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Honest services fraud is a federal crime that arises when someone abuses a position of trust for personal gain, typically through bribery or kickbacks. Codified under 18 U.S.C. § 1346, this law expands traditional mail and wire fraud statutes to include schemes that deprive others of the “intangible right of honest services.”
Added to the federal mail and wire fraud statute by Congress in 1988, this statute was designed to combat public corruption and breaches of fiduciary duty. In simple terms, it allows federal prosecutors to charge individuals not just for taking money or property, but for engaging in dishonest conduct that violates a duty of loyalty owed to the public, an employer, or another entity.
What Does “Honest Services” Mean?
Honest services refer to the expectation that individuals in positions of trust act in the best interests of those they serve. This includes public officials, corporate executives, and private employees who owe fiduciary duties. Fiduciary duties being legal obligations to act for the benefit of another party. When someone violates that duty by accepting bribes or kickbacks, they may be charged with honest services fraud.
Importantly, the law has been narrowed by case law. The Supreme Court has clarified that honest services fraud must involve bribery or kickback schemes. It does not apply to mere conflicts of interest or poor decision-making.
Key Elements of Honest Services Fraud
To secure a conviction, federal prosecutors must prove several elements beyond a reasonable doubt:
- A scheme or plan existed to defraud another of honest services
- The defendant knowingly and willfully participated in that scheme
- The scheme involved a bribe or kickback
- Mail, phone, or electronic communications were used to carry out the scheme
Additionally, there are typically three parties involved:
- A person offering a bribe or kickback
- A person accepting it
- A victim who is deprived of honest services as a result
Because these cases often rely on intent and circumstantial evidence, they can be complex and aggressively prosecuted. This is why speaking with an experienced Honest Services Fraud defense attorney early in the process can be critical.
What Are Some Examples of Honest Services Fraud?
One of the most widely known examples is the 2019 College Admissions Scandal, in which celebrities and wealthy parents paid bribes to college admissions offices to alter test scores and secure spots for their children, depriving other qualified students of the honest services they were entitled to. Other common examples include:
- A state representative who accepts gifts from a business owner in exchange for voting on legislation that benefits that business.
- A CFO who accepts a “lifetime discount” from a contractor in exchange for awarding them a lucrative company contract, cutting out other competitors.
If you believe you may be implicated in a similar scheme, consulting with an Honest Services Fraud defense attorney as early as possible can make a significant difference in your case.
Penalties for Honest Services Fraud
The consequences of a conviction are severe. Because this offense falls under federal fraud statutes, penalties can include:
- Up to 20 years in federal prison
- Fines of up to $250,000
- Up to 30 years in prison and $1 million in fines if a financial institution is involved or affected
Each use of mail or wire communication can be charged as a separate offense, potentially increasing exposure significantly. Given these stakes, anyone under investigation or charged should immediately consult an Honest Services Fraud Lawyer to evaluate their options.
What Must the Government Prove?
To convict you of honest services fraud, the prosecution must prove all four of the following elements beyond a reasonable doubt:
- There was a scheme designed to defraud others through a bribe or kickback;
- You willfully participated in that scheme;
- The scheme had the potential to deprive others of honest services; and
- The scheme used mail, telephone, the Internet, or other wire communications.
Defenses to Honest Services Fraud Charges
A skilled Honest Services Fraud Lawyer will build a defense strategy targeting one or more of the elements above. Common defenses include:
- Lack of intent: You were unaware that the scheme was fraudulent when you participated in it. For example, you may have believed an extra fee was a legitimate “fast-track” program when it was actually a bribe. A conviction requires willful participation.
- No bribe or kickback: Perhaps what appeared to be a bribe was simply a gift given freely with no expectation of anything in return.
- No official act: Arranging meetings, making phone calls, or providing information does not automatically constitute an “official act” under the statute.
- No quid pro quo: The government must prove a direct and explicit agreement, a specific benefit exchanged for a specific action.
Contact Top Rated Federal Attorneys
If you or a loved one has been charged with honest services fraud, or suspect you are under investigation, you need to consult an experienced Honest Services Fraud defense lawyer for assistance with your case. Contact us today to schedule your free 15-minute consultation.
