A top Justice Department official in the Criminal Division on Thursday said new limits on prosecutors’ use of a federal fraud law to go after white-collar criminals has not stopped corruption prosecutions, but has created holes that the DOJ would like filled.
Matthew Axelrod, senior counsel to Assistant Attorney General Lanny Breuer of the Criminal Division, told defense lawyers at an American Bar Association town hall meeting that the DOJ lost valuable tools to fight fraud after the Supreme Court said earlier this year that the “honest services fraud” law is limited to bribery and kickback schemes. The justices questioned the convictions of several high-profile defendants, including former Enron chief Jeffrey Skilling and former Canadian newspaper mogul Conrad Black, who were accused of undisclosed self-dealing.
“Everyone should rest assured that the Justice Department remains everyday out there vigorously combating fraud and corruption,” Axelrod said. “The Skilling decision doesn’t mean that our public corruption prosecutions have ceased. But there is a gap.”
Sen. Patrick Leahy (D-Vt.) introduced legislation in September that would close the gaps made by the Supreme Court decision. The bill would allow the DOJ to once again use the “honest services fraud” law to prosecute public and private officials suspected of undisclosed self-dealing.
Axelrod said the DOJ does not have a position on the bill yet. But he said the DOJ supports a strong legislative fix that the Supreme Court could not overturn.
“We like having as many tools as possible in our toolbox, but we also want to make sure those tools stand the test of time,” Axelrod said.
Noah Bookbinder, Leahy’s chief counsel for criminal justice, said the senator tried to create a ”well-defined, narrow and precise” bill to fill the gap made by the Supreme Court.
“I think one of things that he was careful to do in crafting this [was] to give some real notice and some real definition to the contours of what this crime is,” Bookbinder said. “So, it’s not creating something brand new. It is bringing back this concept of undisclosed self-dealing.”
