Stealing the Intangible Right to Honesty

Former NBA referee Tim Donaghy claimed that the NBA used its ref’s to manipulate games to make them more exciting.  This didn’t save him from an extended visit to Club Fed, when he was sentenced by Eastern District Judge Carol Amon to 15 months imprisonment.  Still, it was better than the guidelines sentence of 27 to 33 months.  And Donaghy’s refusal to meet with an independent investigator appointed by NBA Commissioner David Stern makes a Rule 35 reduction appear unlikely.

Donaghy’s allegations, however, go the heart of the charged offense against Donaghy.  Not gambling.  Not bribery.  But a scheme to defraud the NBA by depriving it of the intangible right to his honest services under 18 USC 1346.  Many will say, “huh?”  Yes, there is such a crime.

A 28 word amendment slipped into the Anti-Drug Abuse Act of 1988 created the crime, a congressional response to the Supreme Court’s holding in McNally v. U.S. that a scheme to defraud did not cover “intangible rights.”  Well, Ronald Reagan fixed that.  It reads:


For the purpose of this chapter, the term ‘scheme or artifice to defraud’ includes a scheme or artifice to deprive another of the intangible right of honest services.

The crime was directed toward political corruption, as a weapon against politicians who sold their good office and thus denied the public their honest services.

But crimes have a funny way of spinning out of their intended orbit, as imaginative prosecutors see the words applicable to a host of other circumstances.  If a politician owes honest services to the public, doesn’t an employee owe honest services to an employer?  Or course, this line of reason could be pushed a lot further, with a husband owing honest services to his wife, perhaps?  Maybe a teacher to his student, should he neglect to teach intelligent design/evolution (pick your side)?  How about the physician who refuses to recommend treatment to a patient based on his religious beliefs, or the pharmacist who refuses to fulfill a prescription for a pill that crosses his personal boundaries?  You get the picture.

The crime of deprivation of honest services is another of the “prosecution’s darling” offenses because of its breadth in criminalizing conduct between private parties based upon a theoretical breach in the rules of the private relationship.  It circumvents the normal coterie of crimes to create a catch-all type offense, facilitating conviction when direct proof of a crime may fall short.  Like the crime of conspiracy, it’s a back door means of proving a crime because it’s too difficult to open the front door.

Over the 20 years since Section 1346 was slipped into the Anti-Drug Abuse Act, it has been the subject of controversy.  Should our government be in the business of criminalizing the conduct of an employee for dishonesty toward his employer?  Think about that the next time you ‘borrow” a pencil from your boss, or use a few minutes of work time to check your personal email.  While it’s unlikely that the feds will burst through the door, the conduct is still a crime since you’ve failed to give your employer your undivided loyalty and honest service. 

But isn’t loyalty and honesty a two-way street?  If an employee owes such a duty to his employer, what duty is owed by the employer to the employee?  Sorry, no sale.  This crime only applies to the employee, not the employer.  Despite the legal obligations that flow both ways, only one side could be staring down the prosecution’s gun for the failure to adhere to their employment duties.  The employer may be subject to civil suit, but rest assured that it will be the employee who sees the back side of an indictment.

Despite all this, a scheme to deprive an employer of honest services remains a viable and potent crime available to keep the little people in line, lest they anger the taskmasters.  In Donaghy’s case, notice that it’s not the feds independently investigating his claims that the NBA has been fixing games to pump its ratings, but the NBA itself.  Doesn’t the NBA owe its fans and its players the intangible right of its honest services?  Not under section 1346 it doesn’t.

2 thoughts on “Stealing the Intangible Right to Honesty

  1. Windypundit

    If I’m not mistaken (and I may be mistaken) 18 USC 1346 also rears its head in Employer-v.-Employee civil cases, where the commission of a crime may trigger punitive damages.

  2. SHG

    I supposed you could say that, in a round about sorta way.  Section 1346 violations could form a predicate offense for a civil RICO case, which could give rise to treble damages.

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