Case o' The Week: Strip Club Honest Services, Kincaid-Chauncey

Las Vegas strip clubs, "touching" legislation, cash bribes to politicians and federal wiretaps -- the salacious stuff of a new prime time miniseries? Nope: just another day in the Ninth. United States v. Kincaid-Chauncey, No. 06-10544, __ F.3d __, 2009 WL 415567 (9th Cir. Feb. 20, 2009), decision available here. In this interesting decision Judge Bybee creates a good new rule for "honest services" fraud and delves into a theory of prosecution that is ripe for abuse.

Players: Hard-fought case by Las Vegas Federal Defender Franny Forsman.

Facts: Mary Kincaid-Chauncey (above) was a Commissioner for Clark County – the unincorporated area of Vegas. Id. at *1. A local strip club owner was caught on a wiretap, apparently bribing Kincaid-Chauncey for favorable action on legislation affecting the clubs. Id. Kincaid-Chauncey was convicted of Hobbs Act violations and “honest services wire fraud” after an eight-week trial. Id. The district judge refused to allow her to call a number of witnesses, and also rejected defense jury instructions. Id.

Issue(s): 1. Hobbs Act Quid Pro Quo: “Kincaid-Chauncey . . . challenges the jury instructions given on the Hobbes Act charges. She alleges that the district court erred by failing to instruct the jury that an explicit quid pro quo was necessary to convict her of violating the Hobbs Act.” Id. at *10.

2. Honest Services Fraud Quid Pro Quo: “Kincaid-Chauncey asserts that the district court erred in failing to instruct the jury that the crime of honest services fraud requires proof of a quid pro quo.” Id. at *12.

Held: 1. Hobbs Act Quid Pro Quo: “Although we agree that the government must prove the existence of a quid pro quo to obtain a conviction under the Hobbes Act for non-campaign related payments, we reject the notion that the quid pro quo needs to be explicitly stated.” Id.

2. Honest Services Fraud Quid Pro Quo: “When the government’s theory is that a public official accepted money in exchange for influence, we agree that at least an implicit quid pro quo is required . . . . This requirement is necessary to ensure that the defendant had the requisite intent to defraud and to avoid convicting people for having the mere intent to curry favor.” Id. at *16 (citations omitted).

Of Note: Though a disappointing outcome, this is a well-written decision and a must-read for public corruption cases. Authoring Judge Bybee gives an exhaustive history of the (amorphous) “honest services” fraud theory, and articulates some important limitations on the theory – including this new rule requiring a quid pro quo for the “bribery” theory of prosecution. (Though an “implicit” quid pro quo will do).

The case also has an extensive (though again, frustrating) discussion of that elusive evidentiary concept, “impeachment by contradiction” – along with an unwelcome endorsement of the rule that this evidentiary avenue is (generally) not open when cross-examination testimony is being impeached. Id. at *7 - *8.

How to Use: There’s much left to tackle after Kincaid-Chauncey. First, the Ninth expressly avoids setting the limitations necessary for honest services fraud cases involving failures to disclose conflicts of interests. Id. at *19 & n.17. In a very thoughtful concurrence, Judge Berzon worries that the non-disclosure theory of prosecution is too broad and must have some limitations. Id. at *20. The question of the limitations on honest service fraud, when the theory is non-disclosure of a conflict of interest, is an issue ripe for attack. This attack would get a sympathetic hearing from Judge Berzon.

Moreover, while the convictions based on the instructions in this case are upheld, Judge Bybee concedes that the “intent element” for the (implicit) quid pro quo showing on the honest services fraud instruction was “rather thin.” Id. at *18. The Ninth salvages the convictions by rummaging among other instructions to prop up this element, but in future cases the defense should get a clearer, more forceful “honest services” instruction explaining the “quid pro quo” requirement.

For Further Reading: The whole sordid story of this corruption case is a fascinating tale, implicating a slew of local politicians and a government snitch (the strip-club owner) who changed his story more often than his socks. For a recent article on the case from the Las Vegas Sun, visit the paper's site here.


Above image of Ms. Kincaid-Chauncey (with her attorney, Richard Wright), by Sam Morris from http://www.lasvegassun.com/news/2009/feb/20/appeals-court-upholds-kincaid-chaunceys-conviction/


Steven Kalar, Senior Litigator. Website at www.ndcalfpd.org

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