Case No. 18-1059 | 3d Cir.
Preview by Michael Fischer, Online Editor
On the morning of September 9, 2013, two of the three toll lanes for the upper-level entrance of New York City’s George Washington Bridge were closed as part of a purported traffic study. These lane closures lasted over four days and resulted in extensive traffic delays in Fort Lee, New Jersey. Following an investigation, it was later revealed that the lane closure fiasco was in reality an act of political payback orchestrated by staff members within then–Governor Chris Christie’s administration. Fort Lee Mayor Mark Sokolich had previously refused to endorse Christie’s bid for reelection and it was believed that the traffic jams were designed to cause extensive delays during the first week of Fort Lee’s school year as punishment. William Baroni, Jr. and Bridget Anne Kelly, both aides of Governor Christie, were later charged with conspiracy to obtain by fraud, knowingly convert, or intentionally misapply property of an organization receiving federal funds as well as the offense underlying that conspiracy. Baroni and Kelly were convicted on both counts and their convictions were affirmed by the Third Circuit Court of Appeals.
Defendants appealed to the Supreme Court and certiorari was granted on June 28, 2019. The issue on appeal before the Court is whether “a public official ‘defraud[s]’ the government of its property by advancing a ‘public policy reason’ for an official decision that is not her subjective ‘real reason’ for making the decision.” Petition for a Writ of Certiorari at i, Kelly v. United States, No. 18-1059 (U.S. filed Feb. 12, 2019).
On appeal, Petitioner Kelly contends that an official’s regulatory decision or inducement thereof is not an obtainment of property. Reply Brief for Petitioner at 16, Kelly, No. 18-1059 (U.S. filed Dec. 20, 2019). Petitioner asserts that regulatory power is not “property” under the fraud statutes and therefore, even deceitful methods of affecting regulatory actions are not schemes to “obtain property.” Id. Additionally, Petitioner argues that if an official does not “obtain property” by inducing the regulatory decision, then the official also does not “obtain” the decision’s implementation costs. Id. at 18. Finally, Petitioner emphasizes that no resources were devoted to private use since neither Baroni nor Kelly personally obtained money or property and to hold that this constitutes property fraud would give rise to the possibility that every sovereign decision could be characterized as “obtaining property.” Id. at 20.
Respondent counters that Petitioner committed property fraud by faking a traffic study to divert Port Authority resources because proof that a defendant obtained property through a material falsehood satisfies the statutory definition of fraud. Brief for the United States at 25, Kelly, No. 18-1059 (U.S. filed Nov. 22, 2019). Additionally, Respondent argues that Petitioner’s conduct satisfies the requirements for wire fraud, which includes lying for diversion of an “organization’s money, employee time, or other resources toward an otherwise unachievable end.” Id. at 28. Furthermore, Respondent contends that Petitioner mischaracterized the fraud for which she and Baroni were convicted, and explains that the fraud concerned the lie about the existence of a traffic study, not the concealment of their underlying political motives. Id. at 32–33. Finally, Respondent argues that affirming the convictions would not subject routine political conduct to federal fraud prosecutions because the illegal conduct in this case involved lying to obtain authority that the officials did not otherwise possess. Id. at 47.