In July of 2019, these authors wrote a Practice Point on Kelly v. United States, better known as “Bridgegate,” which was then pending before the United States Supreme Court. This Practice Point is an update to that case, which has now been decided by the Supreme Court
Kelly v. United States involved the reallocation of two traffic lanes over the George Washington Bridge, which links New Jersey and Manhattan. The government alleged that the lane reallocation was done to increase traffic in the town of Fort Lee, New Jersey, to punish Fort Lee’s mayor for not endorsing the New Jersey Governor Chris Christie’s bid for reelection; Governor Christie’s chief of staff, Bridget Ann Kelly, stated that the lane reallocation was part of a traffic study. Federal prosecutors from New Jersey indicted Kelly for wire fraud under 18 U.S.C. section 1343 and theft from a federally funded entity under 18 U.S.C. section 666. At trial, Kelly filed a motion to dismiss the indictment. The district court denied the motion, reasoning that the indictment sufficiently alleged that Kelly “deprived” the Port Authority of New York and New Jersey, the entity that oversees much of the region’s infrastructure, of “control over its assets” to move forward with the wire fraud count. As it relates to section 666, the court construed the statute to proscribe “any improper use of property,” and declared it “improper” to be motivated by political “retribution.” The jury convicted Kelly on all counts, and she was sentenced to 18 months. The Third Circuit affirmed the convictions.
In a rare unanimous opinion by the Supreme Court, delivered by Justice Kagan, the Court held that because the scheme in this case did not aim to obtain money or property, Kelly could not have violated the federal program fraud or wire fraud laws; therefore, Kelly’s convictions were overturned. In this decision, the Supreme Court continues its recent trend in narrowing the ability of federal law enforcement to prosecute political corruption and white-collar crimes. The Court stated that the government needed to show “not only that Kelly engaged in deception,” but that she did so to obtain property.
The court rejected the government’s argument that Kelly’s scheme intended to obtain the Port Authority’s money or property as it took over the Port Authority’s lanes and because, as a result of the lane takeover, the Port Authority had to pay the traffic engineers and the toll collector. The Court reasoned that accepting the government’s argument would allow the federal government to “use the criminal law to enforce (its view of) integrity in broad swaths of state and local policymaking.” The Court explained that the lane realignment was simply an exercise of regulatory power that it “cannot count as the taking of property.” The Court did caution that there could be scenarios in which the use of government employees’ time and labor could count as “property” for purposes of federal fraud prosecutions—for example, if “a city parks commissioner induces his employees into doing gardening work for political contributors.” However, the Court was clear that to sustain a conviction for property fraud, getting the property needs to be the point of the scheme. In this case, the Court explained that getting the property was not the point of the scheme. Kelly was not trying to use the extra toll collector’s services or the data that the traffic engineers collected but rather to increase traffic in Fort Lee and the cost of the employees’ labor was simply an “incidental byproduct” of the scheme. The Court was still critical of Kelly’s actions but stated that “not every corrupt act by state or local officials is a federal crime.”
Practitioners should take note of this opinion if they have a client charged with wire fraud and fraud from federally funded programs, as the case provides a complete defense to the charges if your client’s motive was not to obtain property or money. Additionally, if some property or money was obtained, practitioners can argue that any property or money obtained was an “incidental byproduct” of the scheme and not the scheme’s purpose.
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