Federal circuit courts are split on a core question of corruption law: whether state and local officials, and agents of organizations that contract with or receive benefits from the federal government, may lawfully accept gratuities.
It is generally a federal crime for state and local officials to act in their official capacities in exchange for things of value, provided they solicit or agree to accept such benefits “corruptly.” This is quid pro quo bribery, prohibited under 18 U.S.C. § 666. Federal courts lack consensus, however, on whether § 666 also criminalizes scenarios wherein an official or agent of a federal program recipient acts without expectation of a thing of value, but later receives a “gratuity” to reward his or her conduct.
The Supreme Court will review the issue this term in Snyder v. United States. The case concerns an Indiana mayor who was convicted under § 666 for accepting a $13,000 payment from a truck company that had recently won a sizeable contract with the city.
Although the merits of this case involve money given to an elected official, the statute also applies to agents of organizations that receive, in any one-year period, more than $10,000 in federal benefits, whether in the form of a contract award, grant, loan, appropriation, or other structure. This includes a sizeable number of companies, institutions of higher education, and nonprofit organizations. As a result, if the Supreme Court holds that § 666 criminalizes gratuities and broadly interprets the statutory standard for “corruptly” accepting things of value, covered entities may have limited capacity to receive gifts, even those unrelated to the principal’s use of federal funds.
The Supreme Court’s decision could also have significant implications for individuals, companies, and organizations that offer items or services of value to the covered officials and entities, since any gift can be scrutinized as a possible inducement or reward for exercising official powers.
This area of law spans civil and criminal provisions at the federal and state levels, and parties engaging on related matters should consider consulting with counsel. Covington will continue to monitor developments in this space, and the firm is well positioned to assist companies and individuals navigating this area of the law.