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 report—moved 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. Continue reading →