By Lisa Soronen
In Kelly v. United States the U.S. Supreme Court unanimously overturned the federal fraud convictions of the Bridgegate masterminds because they didn’t seek to obtain money or property.
The Democratic mayor of Fort Lee, N.J., refused to support then-Governor Chris Christie’s reelection. As punishment, under the guise of conducting a traffic study, one of Christie’s staff members and two high ranking Port Authority employees decided to close two out of three lanes serving only cars coming from Fort Lee on the George Washington Bridge, the busiest motor-vehicle bridge in the world.
One of the people involved cooperated with the federal government. The other two were convicted of wire fraud and fraud on a federally funded program.
The federal wire fraud statute criminalizes, using wires, for “any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises.” According to Justice Elise Kagan, writing for the court, “[c]onstruing that disjunctive language as a unitary whole, this court has held that ‘the money-or-property requirement of the latter phrase’ also limits the former.”
“Similarly, the federal-program fraud statute bars ‘obtain[ing] by fraud’ the ‘property’ (including money) of a federally funded program or entity like the Port Authority.”
The federal government agreed the convictions in this case could only stand if the two employees engaged in fraud to obtain money or property. The federal government claimed the employees fraudulently obtained property in this case by taking control of the bridge lanes and depriving the Port Authority “of the costs of compensating the traffic engineers and back-up toll collectors who performed work relating to the lane realignment.”
The court rejected the argument that the “object” of the employees’ deceit was to obtain the Port Authority’s money or property stating: “[The] realignment was a quintessential exercise of regulatory power. And this court has already held that a scheme to alter such a regulatory choice is not one to appropriate the government’s property. But [the employees’] plan never had that as an object. The use of Port Authority employees was incidental to—the mere cost of implementing—the sought-after regulation of the bridge’s toll lanes.”
The court distinguished this case from cases involving a mayor using deception to get city workers to renovate his daughter’s home and a city parks commissioner inducing his employees to do gardening work for political contributors. “In the home-and-garden examples . . . [t]he entire point of the fraudsters’ plans was to obtain the employees’ services.” “A property fraud conviction cannot stand when the loss to the victim is only an incidental byproduct of the scheme,” as in this case.
Kagan concluded the court’s opinion by stating that “not every corrupt act by state or local officials is a federal crime.” Earlier in the opinion, she noted that federal fraud law “leaves much public corruption to the states (or their electorates) to rectify.”
Lisa Soronen is executive director of the State and Local Legal Center and is a regular contributor to the NCSL Blog on judicial issues.