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The US Department of Justice's ongoing efforts to expand the reach of federal corruption statutes is in jeopardy after last week's failure to convict US Senator Robert Menendez (D-NJ). U.S. v. Menendez et al, No. 15-cr-00155, US District Court for the District of New Jersey. The case against Sen. Menendez, which ended in a deadlocked jury, highlights the challenges the government now faces when proving corruption cases following the US Supreme Court ruling in United States v. McDonnell, 136 S. Ct. 2355 (2016). The outcome is instructive for those who wish to challenge the government’s use of the "stream-of-benefits" theory in bribery or corruption cases.
The Menendez case involved multiple federal charges against the Senator and one of his campaign donors, Dr. Salomon Melgen, a Florida ophthalmologist. The indictment alleged that Dr. Melgen had provided Sen. Menendez with free flights on his private jet, free stays and luxury golf at the doctor's vacation villa, and hundreds of thousands of dollars in campaign contributions. According to the Government, in exchange for such items, Sen. Menendez used his influence as a US Senator to promote Dr. Melgen’s business and personal interests, including by expediting visas, intervening on Dr. Melgen's behalf in disputes arising out of federal government contracts, and pressuring federal regulatory agencies to change decisions unfavorable to Dr. Melgen. The indictment also alleged that Sen. Menendez failed to disclose several of these gifts in his annual financial disclosure reports.
At trial, the prosecution presented the various benefits Dr. Melgen provided to the Senator under a “stream of benefits” theory, whereby the government attempted to show that Dr. Melgen paid bribes to the Senator in return for the Senator being available to perform official acts as needed. Sen. Menendez challenged the Government’s “stream of benefits” theory by arguing that, under McDonnell, prosecutors were required to link each bribe to a corresponding official act (a specific quid pro quo). In McDonnell, the Supreme Court had significantly narrowed the definition of an “official act” to exclude conduct such as arranging meetings, hosting events or making telephone calls on another’s behalf. Instead, “official acts” extended only to the “formal exercise of governmental power,” such as those “similar in nature to a lawsuit before a court, a determination before an agency, or a hearing before a committee.”
The prosecution’s case faltered at trial. While the defense acknowledged that Dr. Melgen provided generous gifts to Sen. Menendez, the defense also provided a context for such gifts, arguing that the two men had been friends since before Sen. Menendez was elected, and that Dr. Melgen’s gifts were simply reflections of their long friendship. Further, defense counsel characterized Sen. Menendez’s acts as reflections of the Senator’s interest in general policy issues, not acts performed as favors to Dr. Melgen. The defense further argued that Sen. Menendez was simply doing things that elected officials customarily do for their constituents. This line of argument apparently created some confusion in jurors’ minds over the role of a Senator, prompting them to send a note to the judge inquiring “What is a Senator?”
After seven days of deliberations, the jury announced that it was deadlocked, and the court was forced to declare a mistrial on November 16, 2017. Initial reports from jurors indicated they were not close to conviction, with one juror informing reporters that the split was 10-2 in favor of acquittal. Initial reports also indicated that some jurors thought the prosecution failed to prove that Sen. Menendez and Dr. Melgen exchanged favors and gifts for reasons other than friendship.
The Menendez result, which closely follows the Government’s stinging loss in McDonnell, could have a significant impact on how the federal government pursues bribery and corruption charges going forward. In particular, the case highlights the questionable viability of the Government’s “stream of benefits” theory in the post-McDonnell world. The shifting sands of this area of the law are well-worth considering when examining both domestic and foreign corruption allegations.
For more information concerning this alert or other recent developments regarding bribery and corruption investigations, please contact us using the information provided in the upper right under “Key Contacts”