07/19/2024 | Press release | Distributed by Public on 07/19/2024 10:04
In 2012 and 2013, while James Snyder was the mayor of Portage, Indiana, the city purchased garbage trucks from local trucking company Great Lakes Peterbilt for roughly $1.1 million. A few months later, Snyder solicited and eventually accepted $13,000 from Peterbilt's owners, which Snyder said he received for providing the company with independent consulting services. In November 2016, Snyder was charged with and indicted for federal fund fraud in violation of 18 U.S.C. § 666. After he was convicted and then granted a new trial on the same charges, he was convicted a second time in March 2021. Snyder appealed his conviction to the Seventh Circuit, arguing that § 666 does not apply to after-the-fact gratuities. Snyder said that § 666 was inapplicable because there was no agreement made in exchange for the $13,000 payment prior to the city awarding the contract to Peterbilt. The Seventh Circuit rejected that argument and affirmed Snyder's conviction.
In holding that § 666 only applies to bribes, not gratuities, the Court looked to the statute's origins and explained that it was modeled after 18 U.S.C. § 201(b), the federal bribery statute for federal officials. Both statutes have express mens rea requirements: § 201(b) "requires an official to have a corrupt state of mind and to accept (or agree to accept) a payment intending to be influenced in an official act"; § 666 requires an official to "corruptly" solicit, accept, or agree to accept "anything of value." The Court contrasted this with 18 U.S.C. § 201(c), the federal anti-gratuity provision, which contains no express mens rea requirement.
The Court also expressed federalism concerns, noting that the application of § 666 to all gratuities would significantly infringe states' rights, as § 666 "covers virtually all state and local officials - about 19 million nationwide." The Court reasoned that the government's position would subject state and local officials to a "new and different regulatory regime for gratuities." The opinion highlighted the risk that an overbroad application of § 666 could lead to unfortunate unintended results. For example, a county official could face up to 10 years in federal prison for accepting a $100 gift card from a grateful neighbor for their work on a new city park. The Court said that interpreting § 666 to criminalize this interaction "would significantly infringe on bedrock federalism principles," and that states should have the "prerogative to regulate the permissible scope of interactions between state officials and their constituents."
Snyder raises several issues that companies must strongly consider going forward:
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