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“What Kind of a Mad Prosecutor” Brought Us This White Collar Case

“What Kind of a Mad Prosecutor” Brought Us This White Collar Case

Ellen S. Podgor

Throughout history, there has been a long line of cases where prosecutors have attempted to stretch statutes to cover conduct that they consider criminal.[1] Clearly, prosecutors have enormous discretion to pick and choose whom to charge, what to charge,[2] when to charge,[3] and whether to proceed against individuals or entities.[4] Likewise, prosecutors decide who will receive immunity,[5] who will get a plea benefit,[6] and whether a pending case will be dismissed.[7]

Although prosecutors do not have “unfettered” discretion,[8] there are very few restrictions on their discretionary power.[9] It is not prohibited for prosecutors to act arbitrarily,[10] and few defendants have succeeded in the dismissal of an indictment absent a showing that the alleged conduct did not match the crime charged or was a result of vindictive action.[11]

This Essay examines prosecutorial discretion that stretches statutes beyond statutory language, congressional intent, or policy. Although cases of prosecutorial stretching occur throughout the context of criminal law, this piece focuses on the stretching of statutes in the white collar context.

In the past, stretching of statutes or creative prosecutions was sometimes justified with claims that existing statutes did not cover the misconduct.[12] For example, prior to the passage in 1970 of the Racketeered Influenced Corrupt Organization Act (RICO),[13] individuals engaged in organized crime were commonly indicted and convicted for tax crimes.[14] Likewise, prior to the passage of the Computer Fraud and Abuse Act,[15] prosecutors used the National Stolen Property Act[16] and Wire Fraud[17] statutes to proceed against computer misconduct.[18] But the growth of criminal statutes makes looking beyond the explicit language of the legislation less warranted.[19]

This Essay looks at three areas of white collar crime that have seen prosecutorial statute stretching: fraud,[20] obstruction-of-justice,[21] and bribery.[22] Within each of these areas, there are many examples of both historical and recent cases requiring judicial oversight to halt prosecutorial practices.[23] This Essay concludes by noting that prosecutors who stretch statutes do a disservice to our judicial system. It is important to strictly construe white collar statutes to assure that criminal conduct is recognized and conformity with the law is promoted.[24]

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[1] See, e.g., Cleveland v. United States, 531 U.S. 12, 15, 27 (2000) (addressing prosecution under the mail fraud statute for an alleged false statement on a video poker machine license application); McDonnell v. United States, 136 S. Ct. 2355, 2361, 2370, 2372 (2016) (declining the prosecutor’s “expansive interpretation” of an “official act”); United States v. Czubinski, 106 F.3d 1069, 1071, 1076 (1st Cir. 1997) (finding that prosecution for browsing files containing tax information does not meet the elements of wire fraud).

[2] See United States v. Batchelder, 442 U.S. 114, 123–26 (1979) (discussing the broad prosecutorial power to select charges).

[3] See United States v. Mandujano, 425 U.S. 564, 595 (1976) (discussing prosecutorial authority in when to bring criminal charges).

[4] See, e.g., Ellen Podgor, The Ethics and Professionalism of Prosecutors in Discretionary Decisions, 68 Fordham L. Rev. 1511, 1531 (2000) (discussing prosecutorial discretion and the need for ethical decision-making); James Vorenberg, Decent Restraint of Prosecutorial Power, 94 Harv. L. Rev. 1521, 1523–37 (1981) (discussing the breadth of prosecutorial discretion).

[5] See Robert L. Misner, Recasting Prosecutorial Discretion, 86 J. Crim. L. & Criminology 717, 741 (1996) (discussing decisions within prosecutorial discretion, including immunity grants).

[6] See Darryl K. Brown, Judicial Power to Regulate Plea Bargaining, 57 Wm. & Mary L. Rev. 1225, 1272 (2016) (discussing the breadth of prosecutorial discretion).

[7] See, e.g., Best v. City of Portland, 554 F.3d 698, 702 (7th Cir. 2009) (“[U]nder Indiana law, a prosecutor may voluntarily dismiss an indictment or information before trial for any reason and without court approval.”). Prosecutors also have discretion with respect to many related decisions, such as whether to give a defendant a 5K1.1 motion for substantial assistance, a motion that can reduce the sentence. Julie Gyurci, Note, Prosecutorial Discretion to Bring a Substantial Assistance Motion Pursuant to a Plea Agreement: Enforcing a Good Faith Standard, 78 Minn. L. Rev. 1253, 1260 (1994) (discussing the discretion afforded to prosecutors in filing a motion that serves as an exception to the legislative restrictions of mandatory-minimum sentences).

[8] Wayte v. United States, 470 U.S. 598, 608 (1985) (“[A]lthough prosecutorial discretion is broad, it is not ‘unfettered.’”) (quoting United States v. Batchelder, 442 U.S. 114, 125 (1979)).

[9] Prosecutorial discretion is limited by the use of improper factors. See United States v. LaBonte, 520 U.S. 751, 762 (1997) (“[D]iscretion is an integral feature of the criminal justice system, and is appropriate, so long as it is not based upon improper factors.”). Additionally, there are ethical restrictions that apply to prosecutorial decision-making. See Model Rules of Prof’l Conduct r. 3.8 (Am. Bar Ass’n 2016) (stating that prosecutors shall “refrain from prosecuting a charge that the prosecutor knows is not supported by probable cause”). See Standards for Criminal Justice Prosecution Function and Defense Function § 3-3.9 (Am. Bar Ass’n 1993), for more extensive guidance.

[10] United States v. Armstrong, 517 U.S. 456, 465 (1996) (citing Wayte, 598 U.S. at 608).

[11] The Supreme Court has held that there is no presumption of vindictiveness. United States v. Goodwin, 457 U.S. 368, 384 (1982). In United States v. Armstrong, the Supreme Court held that “[i]n order to dispel the presumption that a prosecutor has not violated equal protection, a criminal defendant must present ‘clear evidence to the contrary.’” Armstrong, 517 U.S. at 465 (quoting United States v. Chem. Found., 272 U.S. 1, 14–15 (1926)).

[12] See, e.g., Tod H. Flaming, Comment, The National Stolen Property Act and Computer Files: A New Form of Property, a New Form of Theft, 1993 U. Chi. L. Sch. Roundtable 255, 256, 290 (1993) (discussing Dowling v. United States, 473 U.S. 207 (1985), and noting the confusion lower courts faced in addressing stolen computer files under the National Stolen Property Act).

[13] 18 U.S.C. §§ 1961–1968 (2012).

[14] Daniel C. Richman & William J. Stuntz, Al Capone’s Revenge: An Essay on the Political Economy of Pretextual Prosecution, 105 Colum. L. Rev. 583, 630 (2005) (prosecuting individuals for lesser charges than the conduct warrants).

[15] 18 U.S.C. § 1030 (2012).

[16] 18 U.S.C. §§ 2311, 2314–2315 (2012).

[17] 18 U.S.C. § 1343 (2012).

[18] See Flaming, supra note 13, at 255 (discussing the difficulty of charging computer crimes under the National Stolen Property Act). Both of these statutes continue to be used by prosecutors when charging computer misconduct. See, e.g., United States v. Agrawal, 726 F.3d 235, 237 (2d Cir. 2013) (discussing charges brought under the Economic Espionage Act and the National Stolen Property Act); United States v. Aleynikov, 676 F.3d 71, 74–75 (2d Cir. 2012) (rejecting charges brought under the Economic Espionage Act, National Stolen Property Act, and the Computer Fraud and Abuse Act); United States v. Czubinski, 106 F.3d 1069, 1071 (1st Cir. 1997) (discussing wire fraud and computer fraud charges brought under 18 U.S.C. §§ 1343, 1346, and 18 U.S.C. § 1030(a)(4)).

[19] See Brian W. Walsh & Tiffany M. Joslyn, Heritage Found. & Nat’l Ass’n of Criminal Def. Lawyers, Without Intent: How Congress is Eroding the Criminal Intent Requirement in Federal Law 6 (2010), http://s3.amazonaws.com/thf_media/2010/pdf/WithoutIntent_lo-res.pdf (discussing an estimated 4,450 criminal statutes by the end of 2007); Jim E. Levine, From the President: Faces of Overcriminalization, Champion, Nov. 2010, at 1, 5 (noting that there are an estimated 4,450 federal crimes and “quite possibly as many as 300,000 federal regulations that can be enforced criminally”); John S. Baker, Jr., Jurisdictional and Separation of Powers Strategies to Limit the Expansion of Federal Crimes, 54 Am. U. L. Rev. 545, 547 (2005) (discussing how to limit the expansion of federal criminal law); William J. Stuntz, The Pathological Politics of Criminal Law, 100 Mich. L. Rev. 505, 512 (2001) (“Criminal law is both broad and deep: a great deal of conduct is criminalized, and of that conduct, a large proportion is criminalized many times over.”).

[20] Although the focus here is on the mail and wire fraud statutes, 18 U.S.C. §§ 1341–1342, it is recognized that many of the fraud statutes that exist in the federal criminal code are modeled after these two statutes. See, e.g., 18 U.S.C. § 1344 (bank fraud statute).

[21] Although there are many obstruction-of-justice statutes in the United States Code, a more recent statute is selected here, 18 U.S.C. § 1519 (2012), to demonstrate prosecutorial statutory stretching.

[22] There are many bribery statutes in the United States Code. The focus here is on 18 U.S.C. § 201 (2012).

[23] Prosecutorial statutory stretching is not limited to these white collar areas, nor are all cases of prosecutorial stretching rejected by the courts. See, e.g., United States v. McNab, 331 F.3d 1228, 1247 (11th Cir. 2003) (affirming a conviction under the Lacey Act for an alleged violation of Honduran law); id. (Fay, J., dissenting) (pointing out that the Honduran government found the alleged violation to be “null and void”).

[24] This Essay is not exclusively focused on the Rule of Lenity, which “requires ambiguous criminal laws to be interpreted in favor of the defendants subjected to them.” United States v. Santos, 553 U.S. 507, 514 (2008). Rather, the focus is on the prosecutor who stretches a statute to fit alleged misconduct that is not encompassed within the law, intent, or the policy rationale for it being part of the criminal code.

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