Did the McDonnell Decision Legalize Putting Public Officials on Retainer? Menendez’s Challenge to the “Stream of Benefits” Theory

In my post two weeks ago, I argued that in order to assess whether the U.S. Supreme Court’s decision in the McDonnell case would have a major impact on public corruption prosecutions—and in the slightly-hyperbolic words of some commentators, whether the decision “legalized public corruption”—the case to watch is the trial of New Jersey Senator Bob Menendez. Since most of the case law coming out of the McDonnell decision has focused on the definition of “official acts” in the context of quid pro quo bribery, many of those watching the Menendez trial expected it to center on how the court interpreted “official acts,” and whether Menendez’s actions qualified. But the case took an unexpected twist: the same day I published my post, Judge William Walls zeroed in on McDonnell’s effect on the prosecution’s stream of benefits theory of corruption—a key part of the government’s case.

According to the “stream of benefits” theory of corruption, prosecutors can establish an implicit quid pro quo by showing that a series of bribes were made to keep an official “on retainer,” so the donor can benefit from the official’s service as needed. In other words, on this theory, the government does not need to connect a specific individual gift to a specific individual act. Instead, the government can show that the private party provided a series of payments or gifts to the public servant over time, in exchange for the public servant being “on call” to perform official acts in return as needed. On this theory, the specific official act (the “quo”) doesn’t need to be known or contemplated at the time of the bribe (the “quid”). In Menendez, prosecutors invoked that theory, and attempted to show that the many favors Dr. Salomon Melgen did for Senator Menendez over a period of several years—such as rides on his private plane and trips to luxury resorts in the Caribbean—were offered in exchange for a series of actions Menendez took to lobby the executive branch on Dr. Melgen’s behalf. (The government alleges other charges against Menendez, such as making false statements on financial disclosure forms related to the bribery, but the stream-of-benefits bribery allegations are the heart of the case.)

Senator Menendez’s defense team—drawing on an argument developed in a Cato Institute reportmoved to dismiss the case, arguing that McDonnell narrowed the scope of “official act” so much so that the public official must agree to perform a “specific and focused” act rather than a “broad policy objective,” meaning that the theory that a public official is kept “on retainer” in exchange for a series of favors cannot stand. Judge Walls said he was not sure that the stream of benefits theory was still viable after the McDonnell ruling, and asked the parties to brief the issue over the weekend, even saying to the DOJ lawyers that “if stream of benefits still lives, then you’ve got a chance.” Commentators accordingly rang the alarm bells, worried what extending McDonnell this far would mean for public corruption cases (see here and here).

Judge Walls eventually ruled last Monday that McDonnell did not prevent prosecutors from arguing a stream of benefits theory, concluding instead that the issue of whether there was a quid pro quo was a question of fact for the jury to decide. This was the right decision. Indeed, it’s troubling that the judge took the issue as seriously as he seemed to, as the idea that a fair reading of McDonnell requires outright rejection of the stream of benefits theory seems farfetched.

  • For one thing, the defense’s argument reads far too much into the McDonnell Court’s “specific and focused” language. In context, it’s likely that the Court meant that the official acts provided by the public servants must be concrete ones within the scope of the official’s position, rather than ambiguous, or generally referring to “access” (things like setting up a meeting or making a phone call, which may or may not lead to some official act down the road). For instance, in McDonnell, the Court noted that an event hosted by the defendant that focused on “economic development” was not sufficiently specific to constitute an official act. However, the Court went on to say that a decision to allocate grant money would be a “focused and concrete” matter that could be considered quid pro quo Therefore, the McDonnell Court meant that the official acts, whatever they were, had to be “specific and focused,” not that the bribe payments needed to have a specific and focused connection with an individual official act at the time the payment was made.
  • Moreover, in McDonnell, the Court emphasized that the quid pro quo requirement “need not be explicit, and the public official need not specify the means that he will use to perform his end of the bargain.” The official needs to only have “received a thing of value knowing that it was given with the expectation that the official would perform an ‘official act’ in return.” The Court seems to endorse implicit quid pro quo schemes, such as a stream of benefits. This language, from McDonnell itself, strongly supports the validity of a stream of benefits scenario in which the public official can later perform his “official act” by any means after a series of benefits are conferred.
  • In addition to these legal arguments based on a close reading of the McDonnell opinion, it’s also worth noting that, from a policy standpoint, the defense’s theory would produce irrational results that it’s extremely unlikely the Supreme Court (or Congress, which wrote the statutes being interpreted) could possibly have intended. If the court were to invalidate the stream of benefits theory, it would really would legalize corrupt arrangements in which private interests put public servants politicians “on retainer”—even, in extreme cases, going so far as to provide regular cash payments into the public servant’s personal bank account in exchange for an agreement that the public servant will do the payer’s bidding on any issue of interest comes up in the future. While the McDonnell Court may have wanted to better define what counted as an “official act” under the bribery statute, it’s unlikely the Court wanted to relax protections against public corruption to this extent.

No court has invalidated the stream of benefits theory after McDonnell. And as the prosecution emphasized, the policy implications from this move would be seismic. The judge made the right decision in rejecting the defense’s argument, though the fact that it was even entertained illustrates the undesirable destabilizing effect the Court’s McDonnell decision is having on public corruption prosecutions.

3 thoughts on “Did the McDonnell Decision Legalize Putting Public Officials on Retainer? Menendez’s Challenge to the “Stream of Benefits” Theory

  1. Nice post. And yes, a bit of hyperventilating about McDonnell.

    My favorite defense of “stream of benefits” theory —

    “In bribery as in baseball, there appears to be no good reason why a transaction may not include a player to be named later. If a public official named Genie were to agree to grant three wishes in exchange for a deposit to her Cayman Islands bank account, she surely should be convicted of bribery.” http://chicagounbound.uchicago.edu/cgi/viewcontent.cgi?article=1951&context=public_law_and_legal_theory

  2. Pingback: Did the McDonnell Decision Legalize Putting Public Officials on Retainer? Menendez’s Challenge to the “Stream of Benefits” Theory | Matthews' Blog

  3. Hi Maddie,

    Thanks for a great post and your coverage of these developments. I agree with you that the stream of benefits theory is an important one to keep in the anti-corruption arsenal. In this case, the issue of whether quid pro quo corruption existed was an issue for the jury to decide based on evidence. Do you think this case will start a trend in monitoring activities of public officials to catch corruption sooner (like plane rides and deposits in a Cayman bank account)? Or, do you think we will wait until corruption cases come up to dig through a potential stream of benefits?

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