Judge Trott begins this opinion with a snippet from a poem by Sir Walter Scott: "Oh what a tangled web we weave when first we practice to deceive." It's a "theft of honest services" -- i.e., fraud -- case.
I'm a lot less sophisticated than Judge Trott. So my reaction was similarly less erudite. It's a case involving a union official in Hawaii who shook down the union's dental and medical plan providers and convinced them to pay "consultant" fees to his relatives in return for getting the union contracts. To which my reaction arose less from Marmion and more from Casablanca: "I'm shocked, shocked to find that [corruption in union contracts] is going on here."
The district court the jury the wrong instruction for these kinds of cases because the model Ninth Circuit jury instruction at issue was created before the Supreme Court's decision in Skilling, which -- in a case involving a much more sophisticated theft of assets -- changed the law regarding what counts as the theft of honest services. But no matter. The Ninth Circuit holds that the error was harmless. As indeed it seems to be. The appeal here involves a classic case of corruption. A "no pay" job; essentially, a bribe. Given that fact, as long as the jury found -- as it did -- the underlying facts, it doesn't matter what instruction was given. The defendant was guilty.
There's a much, much larger problem underneath the surface here that exists with respect to both legal and illegal transactions alike. A vast amount of economic activity nowadays involves agents attaching themselves -- like lampreys to a shark or barnacles to a ship -- to an underlying monetary circumstance and sucking a tiny piece of this much larger pie. Corrupt union officials. CEOs. Underwriters. Real estate agents. In many cases, lawyers.
Given the size of the relevant transaction, the "tiny" piece taken by each individual agent is overlooked and/or justified without much trouble. Even when, as here, the size of that piece is perhaps not reasonable. There are upsides and downsides of (essentially) variable compensation, but one downside is that you're rarely sure you're getting what you pay for. Unlike an hourly wage, in which it's fairly easy to see that you've obtained (say) $20 of work when an employee works two hours at $10/hour.
The line between legal and illegal economic activity isn't as clear as many believe it to be. But it's nonetheless clear which side of the line this one falls. Conviction affirmed.
