The NCSL Blog

19

By State and Local Legal Center

The issue the U.S. Supreme Court will decide in Percoco v. United States is whether a private citizen who has informal political or other influence over governmental decision-making owes a fiduciary duty to the general public and can be convicted of honest-services fraud.

US Supreme CourtJoseph Percoco was a top aide to former Governor Andrew Cuomo. While he was working as Cuomo’s campaign manager (so not as a state employee), a company that didn’t want to have to enter “into a potentially costly [labor] agreement” prior to receiving state funding for a project, sent Percoco’s wife $35,000.

While sitting at his desk in the executive chamber (but still a few days away from formally returning to work at the governor’s office) Percoco directed a state agency to reverse its previous decision requiring the company to enter into the labor agreement, which it did.

Percoco was tried and convicted of federal honest-services fraud.

Before the 2nd Circuit, Percoco objected to the jury instruction which stated that he did “not need to have a formal employment relationship with the state in order to owe a duty of . . . honest services to the public,” so long as he “owed the public a fiduciary duty.”

The jury also was instructed Percoco owed a fiduciary duty to the public if, and only if, (1) “he dominated and controlled any governmental business,” and (2) “people working in the government actually relied on him because of a special relationship he had with the government.”

The 2nd Circuit approved this jury instruction stating that it “fits comfortably within our decision in United States v. Margiotta, where the 2nd Circuit held “a formal employment relationship, that is, public office,” is not a “rigid prerequisite to a finding of fiduciary duty in the public sector.”

Percoco asked the 2nd Circuit to reconsider Margiotta, decided in 1982, in light of more recent Supreme Court cases and “various constitutional considerations.” The 2nd Circuit declined to do so.

Percoco’s petition asking the U.S. Supreme Court to decide this case begins as follows: “When a public official accepts money to convince the government to do something, we call him a crook. But when a private citizen accepts money to convince the government to do something, we call him a lobbyist.”

The petition later continues: “The notion that private citizens owe a duty of honest services to the public so long as a jury deems them sufficiently influential finds no basis in law or common sense. It blurs the fundamental line between private and public that defines the relative roles of citizens and officials.”

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This blog offers updates on the National Conference of State Legislatures' research and training, the latest on federalism and the state legislative institution, and posts about state legislators and legislative staff. The blog is edited by NCSL staff and written primarily by NCSL's experts on public policy and the state legislative institution.