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UNDERSTANDING FEDERAL PUBLIC CORRUPTION AND BRIBERY
Public corruption is a federal crime and a top priority for federal law enforcement because it damages public trust in government.
INTRODUCTION
Public corruption is the Federal Bureau of Investigation’s top criminal investigative priority in the United States.
Federal law enforcement seeks to protect the public’s confidence in government. Public confidence in government materially suffers when public officials fall prey to public corruption, including bribery, illegal lobbying, extortion, graft, influence peddling, no-bid contracts, and other corrupt acts.
Public corruption costs the US government and the public billions of dollars each year.
PUBLIC CORRUPTION AND TYPES OF CORRUPTION
Public corruption is a breach of public trust that typically occurs when federal, state, or local officials and their private-sector co-conspirators abuse their position.
What is an example of abuse of office and public corruption? Bribery is one of the most common examples of public corruption. Bribery and kickbacks are common types of corruption and often go together. Bribery and kickbacks are among the most serious types of corruption.
Among the most serious types of public corruption are bribery and kickbacks, extortion, blackmail, bid-rigging, influence-peddling, illegal lobbying, collusion, graft, conflict of interest, gratuities, product diversion, and cyber extortion. Public corruption violates public trust for personal gain.
PUBLIC CORRUPTION IS A FEDERAL CRIME
In no uncertain terms, the Department of Justice states that it is a violation of federal law for any federal, state, or local government official to ask for or receive anything of value in exchange for, or because of, any official act. Public corruption is a federal crime.
Several federal statutes provide for federal prosecution of public corruption in the United States. Prosecutors regularly use most often use the Hobbs Act, Travel Act, RICO, the program bribery statute, and mail and wire fraud statutes to prosecute people for public corruption.
Under federal law, any person who offers or pays a bribe is guilty of public corruption and bribery, among other possible crimes. Because these crimes result from secret backroom dealings, they can be challenging to detect and prosecute.
The FBI investigates all types of public corruption and encourages citizens to report instances of public corruption when they become aware.
PUBLIC CORRUPTION AND BRIBERY
Bribery is one of the most serious types of public corruption. Public corruption is a broad category that includes any unlawful, unethical, or improper action or breach of trust undertaken for personal, commercial, or financial gain. Public corruption includes all forms of bribery, including kickbacks.
*Pro-Tip: Remember to consult legal counsel in connection with any federal investigation or criminal court case. Prison Professors, an Earning Freedom company, regularly helps clients locate and vet experienced criminal counsel. Prison Professors also helps clients navigate the criminal justice journey and obtain better outcomes.
FEDERAL BRIBERY INCLUDES PUBLIC AND PRIVATE DEALINGS
All too often, people looking to gain the favor of a government official or private commercial partner offer gifts or money in exchange for faster results or better outcomes. Bribery is an accepted cost of doing business in some countries and industries, but it is severely punished in the United States.
The decisions of public officials and corporate officers should always protect the interests of their constituents and employers. To that end, public officials or private company officers cannot:
- accept something of value in exchange for influencing their decisions;
- enable fraud; or
- violate their lawful duties.
As such, while most headlines focus on public corruption, bribery is also illegal in the private sector.
States have enacted laws criminalizing bribery between private sector commercial entities. While no federal statute prohibits explicitly commercial bribery, prosecutors can use a handful of other federal statutes to prosecute commercial bribery cases.
Private bribery works just as bribery of a public official. Instead of bribing a public official, the bribe goes to a private company employee to obtain an advantage in a commercial transaction. For example, commercial bribery occurs when a supplier pays cash or expenses to someone in a position to make sure that the supplier’s bid wins the contract.
Significantly, in bribery cases, both the person offering the bribe and the person who solicits or accepts the bribe are subject to federal criminal charges.
DEFENITION OF PUBLIC OFFICIALS
States and the federal government have laws specifically against bribing foreign or domestic public officials, defining “public officials” very broadly.
Generally, a public official for these purposes is anyone who works for the federal (or state) government. That includes members of Congress, delegates, resident commissioners, any officer, employee, or person acting on behalf of the United States or any department, agency, or branch of the US government, including the District of Columbia. It even applies to people who will become public officials once they are nominated or appointed.
GRAFT AND BRIBERY VIOLATE FEDERAL PUBLIC CORRUPTION LAWS
Generally, bribery is the practice of offering, giving, receiving, or soliciting something of value to influence another person’s official actions in the discharge of their public or legal duties.
Federal statutes refer to two classes of federal offenses: graft and bribery. See 18 US Code CHAPTER 11—BRIBERY, GRAFT, AND CONFLICTS OF INTEREST, SECTION 201 et seq.
FEDERAL CHARGES FOR GRAFT
Appointed or elected government officials tasked with allocating public funds must act in the public’s best interest, including awarding contracts to the most competitive bidders in a fair and honest procurement process.
Graft is associated with political corruption and involves misdirecting public funds by a government official to benefit private interests.
Graft often involves private companies owned by public officials or friends, who pay kickbacks or bribes for preferential treatment.
Specifically, political grafting can occur when a public official selects suppliers to provide products or services to a local community. Another example is selecting suppliers to participate in the bidding for government contracts and selecting the winning bid.
It is the concern of anti-public corruption officers that public officials not select friends as suppliers or agree to pay above-market prices on government contracts, for which they may later obtain gifts, vacations, and other gratuities. These items will be seen as illegal bribes or kickbacks in a law enforcement investigation.
Another example of graft is no-bid contracts.
Graft violates the general federal bribery statute, and grafting almost always includes a violation of general anti-corruption laws. Prosecutors may also charge the act of graft as defrauding the federal government.
In short, federal law enforcement will come knocking when a public official accepts kickbacks from private companies in exchange for public contracts.
FEDERAL CHARGES FOR BRIBERY
Bribery occurs when someone offers something of value to a corporate or public official in exchange for their cooperation in influencing a decision-making process, committing or allowing fraud against the official’s organization, or otherwise violating their official duties.
In the US, the General Federal Bribery Act (18 USC § 201) bans the bribing of public officials. (Internationally, the federal governing statute is the FCPA or Foreign Corrupt Practices Act.)
There is no explicit federal prohibition or regulation against bribery in the private sector. Still, prosecutors charge corporate officers involved in bribery schemes under federal laws such as honest services fraud or under state bans against commercial bribery.
Honest services fraud is part of the federal mail and wire fraud statutes (18 USC § 1346). The statutes cover fraudulent schemes that deprive another of honest services through bribes or kickbacks from a cooperating third party. Prosecutors often use these statutes to charge persons involved in private sector commercial bribery.
An additional point on bribery vs. gratuities is consequential.
For a person facing public corruption charges of bribery or gratuities under Section 201, 18 US Code, it is highly significant how prosecutors characterize the exchange of value. That is because a Section 201 bribery conviction is punishable by up to 15 years in prison, while a gratuities conviction under Section 201 carries a maximum 2-year sentence.
What will the charges turn on?
The DOJ explains the difference as follows. The most important difference is how close a connection there is between the giving (or receiving) of the thing of value, on the one hand, and the doing of the official act, on the other.
If money was given essentially to purchase or ensure an official act, as a “quid pro quo,” then the crime is bribery.
On the other hand, if money was given after the fact, as thank you for an official act but not in exchange for it, or if it was given with a nonspecific intent to “curry favor” with the public official, then it is a gratuity.
In addition, with a bribe, the payment may go to anyone or to anything and may include campaign contributions. With a gratuity, the payment must inure to the personal benefit of the public official and cannot include campaign contributions.
Either way, bribery or illegal gratuities are both serious types of public corruption that can lead a person to prison.
ADDITIONAL FEDERAL ANTI-BRIBERY LAWS
Additional federal anti-bribery statutes include, for example, statutes prohibiting specifically:
- bribery of a bank examiner;
- bribery incident to appointment to a public office;
- bribery incident to various loan and bank transactions; and
- bribery in connection with the sale or distribution of alcoholic beverages.
Also, the Travel Act is a federal statute that prohibits travel in interstate commerce with the intent to engage in any unlawful activity. Bribery is an unlawful activity under state laws. Therefore, bribing a private person in a state where “commercial bribery” is prohibited renders the case a federal criminal case under the Travel Act.
*Pro-Tip: Many state laws define commercial bribery as “the giving or offering to give, directly or indirectly, anything of value to any private agent, employee, or fiduciary, without the knowledge and consent of the principal or employer, with the intent to influence such agent’s, employee’s, or fiduciary’s action concerning the principal’s or employer’s affairs.”
Click here for a case study from White Collar Advice on a veteran’s journey through federal bribery charges: Bribery Charge Lands Veteran in Federal Prison.
The statutory penalties for bribery of a public official include a fine of up to three times the value of the bribe and imprisonment for up to 15 years in federal prison. A conviction can also disqualify the individual from holding any office of honor, trust, or profit under the auspices of the United States government.
Federal Anti-Public Corruption Act
The Foreign Corrupt Practices Act (“FCPA”) provides for federal criminal punishment for the bribery of foreign officials. Offers or promises to pay any money, gift, or promises to a foreign official to influence their official acts or decisions can result in criminal charges. Paying foreign government officials to help with obtaining or retaining business is illegal.
The Foreign Corrupt Practices Act (15 US Code § 78dd-1) criminalizes the corrupt offer, by mail or in commerce, of anything of value from a publicly-traded company to a foreign official for an official act to do business. This statute is often referred to as a federal public corruption act or anti-public corruption act.
Anyone who works in international business must understand the FCPA. Countries like Russia, China, or Mexico are notorious for the bribery that is part and parcel of international business deals. Bribery may be just a cost of doing business in some countries, but its penalties in the US are harsh. Walmart is an example of a company that faced FCPA bribery charges for paying $24 million in “facilitation expenses” in Mexico to obtain licenses to expand its Mexican operations.
Penalties for violations of the FCPA are severe, including up to $2 million in fines for US companies. US company officers, directors, employees, stockholders, or agents can also face fines of up to $100,000 and up to 5 years in prison.
Public Corruption And Lobbying, Influence-Peddling & Bribery
Lobbying, influence peddling, and bribery are related but distinct public corruption concepts. They all seek preferred favorable outcomes or personal favors. As such, they create a slippery slope environment that can lead to public corruption.
While bribery is an effort to buy power in order to guarantee the desired outcome, lobbying is an effort to influence power, often by offering seemingly above-board contributions or favors. Influence-peddling is the use of position or political influence on someone’s behalf in exchange for money or favors.
Influence-peddling and lobbying can look alike, and neither alone is illegal or corrupt. (Lobbying in the US is subject to federal regulations.) Some law enforcement experts use “undue influence peddling” to describe instances when influence-peddling crosses the line towards illegal public corruption. Critics of lobbying and influence-peddling claim that they are each just bribery by another name.
The lobbying definition is an organized attempt to influence a law-making or policy-making body, often through financial contributions. To lobby is to influence or attempt to influence legislative action or public policy consideration.
Lobbyists try to ensure that contributions made by grassroots donors can help influence decision-makers at all stages of the law-making and public policy process. These contributions do not go to any official or lawmaker directly. But they might go to an official’s election or re-election campaign or a politician’s favorite charity. These exchanges create the unmistakable understanding that “we support your interests and receive your support in return.” Lobbying is big business. Official reports indicate that lobbying spending grew from $1.44 billion in 1998 to $3.53 billion in 2020. Lobbying is vital to companies in the financial sector. In 2020, financial firms spent $104 million on lobbying activities to protect their interests.
Lobbying (and influence-peddling) are efforts to influence power. Bribery is an effort to illegally buy power, not just influence it. However, the lines separating lobbying, influence-peddling, and bribery can sometimes blur, especially where money is involved.
Public Corruption And Extortion
Extortion is one of the most serious types of corruption under federal and state laws.
Extortion is the wrongful use of actual or threatened force, violence, or intimidation to gain money or property from an individual or entity, according to Investopedia. The crime of extortion is the forcing or threatening of another to obtain their money or property.
The crux of extortion is the making of threats, whether the threats are carried out or not. While the threat of violence or property damage is at the core of extortion, it can also involve reputational harm or adverse government action. However, it is not every threat; for example, threatening to file a lawsuit unless someone pays you money they owe is not criminal extortion.
Criminal threats often involve physical violence, damage to property, physical restraint or arrest, or withholding services or money. Another type of extortion involves offering a person protection from harm or theft for a fee. This type of extortion is common in film and television as “protection money.”
Blackmail is extortion based on the threat to reveal embarrassing or scandalous information about someone unless they pay to keep the damaging information private.
Extortion using computers to reach targets is called cyber extortion. For example, ransomware, a type of malware, encrypts essential data files on a computer preventing the owner access unless they pay sums of money.
There is also attacking a computer network and demanding money to end the attack. According to Risk Management Magazine, this type of computer crime is now the most lucrative, outranking intellectual property theft.
Extortion is a federal crime and also a felony in all 50 states. Extortion is federal when implemented by any wireless communication including emails and texts, other computer communication, or by telephone or regular mail, or if it illegally affects interstate commerce by any other means.
Punishment for extortion is severe, commonly punished by fines and incarceration. Extortion punishment includes jail or prison, fines, and restitution. If convicted, a prison term for extortion can be up to 20 years.
5 TAKEAWAYS
- Public corruption is a federal crime and a top priority for federal law enforcement.
- Bribery, kickbacks, and extortion are among the most serious types of public corruption.
- The FBI investigates all types of public corruption and encourages citizens to report instances of public corruption when they become aware.
- Public corruption involves a public official (whether domestic or foreign) as one party to the corrupt act, whereas private corruption includes people in the private sector. Federal public corruption prosecutions through mid-2021 have increased. DOJ Statistics: Public Corruption Prosecutions.
- Official corruption prosecutions include bribery, graft, conflicts of interest, and other violations by federal, state, and local officials and law enforcement personnel. The federal government prosecutes governors, judges, federal and state legislators, and other federal, state, and local public officials for their criminal actions while in public office.
CONCLUSION
Public corruption is a federal crime, and it is a top priority for federal law enforcement. The DOJ aggressively pursues cases where federal, state, or local government officials ask for or receive anything of value in exchange for, or because of, an official act. Bribery, kickbacks, and extortion are among the most serious types of public corruption in the US.
