Remand for new trial in honest services fraud case because of faulty jury instructions/ “Prejudicial spillover” required retrial on all remaining charges too

United States v. Wright, et al., 09-3467. 3731 & 3965 (3d Cir. 1/4/05) (29 pages)

This case is one of many rising through the federal courts since last year’s decision in Skilling v. United States, 130 S. Ct. 2896 (2010), limiting the scope of 18 U.S.C. §1836 prohibiting honest services fraud. Mr. Wright, an aid to a Philadelphia city councilman, was accused of accepting several favors from a realtor and his lawyer, including rent free apartments from the realtor’s company and free legal help from the lawyer.  In return Mr. Wright was accused of aiding the passage of legislation that could help the title agent and his company and securing favors from other city departments for the title company. The three were indicted for honest services fraud, traditional fraud, and bribery in connection with a federal program. Before Skilling was handed down, all were convicted of, among other crimes, conspiracy to commit honest services fraud on the apartment arrangement, and the realtor was further convicted of honest services fraud for offering the legislative aid some private work (which did not result in the aide receiving any compensation). (The realtor’s brother was also charged, but was acquitted of all charges.)

While the Court found the evidence sufficient to sustain the verdicts for honest services fraud, the jury instructions for honest services fraud were flawed in that they permitted the jury to convict the defendants even if the actions of the public officials were done for good faith and honestly motivated reasons. The Court further determined, after sifting through a number of scenarios the jury might have found had it heard the proper instructions, that the error was not harmless. Finally, the Court determined that even though the evidence was sufficient to prove the underlying fraud charges, “prejudicial spillover” from the mistaken honest services fraud instructions might have tainted the other convictions. “When two charges are closely linked and we vacate a conviction on one of them, we must ensure that the error on the vacated charge has not affected the remaining charge,” said the Court. It then described and applied a two step test (the second prong of the test involving the weight of four factors) for determining whether prejudicial spillover occurred requiring a new trial on remaining charges (the Court’s description of the test is succinct and is best read in the original) and determined that the traditional fraud charges had to be retried too.

The case can be found here.

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