On June 26, 2024, the Supreme Court issued a 6-3 opinion in Snyder v. United States, 603 U.S.____(2024), holding that 18 U.S.C. § 666 — a federal fraud statute geared towards a variety of misconduct by state, local, and tribal officials in connection with federal program funds — does not criminalize gratuities received for an official's past acts. This decision continues the Court's ongoing trend of narrowing federal anticorruption laws and limiting when and how federal prosecutors can bring federal charges against state and local government officials. The decision also serves as a reminder that different jurisdictions — both inside and outside the United States — have varying rules on what gifts to government officials are and are not lawful.
Over the past 15 years, the Court has unanimously decided a series of cases that significantly limited the scope of federal anticorruption laws. The Court's 2010 decision in Skilling v. United States held, in the context of the prosecution of a business executive, that "honest services" mail and wire fraud reaches only bribery and kickback schemes. In 2016, McDonnell v. United States narrowed the definition of "official acts" under the federal bribery statute (which the parties had agreed to use at trial) and overturned the honest services fraud conviction of a former Virginia governor for accepting more than $175,000 worth of loans, gifts, and other benefits from the CEO of a dietary supplement company. And in 2020, the Court held in Kelly v. United States
that appointees of a New Jersey governor did not commit federal program fraud when they orchestrated traffic congestion at the George Washington Bridge as political retribution, because the scheme did not aim to obtain money or property. Finally, in May 2023, the Court overturned the convictions in both Percoco v. United States and Ciminelli v. United States, which related to the "Buffalo Billions" economic development controversy under a New York governor, limiting the prosecutions of private individuals for honest services fraud and rejecting the "right to control" theory of wire fraud.
Background and Analysis of Snyder
Snyder continues this trend. In 2019, James Snyder, the former mayor of the city of Portage, Indiana, was convicted of accepting an illegal gratuity in violation of 18 U.S.C. § 666(a)(1)(B). In 2013, while Snyder was mayor, Portage awarded two contracts to a local truck company, Great Lakes Peterbilt, and bought five garbage trucks from the company for approximately $1.1 million. The next year, Peterbilt gave Snyder $13,000. Snyder maintained that the payment was in exchange for his consulting services, but federal prosecutors charged him with accepting an illegal gratuity in violation of Section 666. Snyder was convicted and sentenced to one year and nine months in prison. On appeal, Snyder argued that Section 666(a)(1)(B) only applies to bribes and therefore does not cover a gratuity for a past act. The Seventh Circuit affirmed the conviction and the Supreme Court granted certiorari.
The Court's 6-3 decision departed from its previous string of unanimous anticorruption decisions. Justice Kavanaugh's opinion for the Court first distinguished bribes from gratuities. "Bribes" are generally "payments made or agreed to before an official act" to influence the official about "that future official act." Conversely, "gratuities" are payments made "after an official act," "with no agreement beforehand," and "are not the same as bribes before the official act." Having made that significant distinction about what separates "bribes" from "gratuities," the Court discussed the six reasons that led the Court to conclude that Section 666(a)(1)(B) is a bribery provision and does not prohibit gratuities for past acts.
First, the Court considered the text of Section 666, which makes it a crime for state and local officials to "corruptly" accept a payment "intending to be influenced or rewarded" for an official act. This language was modeled after the bribery provision, 18 U.S.C. § 201(b), for federal officials which, according to Justice Kavanaugh's opinion, bears little resemblance to the federal gratuity provision. The gratuity provision, Section 201(c), provides no express mens rea requirements and instead criminalizes federal officials accepting payments "for or because of any official act." The Court wrote, "the dividing line between 201(b)'s bribery provision and 201(c)'s gratuities provision is that bribery requires that the official have a corrupt state of mind and accept (or agree to accept) the payment intending to be influenced in the official act." According to the Court, Section 666 contains the same attributes of Section 201(b)'s bribery provision — a corrupt state of mind and the intent to be influenced in the official act. The Court interpreted Congress' use of the term "rewarded" in the statute to encompass situations "where the agreement was made before the act, but the payment was made after the act."
Second, the Court explained that the statutory history reinforced the plain text. In 1986, Congress revised Section 666 to remove the language that resembled Section 201(c) (the federal gratuities statute) and instead updated the language to reflect Section 201(b) (the federal bribery statute). To interpret Section 666 to extend to gratuities would be to apply the meaning it had prior to its 1986 update.
Third, the Court considered the statute's structure and concluded that it would be "highly unusual, if not unique" for Congress to prohibit bribes and gratuities to state and local officials in a single provision. There is no other provision in the U.S. Code that prohibits both bribes and gratuities. Justice Kavanaugh's opinion presumed that this is because "bribery and gratuities are two separate crimes with two different sets of elements." (internal quotation marks omitted).
Fourth, the Court explained that Congress likely divided bribery and gratuities into two separate provisions because they each warrant a distinct punishment that "reflect their relative seriousness." Accepting a bribe as a federal official is punishable by up to 15 years in prison while accepting an illegal gratuity as a federal official is punishable by only up to two years. "In short," the Court concluded, "the inexplicable anomalies ushered in by the Government's approach powerfully demonstrate that § 666 is a bribery statute."
Fifth, the Court considered the federalism implications of the government's position. Because Section 666 "covers virtually all state and local officials — about 19 million nationwide," the government's position would subject those officials to a "new and different regulatory regime for gratuities." For instance, the opinion suggested that a county official could face up to 10 years in federal prison for accepting a $100 gift card from a grateful neighbor for working on a new park. Interpreting Section 666 to criminalize this interaction "would significantly infringe on bedrock federalism principles" because states generally have the "prerogative to regulate the permissible scope of interactions between state officials and their constituents."
Finally, the Court considered fair notice and determined that interpreting Section 666 to apply to gratuities would serve as a trap for state and local officials. As the government conceded at oral argument, it would be an "irrational overbreadth" to apply Section 666 to all gratuities, since the statute does not cover "innocuous" or "obviously benign" gratuities. The majority found that unconvincing — according to the Court, the government failed to draw a line in the sand and offers "no guidance at all." To drive this point home, the opinion asked, "[i]s a $100 Dunkin' Donuts gift card for a trash collector wrongful?"
Based on this six-step analysis, the Court declined to extend Section 666 to cover gratuities: "Within constitutional bounds, Congress can always change the law if it wishes to do so." In concurrence, Justice Gorsuch acknowledged that "any fair reader of this statute would be left with reasonable doubt about whether it covers the defendant's charged conduct." He added that when in doubt, the rule of lenity is to be applied — proclaiming that it was "at work behind today's decision."
Justice Jackson penned a vigorous dissent, joined by Justices Sotomayor and Kagan, criticizing "Snyder's absurd and atextual reading of the statute," as well as the majority embrace of it. Justice Jackson likened the Court's federalism concerns to a "quintessential example of the tail wagging the dog" and found that the Court's concern about equipping federal prosecutors with unwarranted power, put simply, is not the Court's problem. This decision, Justice Jackson wrote, "overrides the intent of Congress" and is at odds with the plain text of the statute. "The real bone the majority has to pick with 666 is its concern about overregulation."
Implications
Snyder is the Court's most recent message to federal prosecutors that anticorruption statutes should be read narrowly, particularly when it comes to local and state officials. But in addition to continuing the Court's trend of narrowing these laws, Snyder's temporal-based distinction of what separates a "bribe" from a "gratuity" — whether the payment is made before or after the decision to take an official act — may support future challenges when the government charges that an official unlawfully accepted a payment.
Additionally, although Snyder cabins the scope of anticorruption laws, it also serves as a reminder that companies interacting with local, state, and federal officials — or any organization receiving more than $10,000 annually in federal assistance — must navigate varying (and potentially inconsistent) local, state, and federal laws and regulations. As Justice Kavanaugh pointed out: "Not surprisingly, different governments draw lines in different places." Some jurisdictions bar gifts for specific activities; some make exceptions for certain gifts; and some prohibit all gifts from business entities doing business with or bidding for contracts with the government. As the Court suggested, even if a gratuity does not violate Section 666, "a gratuity offered and accepted after the official act may be unethical or illegal under other federal, state, or local laws."
While the use of Section 666 has declined in recent years (according to the Bureau of Justice Statistics, about 145 people were charged under the statute each year from 1995 to 2010, but over the last five years, the average has dropped to around half of that), time will tell if this decision — and the Court's six-step analysis — will have rippling effects on other anticorruption statutes.
Please reach out to the authors of this post or members of Arnold & Porter's White Collar Defense & Investigations group if you have any questions about this case or anticorruption matters more generally.
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