What the McDonnell Verdict May Mean Going Forward | Commentary

Posted October 9, 2014 at 1:42pm

The successful prosecution of former Virginia Gov. Bob McDonnell last month was a huge win for the Department of Justice in general, and the Public Integrity Section in particular.

While the evidence at trial of what McDonnell received from businessman Jonnie Williams — a Rolex watch, use of a vacation house, golf trips and the costs for the caterer at his daughter’s wedding, to name just some examples — was offensive to many, what was notably absent at trial was evidence of official acts done by McDonnell to benefit Williams.

In other words, while it was beyond dispute that McDonnell received benefits from Williams, much less clear was what McDonnell did for Williams in exchange for Williams’ largesse.

Most notably, there was scant evidence at trial that McDonnell used his office to directly and personally benefit Williams.

Given the lack of official acts alleged to have been provided by McDonnell, the case was no slam-dunk for the government, particularly considering McDonnell’s popularity and positive public image. It was a case many observers believed easily could have gone the other way.

An appeal challenging (among other things) whether the jury was properly instructed on what constitutes an “official act” will be forthcoming. But unless and until this conviction is overturned, the quick and overwhelming verdict is a significant victory for the Public Integrity Section, which brought the case and which had been on a losing streak in high-profile cases.

This painful streak, which began with the trial of then-Sen. Ted Stevens in 2007, and included acquittals in the trial of presidential-hopeful John Edwards in North Carolina, led some observers to believe that Public Integrity might begin to shy away from bringing challenging cases going forward. While it is far from clear that Public Integrity’s difficulties were, in fact, making it more cautious, the McDonnell verdict will no doubt embolden and encourage it to aggressively pursue more marginal cases involving public corruption in the future.

What does this mean for public officials and their staff, and those that might seek official actions on their or their clients’ behalf? In case they missed the memo, it should be abundantly clear by now that to the extent that “business as usual” once meant nice dinners, rounds of drinks, golf outings and tickets to sporting events and concerts with lobbyists or businessmen picking up the tabs, public officials and their benefactors should assume that these practices will be closely scrutinized by prosecutors.

This type of largesse — still commonplace, no doubt, in some places — will, if identified by the government, be closely reviewed and tabulated, and prosecutors will do what they can to see if the “gifts” can be tied to any official action by the public official. And, after the McDonnell trial, it now appears that “official action” may mean little more than making phone calls or setting up meetings that would enhance the benefactor’s business prospects. If such a connection can be made, the fact that no cash traded hands and no particular legislation was proposed, much less passed, will not deter an aggressive prosecutor.

It is important to understand that individual acts of hospitality will not be looked at in isolation. As in the McDonnell case, the government will seek to aggregate all benefits received over a period of months, even years, and then argue this inflated figure represents the true value of the benefits conferred.

And a failure to report the gifts can, depending on the jurisdiction, result in a separate reporting violation and, in the eyes of government prosecutors, provide compelling evidence of consciousness of guilt.

Although the Supreme Court has recently limited the government’s ability to use the honest services statute, the government — as it has shown in the McDonnell prosecution — still has a sizable collection of anti-corruption statutes to employ. While the fit might not seem to be perfect, the government will no doubt be encouraged by this verdict to force square pegs into round holes.

Peter R. Zeidenberg is a partner in Arent Fox LLP’s white collar and investigations practice. His practice focuses on defending companies and individuals in white-collar criminal matters and other issues that are related to internal fraud investigations and corporate governance.