Sunday, November 20th, 2011

Making a Skilling in Albany

United States v. Bruno, No. 10-1887-cr (2d Cir. November 16, 2011) (Parker, Chin, CJJ, Korman, DJ)

The story of Joe Bruno, former New York State Senate Majority Leader, is fairly well known. Having seemingly turned his position into a veritable cesspool of self-interested profiteering, he was ultimately convicted of two counts “honest services” fraud – the jury hung on a third, and acquitted him of several others. Consistent with the law at the time, however, the fraud was charged only as a failure to disclose various conflicts of interest.

While Bruno’s appeal was pending, the Supreme Court decided United States v. Skilling, 130 S.Ct. 2896 (2010), which held that the honest services statute criminalizes only fraudulent schemes that are effectuated through bribery or kickbacks. In light of Skilling, was inevitable that Bruno’s convictions would have to be tossed. The only real suspense was whether the Circuit would acquit him or permit the government to retry him. Under this decision, the government can reindict and retry Bruno on all three counts.

Bruno first asked the circuit to dismiss the indictment for failing to charge a crime, becauase it did not allege a fraud grounded on bribery or kickbacks. Since the government advised the court that it would seek a superseding indictment, the court dismissed the indictment without prejudice.

The remainder of the opinion is framed in double jeopardy terms, since Bruno argued that the evidence was legally insufficient. For Count Three, the one on which the jury hung, the court did not conduct a sufficiency review. There is ordinarily no double jeopardy bar to ordering a retrial on a hung count – Bruno did not allege any of the circumstances where this is not so – and this “analysis does not change even if the prosecution’s evidence was insufficient to support a conviction.” The court accordingly ordered a retrial on Count Three.

For the counts of conviction, the court approached things differently. Breaking with most other circuits, the court conducted a sufficiency review, rejecting the government’s argument that it would be unfair to do so since the putative insufficiency was caused by supervening change in the law. While there might be “in some cases sound reasons for refusing to consider the sufficiency of the evidence when there has been a subsequent change in the law, they do not apply here.” The government had indicated that, on retrial, its evidence would be the same, and that it presented at Bruno’s first trial all of the evidence that it had “regarding quid pro quo.” Thus, here, a sufficiency review would not “deny the government an opportunity to present its evidence.”

That said, however, the court found that a rational jury could find sufficient evidence of a quid pro quo on both counts. For the first, Count Four, a rational jury could conclude that Bruno: “performed virtually non-existent consulting work for substantial payments” for a company that did business with the state; received “sham” payments under the consulting agreement; attempted to cover up both the payments and the underlying relationships, and; “understood that the consulting payments were made in return for official action.”

For the last count, there was similarly sufficient evidence of a quid pro quo. There, one of Bruno’s cronies paid him $40,000 for a race horse that was worth a fraction of that amount. A rational jury could find that this “was an illegitimate gift disguised as a horse payment.” Moreover, Bruno failed to disclose the transaction, and a jury could conclude that the payment was “structured to pay for Bruno’s continued assistance” to the crony and his business.

Accordingly, the court permitted a retrial on both counts of conviction, in addition to the count on which the jury hung.

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