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Will recent federal appeals court rulings impact Percoco, Buffalo Billion trials?

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Will recent federal appeals court rulings impact Percoco, Buffalo Billion trials?

Photo by Zack Seward

Last week, the U.S. Court of Appeals for the Second Circuit, which has appellate jurisdiction over New York’s federal courts, addressed two cases involving former state legislators. On Monday, it upheld a 21-count public corruption conviction of ex-Brooklyn Assemblyman William Boyland, Jr. Three days later, it vacated a similar conviction of former Assembly Speaker Sheldon Silver.

Both appellants had argued that, in light of McDonnell—last year’s Supreme Court decision that essentially held that a gift or payment to a public official must be tied to a concrete “official act” in order to be illegal—the jury instructions in their respective trials were erroneous. (The outcomes of their appeals diverged because the Second Circuit determined that in Boyland, unlike Silver, jury instructions aligned with McDonnell would not likely have produced a different verdict.)

Last Tuesday, Acting U.S. Attorney of the Southern District of New York Joon Kim wrote to the federal judge and counsel of eight defendants in a different, yet-to-be-tried case, advising them of Boyland’s implications. “Of particular relevance here,” Kim wrote, “the Second Circuit declined to apply McDonnell’s limitations on ‘official action’ to Section 666,” a broader bribery statute than the one at issue in McDonnell.

Of those eight defendants—former Governor Cuomo aide Joseph Percoco, former SUNY Polytechnic Institute president Alain Kaloyeros, former energy company lobbyist Peter Galbraith Kelly, Jr., and five real-estate executives from Buffalo and Syracuse—all but Kaloyeros are charged with paying or taking bribes under Section 666. (The defendants, all of whom have pled not guilty, also face charges that include wire fraud, honest services fraud, and extortion. McDonnell likely impacts at least the latter two, and those counts reference “official action” in the indictment.)

Some defendants have contended in pretrial filings that McDonnell has serious implications for their cases, even arguing that it renders Section 666 unconstitutional. “The statute is substantially overbroad and vague,” casting “an aura of impropriety over political advocacy” and campaign contributions, Kelly’s attorney argued in May.

A closer look at the alleged bribery scheme involving Kelly and Percoco illustrates the extent to which the imposition of McDonnell—which, again, now seems not to apply to the bribery counts—could have been a boon to the defense. 

According to the criminal complaint, Percoco, “facing significant financial difficulties,” persuaded Kelly to secure his wife a job with the energy company. From late 2012 to early last year, the firm paid Percoco’s wife $7,500 per month through a consultant, prosecutors say.

During this time, Percoco allegedly took “official actions” that benefitted the energy company, including pressuring other state officials to broker a deal that allowed the firm to buy emissions credits and a contract that would have made the state purchase power from the firm, though only the former materialized.

“The Government alleges that the Energy Company hired Percoco’s wife as a way to bribe Percoco,” Kelly’s lawyer explained in May. “According to the [indictment], Mr. Kelly and Percoco agreed that, in exchange for the hiring of his wife, Percoco would take ‘official action’ to benefit the Energy Company ‘on an as-needed basis’ and ‘as the opportunity arose’…There is no allegation that, when Mr. Kelly and Percoco entered into this alleged quid pro quo agreement in late 2012, they agreed upon any specific official act Percoco would perform or any specific question or matter on which Percoco would perform an official act.”

If McDonnell applied to this case’s bribery counts, this purported lack of specificity might have posed problems for the prosecution. In this sense, Boyland represents a kind of reprieve.

Boyland throws a monkey wrench into the Percoco defendants’ McDonnell arguments,” Albert Alschuler, a Northwestern University law professor who has written about federal bribery statutes, told The Alt in an email. 

Zephyr Teachout, a Fordham law professor who challenged Gov. Cuomo in the 2014 Democratic gubernatorial primary, echoed Alschuler’s assessment.

“This is a major blow to an important part of the defense’s legal arguments,” Teachout told The Alt in an email. “Boyland won’t be the final say on 666 and its interaction with McDonnell, but it tells the trial judge that for now at least, 666 is good law in the 2nd Circuit.”

Teachout also downplayed the idea that Section 666 is overbroad: “I think the Supreme Court got McDonnell wrong, but I also think that [Acting U.S. Attorney Joon] Kim gets it exactly right in his letter yesterday[—]‘Section 666 contains language that distinguishes quid pro quo bribery from ordinary political discourse’—and even this Supreme Court is not likely to throw out 666.”

Jennifer Rodgers, executive director of Center for the Advancement of Public Integrity at Columbia Law School, said she did not think that, beyond Boyland’s assurance that McDonnell does not apply to Section 666, the two appellate decisions would impact the Percoco case.

“Given that Percoco was not even charged, much less tried, before the McDonnell decision came down, the Government already had the benefit of charging its case in such a way as to comply with the Supreme Court’s narrowing of the official act definition,” Rodgers wrote in an email.

Attorneys for the pertinent defendants either declined to comment or did not respond to emails regarding Boyland. A spokesperson for the U.S. Attorney’s Office of the Southern District of New York declined to comment.

Reply briefs from the defense are due July 21. In a court filing at the end of last month addressing defendants’ two dozen pretrial motions, the government proposed to split the case into two trials, seemingly abandoning its long-held position that the case’s two alleged schemes—one centering around bribes sought or received by Joseph Percoco, the other around state-backed economic development deals in Buffalo and Syracuse—substantially overlap. (The government’s key cooperating witness, former lobbyist Todd Howe, is alleged to have figured in both.)

The court indicated in April that if two trials were needed, one would begin in late October and the other in early January. In recent days, however, defendants have submitted a flurry of requests that, if accommodated, might complicate this schedule. It now seems plausible, for instance, that the Buffalo Billion-oriented trial might not happen until next spring.

The reversal of the Silver decision—though Kim has already said the former lawmaker will be retried—has prompted some observers to reassess the legacy of U.S. Attorney Preet Bharara, who oversaw the case against Percoco before he was fired by President Trump earlier this year. Silver’s reprieve has also revived scrutiny and criticism of McDonnell

Back in October, Bharara was asked by the Times Union’s Casey Seiler about McDonnell’s impact on federal prosecutors.

“I think it definitely raises the bar,” Bharara replied, according to a transcript. “I think it makes it more difficult to pursue certain kinds of cases.”

He went on to say, however, that the “bread and butter of the kinds of cases that we have been bringing…for a period of time now have been those in which there has been very concrete official action as part of the quid pro quo.”

Five of the six Section 666 counts in the Percoco-Buffalo Billion indictment, perhaps out of what now might seem an abundance of caution, mention “official action.”

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