United States Supreme Court Reverses NJ “Bridgegate” Fraud Convictions

Philadelphia Criminal Defense Attorneys

The United States Supreme Court has decided the case of Kelly v. United States, reversing the defendants’ convictions for conspiracy, wire fraud, and federal program fraud. This was an extremely high profile case just a few years back in which New Jersey officials associated with then-Governor of New Jersey Chris Christie were accused of creating traffic jams on the George Washington Bridge in order to punish a local mayor who had refused to endorse Christie’s re-election campaign. The decision, while likely alarming to anyone who is against public corruption and the misuse of state resources to punish political opponents, continues a trend of narrowing the federal wire fraud statute’s applicability as a tool to prosecute state and local governmental corruption. 

In Kelly, the defendants were Bridget Anne Kelly, the Governor’s deputy chief of staff, David Wildstein, a Port Authority Official, and Port Authority Deputy Executive Director William Baroni. David Wildstein cooperated with federal prosecutors and pleaded guilty, meaning his conviction will likely stand, while Kelly and Wildstein went to trial and were found guilty by a jury.

The basic scheme was that Governor Christie sought to obtain endorsements from both republican and democratic officials throughout the State of New Jersey for his re-election campaign. After the mayor of Fort Lee declined to endorse the governor, his staff conspired to retaliate against the mayor by causing traffic problems at the George Washington Bridge’s toll plaza by closing the lanes which were normally reserved for the residents of Fort Lee. The scheme was disguised as a “traffic study,” but the evidence overwhelmingly showed that it was meant to punish Fort Lee.

The defendants used Port Authority staff to close the lanes, and they had to pay an additional toll collector overtime so that that toll collector would be able to cover for the main toll collector when that person went on break. The scheme resulted in massive traffic jams for days, causing people to struggle to get to work and ambulances to have trouble picking up heart attack victims.

When the scheme came to light, the defendants were indicted by a federal grand jury in the District of New Jersey and charged with conspiracy, wire fraud, and federal program fraud. Wildstein cut a deal with the government and cooperated against the other two, who were convicted. They appealed to the Third Circuit, which affirmed the convictions. The United States Supreme Court then agreed to review the case. 

The Supreme Court reversed the conviction, finding that fraud had not actually occurred because the defendants had taken no steps to convert government money or property for their own purposes. 

What is federal wire fraud?

The federal wire fraud statute makes it a crime to effect (with the use of the wires) “any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises.” 18 U.S.C. Section 1343. 

What is federal program fraud?

The federal program fraud bars obtaining by fraud the property (including money) of a federally funded program or entity. 

What is conspiracy?

Conspiracy is an agreement between two or more people to commit a crime. It generally requires that two people agree that they are going to commit a crime and then that at least one of the two takes a substantial step (an overt act) towards the commission of that crime. Once that happens, a criminal defendant may be guilty of conspiracy as well as the underlying offense. 

Here, the conspiracy charges were dependent on proper convictions for fraud, and both fraud charges required that the defendants actually gain some sort of money or property from the scheme. As the scheme did not encompass any attempt to gain money, the Court’s analysis hinged on whether they had actually attempted or successfully obtained property. 

The Supreme Court’s Ruling

The Court reversed the convictions. It noted that the fraud statutes are limited in scope to the protection of property rights and do not authorize federal prosecutors to set standards of disclosure and good government for local and state officials. The government had made two arguments as to how the defendants had actually stolen property. First, the government argued that closing the lanes themselves involved actually taking control of the property of those lanes. Second, the government argued that the cost of paying the traffic engineers who reviewed the “study” and the backup toll collectors involved depriving the Port Authority of money. 

The Court rejected both arguments. First, it found that the realignment of the access lanes was an exercise of regulatory power and that a scheme to alter a regulatory choice generally is not a taking of the government’s property, particularly where the move is temporary. Second, it found that while the costs in paying for the “study” and the toll collectors could qualify as property, in order to be relevant for purposes of wire fraud, they must be the object of the fraud. That means it must have been the actual goal of the conspiracy to steal that time and money. But those costs were merely incidental to the regulatory decision. Therefore, they were not the object of the conspiracy, and the defendants had not conspired to steal or stolen any property or money. Accordingly, the Court reversed the conviction. 

Although this decision is unique in that it involved such a high-profile political situation, it will likely have lasting effects on the ability of federal prosecutors to file criminal charges based on state and local criminal corruption. The Court did not dispute that the evidence showed that the defendants had unethically used their positions to punish political rivals. The Court simply found that they had not stolen anything to do so. This decision, however, drastically limits the reach of the wire fraud and federal programs fraud statutes because it prevents federal prosecutors from filling charges to address local political corruption where the corruption does not actually involve bribery or theft. This leaves the prosecution of political corruption to state and local officials, who may not have the independence necessary to bring charges. It also leaves it to the voters, who may demand the resignation of corrupt political officials. However, federal prosecutors probably already have enough power, so anything that reins them in is usually a good thing.

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