The term “honest services fraud” may sound like something from a past century. Make no mistake – it’s a very real and serious federal crime today. It may be more often referred to as bribery or embezzlement.
It involves one party paying a bribe to another or receiving a “kickback” in exchange for providing something of value. The reason this is considered a crime and not a legal transaction is because it harms at least one other party that is deprived of “the intangible right of honest services,” according to a federal statute.
The college admissions scandal
Consider an example. You probably remember the college admissions scandal a few years back that landed some famous and other wealthy parents in serious legal hot water and even behind bars in federal prison. One of the things some of these parents were accused of – and many admitted to – was paying university coaches to help get their kids into schools based on athletic ability and experience they didn’t actually have. These transactions were handled through a third party, who also faced serious federal charges.
These transactions harmed student athletes who were genuinely qualified to go to these schools and compete in sports there. Universities were also harmed with regard to their coaches’ “honest services,” when they chose money over their responsibilities to recruit the best student athletes.
Other examples
Honest services fraud can occur in just about any industry and profession. Doctors who refer patients to a particular specialist in exchange for a “kickback” from that specialist, for example, can be charged with honest services fraud because they’re placing monetary interests over connecting a patient with the best doctor for them. It occurs in private companies of all sizes and in the public sector as well.
This type of fraud often involves wire or mail fraud. Wire fraud is more common these days because most transactions are carried out, at least in part, via text, email, online or over the phone. Mail fraud involves some use of either the U.S. Mail or delivery or courier services. Criminal consequences can involve prison sentences of up to 20 years in addition to significant fines.
If you’re under investigation for any kind of federal fraud or have already been charged, it’s crucial that you get experienced legal guidance right away. There are ways to defend against these charges or at least minimize the consequences. This effort can help you protect your freedom and your reputation.