Lori Loughlin, Felicity Huffman Charged With Honest Services Fraud -- What Is That?
Last month, TV stars Felicity Huffman and Lori Loughlin were among dozens of parents, coaches, and school administrators indicted in an elaborate admissions bribery scheme to get underqualified kids into elite universities. The pair made their first appearances in a Boston federal courtroom yesterday, though neither entered a plea.
Both are charged with conspiracy to commit mail fraud and honest services mail fraud, but what does this scandal have to do with the mail?
Any Scheme or Artifice to Defraud
The federal mail fraud statute makes it illegal to place anything in the mail "for the purpose of executing ... any scheme or artifice to defraud." In addition, 18 U.S.C. § 1346 defines "scheme or artifice to defraud" to include "a scheme or artifice to deprive another of the intangible right of honest services." Mail fraud is one of the most commonly charged federal crimes, as the use of the U.S. Postal Service or a private interstate carrier to commit a crime of deceit gives federal law enforcement officials an easy opportunity to claim jurisdiction. In addition, the honest services statute is broadly defined and has been charged in corporate scandals like Enron and bribery of public officials like Rod Blagojevich (though neither of those charges stuck).
Courts have struggled to define the limits of honest services fraud. The Fourth Circuit has said the statute requires that a defendant possess a fraudulent intent and make "any misrepresentation that has the natural tendency to influence or is capable of influencing" the victim to change his behavior. While the Fifth Circuit has said the law only applies "when there is some detriment to the employer ... The detriment can be a deprivation of an employee's faithful and honest services if a violation of the employee's duty to disclose material information is involved."
The Intangible Right of Honest Services
In this case, prosecutors will likely argue that Huffman and Loughlin deprived the universities of the honest services of their employees by making misrepresentations about their children's qualifications to attend the schools. Huffman allegedly paid $15,000 (disguised as a charitable donation) to rig her daughter's SAT score, while Loughlin and her husband are accused of paying $500,000 to have their two daughters labeled as crew recruits to get into USC.
Unfortunately for both, it doesn't matter if the scheme actually worked, as both are charged with conspiracy, and under that statute: "Any person who attempts or conspires to commit any offense under this chapter shall be subject to the same penalties as those prescribed for the offense, the commission of which was the object of the attempt or conspiracy."
The AP reports that one parent has already pleaded guilty to the same charges. Huffman and Loughlin, though, were released following their court appearances on bond and restricted travel conditions.
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- Sweeping Indictment in $25 Million Admissions Bribery Case (FindLaw's U.S. First Circuit)