record of successfully defending violent crime cases, often getting charges dismissed or winning acquittals after jury trial. He is a certified specialist in criminal law by the California State Board of Legal Specialization. He is available to consult with you at no charge on any criminal matter. Contact his law offices at (800) 349-1619 today or online here.

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