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Corrupt Public Officials Can Be Ordered to Pay Forfeiture Judgments Out of Pensions

On August 17, 2016, the Second Circuit issued a decision in United States v. Stevenson, No. 14-1862-cr, holding that a state legislator convicted of bribery could be required to forfeit a portion of his pension fund as part of a sentence.  Former New York State Assemblyman Eric Stevenson was convicted in 2014 of conspiracy to commit honest services wire fraud, conspiracy to commit federal programs bribery and to violate the Travel Act, accepting bribes, and extortion under color of official right.  The charges arose out of an investigation finding that Stevenson took bribes of $22,000 from businessmen in the Bronx who ran an adult day care center in exchange for proposing legislation that would have imposed a moratorium on new facilities that would have provided competition.

Honest services fraud has recently been at the center of several Supreme Court decisions, but in a summary order addressing Stevenson’s challenges to his conviction, the Court noted that McDonnell v. United States, 136 S. Ct. 2355 (2016), did not affect the charges here because there was no question that Stevenson committed an “official act” by proposing legislation in exchange for cash.  It is somewhat curious that the Court did this in a non-precedential summary order given that several high profile political corruption convictions—such as Sheldon Silver and Dean Skelos—are now pending on appeal.  Whether the charged offense involved an official act may well be relevant to the resolution of those appeals.  We can expect to see, post-McDonnell, a variety of cases addressing the question of whether a particular act was an “official act” and therefore subject to criminal punishment as honest services fraud.

The Court’s published opinion focuses solely on Stevenson’s challenges to his sentence of 36 months’ imprisonment and the district court’s order that he pay a $22,000 forfeiture judgment out of his pension fund.  As to the forfeiture order, the Court first held that the Sixth Amendment does not require that the amount of forfeiture be found by a jury beyond a reasonable doubt.  The Court acknowledged that the Supreme Court’s last statement on this topic, in Libretti v. United States, 516 U.S. 29 (1995), predated its rulings in Apprendi and Alleyne holding that facts that increase a penalty beyond a statutory maximum or that affect a mandatory minimum must be found by a jury.  See Apprendi v. New Jersey, 530 U.S., 466, 490  (2000); Alleyne v. United States, 133 S. Ct. 2151, 2158 (2013).  But those cases were about determinate sentences; forfeiture amounts are “meaningfully different” because they are “not subject to any statutory thresholds that increase penalty—whether they be ‘floors’ or ‘ceilings.’”

Second, the Court held that it was permissible to order the forfeiture amount to be paid out of Stevenson’s pension from the state legislature (Stevenson couldn’t come up with the money on his own, but hoped to protect his own pension from attachment).  Article V, Section 7 of the New York State Constitution states that a state employee plan’s benefits “shall not be diminished or impaired.”  This provision was meant to protect the pensions of civil servants, such as police officers and teachers.  However, it also has been used by state elected officials who are convicted of crimes and who wish to cordon off their pensions from being used to pay financial penalties.  At any rate, that provision must give way under the Supremacy Clause to federal statutes authorizing the forfeiture of property derived from the crime of conviction, “irrespective of any provision of State law.”  This ruling expands the ability of the government to collect financial penalties from New York State politicians and employees.

Stevenson challenged his sentence by arguing that it was impermissible to impose enhancements both for acting as a “public official,” see U.S.S.G. § 2C1.1(a)(1), and as an elected public official,” see  U.S.S.G. § 2C1.1(b)(3)).  The Court upheld the application of both enhancements, applying the rule that “impermissible double counting occurs when one part of the guidelines is applied to increase a defendant’s sentence to reflect the kind of harm that has already been fully accounted for by another part of the guidelines.”  Because betrayal of public trust by an elected official may cause greater harm, the two enhancements do not impermissibly overlap.

Stevenson also argued that his sentence reflected an impermissible disparity with the Bronx businessmen, who all pled guilty.  At sentencing, this argument took on a racial aspect when Stevenson’s counsel said that Stevenson, who is black, received a longer sentence than the white businessmen.  Without addressing that aspect of the sentencing transcript, the Second Circuit held that the businessmen—who gave, not received, bribe—were not convicted of similar conduct.  The Second Circuit favorably quoted the district court’s statement that “to compare the sentences of  the bribing parties to  the sentence of the public official who was bribed is [to compare] apples and oranges.”  Also, the Court stressed that the need to avoid disparity in sentencing is based on nationwide disparity, not disparity among defendants in a particular indictment.  By any standard, whatever one thinks of the sentence here, there has been increased sentencing disparity in the post-Booker environment, a perhaps unavoidable byproduct of the enhanced sentencing discretion that district courts may exercise under Section 3553(a).  On the facts here, it is perhaps unsurprising that an elected official who accepts bribes will receive a longer sentence than will the individual businessmen who paid bribes given the public trust at issue when a politician accepts a bribe. 

-By Stephanie Teplin and Harry Sandick