Sekhar v. United States

Petitioner Giridhar C. Sekhar was convicted of extortion under federal law for threatening to expose an extramarital affair unless the General Counsel for the State Comptroller recommended that the state pension fund invest in a fund managed by Sekhar’s company. The Court will determine the limits of the meaning of the word “property” under federal extortion law, and whether the General Counsel's recommendation was "property" that could be subject to extortion. The Court’s decision will have implications for the scope of federal extortion law and, more generally, for the balance between enforcement of federal and state criminal law when the two overlap. Petitioner argues for a narrow definition of property, limited to something of value that is transferable. Respondent calls for a broader view of property to include the legal advice given by lawyers.

Questions as Framed for the Court by the Parties 

Whether the “recommendation” of an attorney, who is a salaried employee of a governmental agency, in a single instance, is intangible property that can be the subject of an extortion attempt under 18 U.S.C. §1951(a)(the Hobbs Act) and 18 U.S.C. §875(d).

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Issue

Is the recommendation of an attorney considered "property" which can be extorted for purposes of federal anti-extortion law?

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Facts

The New York State Comptroller is the sole trustee for the Common Retirement Fund (“Fund”), the employee pension fund for state and local government employees in New York StateSee United States v. Sekhar, 683 F.3d 436, 438 (2d Cir. 2012).  As such, he has sole authority to approve investments for the Fund.  See id. In making these determinations, the Comptroller is advised by his General Counsel.  See id.

In 2008 and 2009, the Comptroller was considering investing in a fund (“FA Tech III”) managed by FA Technology Ventures, which would have garnered $7.6 million in fees for the company.  See Sekhar, 683 F.3d at 438While investigating the fund, the General Counsel was advised by the office of the New York Attorney General that it was investigating an FA Technology agent associated with a similar fund and that the Comptroller should avoid investing in FA Tech III.  See id.  Based on this information, the Comptroller decided on November 13, 2009 not to invest in the fund.  See id.

Four days later, on November 17, the General Counsel received an anonymous email threatening to disclose his extramarital affair if he did not reverse his position and recommend to the Comptroller that he approve an investment in FA Tech III.  See Sekhar, 683 F.3dat 438–39. Over the next few days, the General Counsel received several more threatening emails.  See id. at 439.  The General Counsel was advised by law enforcement to ask for more time, which the emailer granted.  See id.  The FBI was then able to trace the emails to the home of the Petitioner Giridhar Sekhar, a managing partner at FA Technology. See id. Sekhar admitted to sending the emails.  See id.

Sekhar was indicted on one count of extortion under the Hobbs Act, 18 U.S.C. § 1951(a), and six counts of interstate transmission of extortionate threats under 18 U.S.C. § 875(d)See Sekhar, 683 F.3d at 439.Sekhar moved to dismiss the indictment, arguing that what he was trying to obtain through threats (i.e., the General Counsel’s recommendation) was not “property” as required by both statutes.  See id.  The U.S. District Court for the Northern District of New York denied the motion, and Sekhar, proceeding pro se, was convicted by a jury on five of the six counts.  See id. at 437, 439.  Sekhar then moved for a judgment of acquittal, arguing that there was insufficient evidence that he attempted to control the actions of the General Counsel in order to benefit himself financially.  See id.at 439.  The district court again denied the motion, and Sekhar was sentenced to seventy-five months imprisonment.  See id.  The Court of Appeals for the Second Circuit affirmed.  See id. at 443. The Supreme Court granted certiorari in order to determine whether the Comptroller’s recommendation is in fact “property.” SOURCE.

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Discussion

“PROPERTY” AND THE EXTORTION-COERCION DISTINCTION

Petitioner Sekhar contends that the recommendation of an attorney is not property because it is nontransferable and has “no intrinsic value.”  See Brief for Petitioner, Giridhar C. Sekhar at 26. Although Sekhar acknowledges the state’s interest in preserving the integrity of the decision-making process, he denies that the ability to influence this process fits within the term “property” as used in the Hobbs Act.  See id. at 29–30. Sekhar similarly dismisses the Second Circuit’s recasting of property as including a lawyer’s right to render legal advice free from threats.  See id. at 32. 

Although Sekhar does not argue that using threats in an attempt to influence a state official cannot be a crime, he does assert that in the absence of an attempt to acquire property, his actions fall within the definition of the crime of coercion rather than extortionSee id. at 30. This case, according to Sekhar, really represents an attempt to shoehorn the facts of this case into an ill-fitting federal statute.  See id. at 31. To uphold the ruling of the Second Circuit, Sekhar warns, would be to “eradicate” the distinction between extortion and coercion.  See id.

The United States responds that “property” encompasses many intangibles with economic value, including the right to pursue one’s chosen profession.  See Brief for Respondent, United States at 14–16, 28–29. Interfering with that right through blackmail, in the United States’ view, fits the definition of “obtaining” property.  See id. at 15. According to the United States, this widely accepted view of property should extend also to the term as it is used in the Hobbs Act.  See id. at 23. The United States also downplays the extortion-coercion distinction by pointing out that extortion is in fact a subset of coercion; that is, extortion is essentially coercion involving an economic element.  See id. at 44–45.

Importantly, the United States argues, Sekhar’s narrow view of property would interfere with several of the principal objectives of the Hobbs Act, namely to prevent organized crime’s interference with the decision making power of businesses and labor unions (i.e., racketeering).  See id. at 33.

FEDERALISM PRINCIPLES

Sekhar warns that, were the Court to break down the extortion-coercion distinction, it would upset the balance between state and federal law enforcement.  See Brief for Petitioner at 45. This balance is disturbed, in Sekhar’s view, when federal prosecutors become involved either to enforce state laws or when a state prosecution is unsuccessful.  See id. Because this case involved interference with the activity of a state official, Sekhar argues that federal involvement is particularly inappropriate.  See id. at 46. Indeed, according to Sekhar, federal involvement is unsuitable because of the Court’s general presumption that Congress does not intend federal crimes to overlap with existing state crimes.  See id. at 47–48. Finally, because of the dangerously expansive view of property asserted by the Second Circuit, Sekhar argues that the Supreme Court should be particularly wary of “overfederalization” in this context.  See id. at 49.

Amici the Cato Institute (“Cato”) and the National Association of Criminal Defense Lawyers (“NADCL”) also argue that the Supreme Court should interpret federal criminal statutes narrowly so as to minimize intrusion into areas of criminal law traditionally enforced by the states, unless there is a clear congressional intent to the contrary.  See Brief for Amici Curiae Cato Institute and National Association of Criminal Defense Lawyers at 10–11. Accordingly, to Cato and NADCL, the Court’s precedent requires a narrow interpretation of the term “property.”  See id. at 16.

The Unites States responds to these concerns by arguing that Congress had no intention of avoiding interference with state law enforcement.  See Brief for Respondent at 26. To the contrary, the United States contends that Congress intended to provide additional mechanisms to deter crimes of extortion that it saw as under-enforced by the states.  See id.

LABOR AND SOCIAL ACTIVISM

Sekhar argues that affirming the Second Circuit poses the danger of subjecting labor unions and social activists to Hobbs Act liability.  See Brief for Petitioner at 51. Sekhar hypothesizes that activities such as picket lines, sit-ins, and other activity could be prosecuted as extortion if the protestor is deemed to have attempted to acquire “property” simply by trying to influence another party’s actions.  See id. at 52.

The United States dismisses Sekhar’s fears regarding labor activities by pointing out that for an activity to constitute extortion, the accused party must have no lawful claim to the property.  See Brief for Respondent at 41–42. Extortion does not apply, according to the United States, when a labor union’s activities are aimed at achieving legitimate goals.  See id.  Similarly, the United States points out, other social activists generally seek rights to which they are in fact entitled, and thus run no risk of being prosecuted for extortion.  See id. at 42.

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Analysis

The dispute in this case is about the definition of property in the Hobbs Act. The Hobbs Act, passed in 1946, was intended to combat extortion, defined as “the obtaining of property from another, with his consent, induced by wrongful use of actual or threatened force, violence, or fear, or under color of official right.” See Brief for Petitioner, Giridhar C. Sekhar at 3. The two parties in this case disagree as to whether an attorney’s recommendation constitutes property under the Hobbs Act. How the Court rules in this case will impact whether future cases that might otherwise be prosecuted under state coercion laws will in fact be prosecuted in federal courts as extortion under the Hobbs Act.

HOBBS ACT

The Hobbs Act, passed in 1946, makes it a federal crime to commit extortion involving interstate commerce.  See Brief for Petitioner at 3. Based on the Penal Code of New York of 1909 and the Field Code, a predecessor to the Penal Code of New York, the Hobbs Act was initially enacted to fight organized crime. See id. at 3. The background of the Hobbs Act is important in this case, as many of the initial cases interpreting the provisions of the Hobbs Act looked to “New York courts’ pre-1946 interpretations of the New York extortion laws on which the Hobbs Act was based.” See Brief for Respondent, United States at 16. To this end, the United States calls for the Court to use an expansive definition of property under the Hobbs Act, similar to that found in many of the pre-1946 cases under New York law. See id. at 16–17. Sekhar argues to the contrary that a narrower definition of property should be adopted, in line with the Court’s 2006 ruling in Scheidler v. National Organization for Women, Inc. See Brief for Petitioner at 22.

PROPERTY UNDER THE HOBBS ACT

Sekhar argues that property should be narrowly construed, in line with the Court’s prior ruling in Scheidler. In Scheidler, the Court dealt with extortion charges under the Hobbs Act against an anti-abortion group who protested outside of a number of health clinics. See Brief for Petitioner at 22–23. As part of their analysis in Scheidler, the Court stated that property under the Hobbs Act must be “something of value” that can be “exercised, transferred, or sold,” and that there must be “both a deprivation and acquisition of property.” See id. at 22, 26. Sekhar argues that the opinion or recommendation of Respondent does not pass this test, as it has no value, it cannot be exercised, transferred, or sold, respondent cannot be deprived of it, and Petitioner cannot acquire it. See id. at 26.

The United States counters that the Court’s ruling in Scheidler does not require the narrow definition of property Sekhar argues for, but instead implies that “something of value that could be exercised, transferred, or sold would qualify as property that could be extorted.” See Brief for Respondent at 26. In support of this, the United States would have the Court look to the common law crime of extortion, which included a broader definition of property. See id. at 27. Additionally, the United States points to cases in other courts of appeals that have held that the definition of property under the Hobbs Act includes intangible rights with economic value. See id. at 23.

LEGAL ADVICE AS PROPERTY

Sekhar also argues that even if the Court adopts a broader definition of property, Respondent’s recommendation does not constitute property under the Hobbs Act because it lacks transferability. See Brief for Petitioner at 25. In Sekhar’s view, the recommendation is merely part of the deliberative process and is not actually a binding decision, giving it no secondary market and lack of transferability (“a third party could not transfer the recommendation to itself by replacing the phrase “FA Tech III” with its own name or fund”). See id. at 26–27. Thus, Sekhar contends, as these two elements are required for something to qualify as property under the Hobbs Act, a recommendation is not property, leaving no grounds on which petitioner’s conviction can stand. See id. at 26.

The United States takes a somewhat different approach, pointing out that lawyers’ opinions and recommendations are property because opinions are what lawyers sell. See Brief for Respondent at 35. In that same vein, the United States argues that the recommendation’s intrinsic value is to the lawyer himself, as it is the source of his professional livelihood. See id. at 38. As for value to Sekhar, the United States points to his attempt to exercise the recommendation to promote his own economic interest as evidence that the recommendation had value. See id. at 38. The Unites States further argues that while transferability may not be satisfied, the exercisability of the recommendation makes that point moot and satisfies the final part of the property definition. See id. at 37. The theory here is that Sekhar’s attempt to unlawfully pressure the General Counsel to change his opinion was also an attempt by Sekhar to exercise the right himself. See id. at 37.

ACQUISITION OF PROPERTY

Under the Hobbs Act, the property in question must be obtained or acquired, which Sekhar contends never occurred. Specifically, Sekhar argues that even if someone is convinced to change his or her mind or opinion, the persuader does not acquire that opinion or recommendation by persuading someone to change it. See Brief for Petitioner at 29. Indeed, Sekhar argues that for this reason, the incident in this case seems more like coercion than extortion, as coercion does not require the acquisition of the property. See id. at 30. Sekhar also points out that Scheidler makes clear that the Hobbs Act was intended to cover extortion, but not coercion, leaving the latter to the states to prosecute. See id. at 30.

The United States takes a different approach to the acquisition issue, looking to prior decisions of the courts of appeals that found Hobbs Act violations where someone attempted to take control of the operation of a business.  See Brief for Respondent at 42. In those cases, the courts found the acquisition element to have occurred when the other party acquired some property right, as opposed to tangible property itself. See id. at 42. Applying that to the present situation, the argument would go that Sekhar obtained the General Counsel’s right to conduct his business as he saw fit when Sekhar threatened him if he did not change his recommendation. See id. at 42.

LENITY

Sekhar further contends that under the rule of lenity the definition of property should be narrowly construed.  In Scheidler, the Court described lenity as follows: “When there are two rational readings of a criminal statute, one harsher than the other, we are to choose the harsher only when Congress has spoken in clear and definite language.” See Brief for Petitioner at 42. In Sekhar’s view, Congress has not spoken in the clear and definite language about the meaning of property, and thus the rule of lenity requires that the Court adopt the narrow definition of property. Seeid. at 43. In support of his view, Sekhar points to Cleveland v. United States, where the Court invoked the rule of lenity and adopted a narrow view of property under the Hobbs Act. Seeid. at 41.

The United States argues that the rule of lenity has no place in this situation, as the rule should be reserved for situations where Congress’s intent is completely unclear. See Brief for Respondent at 47. In support of its argument, the United States points to a series of Supreme Court rulings, one of which stated that the rule of lenity applies “only if, after seizing everything from which aid can be derived, [the Court] can make no more than a guess as to what Congress intended.” See id. at 47 (quoting Muscarello v. United States, 524 U.S. 125 (1998)).

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Conclusion

A federal jury convicted Petitioner of extortion for threatening a state official with embarrassment if he did not recommend investing in a fund managed by Petitioner’s company. The Court will determine the meaning of the word “property” under federal extortion law, which will have implications for the reach of federal extortion law. Petitioner and Respondent disagree over how broadly or narrowly the word “property” was intended to reach when Congress passed the Hobbs Act and related statutes.

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