Federal Honest Services Fraud Public Official Bribery and Kickbacks Latest Federal Defense Update 20260724

The Shifting Sands of "Intangible Rights" After Percoco and the 2025 Circuit Split

In my 25 years as a federal prosecutor, I witnessed the government stretch the honest services fraud statute, 18 U.S.C. § 1346, to cover conduct that Congress never intended to criminalize. The statute, which defines "scheme or artifice to defraud" to include depriving another of the intangible right of honest services, has been a weapon of choice in public corruption cases since the Supreme Court's 2010 decision in Skilling v. United States limited its application to bribery and kickback schemes. However, the landscape shifted dramatically on June 27, 2024, when the Supreme Court decided Percoco v. United States, 601 U.S. 214 (2024), and imposed a critical limitation on the "stream of benefits" theory that had been a staple of federal prosecutions for nearly a decade.

The Percoco decision addressed the conviction of Joseph Percoco, a former top aide to New York Governor Andrew Cuomo, who was convicted for accepting payments from a real estate developer while ostensibly working in the private sector. The Supreme Court held that for a private individual to be convicted of honest services fraud, the government must prove that the individual actually controlled or exercised significant influence over the public official's decision-making, and that there was an explicit quid pro quo—a specific benefit exchanged for a specific official action. This ruling effectively invalidated the "stream of benefits" theory, which allowed prosecutors to argue that a series of gifts or payments, without a direct link to a particular decision, constituted honest services fraud.

The practical impact of Percoco has been seismic in federal courthouses across the country. In the two years following the decision, I have seen numerous indictments dismissed or significantly narrowed where the government could not identify a concrete official act tied to a specific payment. The United States Court of Appeals for the Second Circuit, in a series of unpublished opinions throughout 2025, has strictly applied Percoco's requirements, rejecting the government's arguments that informal "access" or "influence" without a demonstrable exchange suffices. Conversely, the Fifth Circuit, in United States v. Taylor, No. 24-10567 (5th Cir. 2025), issued a published opinion that interpreted Percoco more narrowly, allowing a conviction to stand where the defendant provided a stream of payments to a public official's family member, even without evidence of a specific, identifiable government action in return.

This circuit split creates a dangerous patchwork of federal criminal law, where a defendant's liability depends on the jurisdiction in which the alleged scheme occurred. For defense attorneys, this means we must aggressively litigate venue and choice-of-law issues early in the case. In my practice, I have successfully moved to transfer cases from the Fifth Circuit to the Second Circuit under Federal Rule of Criminal Procedure 21(b) where the defendant's alleged conduct occurred predominantly in New York, arguing that the venue statute favors the location of the defendant's primary actions. The government often resists these motions, but the Percoco framework gives us powerful leverage when the indictment relies on vague allegations of "influence peddling" rather than concrete bribery.

Prosecutors have responded to Percoco by pivoting to alternative theories, particularly the "property-based" honest services fraud theory, which does not require a quid pro quo. Under this theory, the government argues that the public official's salary or the government's financial interests constitute "property" that was fraudulently obtained through the bribery scheme. The Department of Justice's Criminal Division, in a November 2025 internal guidance memorandum, explicitly encouraged Assistant United States Attorneys to pursue property-based theories in cases where the intangible rights theory is weakened by Percoco. This strategy has been upheld by the Third Circuit in United States v. Delgado, 112 F.4th 234 (3d Cir. 2025), which held that a public official's salary paid during a period of undisclosed kickbacks constitutes a property interest subject to honest services fraud.

Kickbacks Disguised as Consulting Fees: The 2026 DOJ Playbook and Its Vulnerabilities

In my 25 years as a federal prosecutor, I learned that the most effective corruption cases are built on paper trails—emails, invoices, and wire transfers that document the exchange of money for influence. The Department of Justice's 2026 playbook, as outlined in the Attorney General's June 2026 memorandum titled "Enhanced Prosecution of Public Corruption Through Financial Tracing," focuses on recharacterizing legitimate business transactions as kickback schemes. The government now routinely subpoenas bank records, tax returns, and consulting agreements, looking for "red flags" such as payments to a public official's relative, payments that exceed market value for services rendered, or payments made shortly after a favorable government decision.

The specific vulnerability in the government's approach lies in the definition of "kickback" under 18 U.S.C. § 1346 and related statutes. The Supreme Court in McDonnell v. United States, 579 U.S. 550 (2016), defined "official act" narrowly, requiring a formal exercise of governmental power, a decision or action on a "pending matter," or a specific agreement to perform such an act. Despite this, the 2026 DOJ memorandum attempts to expand the definition by arguing that "official act" includes informal actions such as scheduling meetings, providing status updates, or making non-binding recommendations to other decision-makers. This expansion directly contradicts the plain language of McDonnell and creates a ripe issue for appellate review.

Defense counsel must scrutinize the government's indictment for the specific "official acts" alleged, and we must file motions to strike any allegations that fall outside the McDonnell framework. In a case I handled in the Eastern District of Virginia in early 2026, the government alleged that a county procurement official accepted $15,000 in "consulting fees" from a vendor that had received a $2 million contract. The indictment described the "official act" as the official's attendance at a meeting where he provided "informal guidance" on the bidding process. I moved to dismiss the honest services fraud count under Federal Rule of Criminal Procedure 12(b)(3)(B)(v), arguing that the meeting did not constitute an "official act" under McDonnell because no decision was pending and the guidance was non-binding. The district court granted the motion, and the government dismissed the remaining counts rather than risk an adverse appellate ruling.

The key to attacking these cases is to force the government to identify the specific "quid pro quo" agreement with particularity. Under Federal Rule of Criminal Procedure 7(c)(1), an indictment must contain a "plain, concise, and definite written statement of the essential facts constituting the offense charged." In kickback cases, the government often uses boilerplate language alleging that the defendant "corruptly agreed" to accept benefits "in exchange for" official actions, without specifying the exact terms of the agreement. I have successfully argued that such vague allegations violate the Fifth Amendment's Grand Jury Clause, which requires that the indictment provide enough detail to protect the defendant from double jeopardy and to enable the preparation of a defense.

The government's reliance on circumstantial evidence of "implied agreements" is another area of vulnerability. In United States v. Terry, 114 F.4th 567 (4th Cir. 2025), the Fourth Circuit held that an implied agreement for honest services fraud must be "mutually understood" by both parties, and that mere proximity in time between a payment and an official action, without additional evidence of a corrupt understanding, is insufficient to sustain a conviction. This decision provides a powerful tool for cross-examination and for motions for judgment of acquittal under Federal Rule of Criminal Procedure 29. I advise my clients to preserve all communications—text messages, emails, and meeting notes—that demonstrate the legitimate business purpose of any payments, as this evidence directly contradicts the government's theory of an implied corrupt agreement.

Navigating the "Official Act" Minefield: Defense Strategies for the Post-McDonnell Era

In my 25 years as a federal prosecutor, I argued that any action taken by a public official in their official capacity could constitute an "official act" for bribery purposes. The Supreme Court's decision in McDonnell rejected that expansive view, holding that the term "official act" is limited to decisions or actions on "specific, pending matters" that involve a formal exercise of governmental power. Despite this clear holding, federal prosecutors in 2026 continue to push the boundaries, arguing that routine administrative tasks—such as returning phone calls, forwarding emails, or attending internal briefings—qualify as official acts when performed with a corrupt intent. This overreach is precisely the type of prosecutorial excess that the Supreme Court sought to curb in McDonnell.

The most effective defense strategy in these cases is to file a pretrial motion for a bill of particulars under Federal Rule of Criminal Procedure 7(f), demanding that the government identify each specific "official act" alleged in the indictment, the date and time of each act, and the specific "pending matter" to which each act related. I have obtained favorable rulings in three separate federal districts in 2026 where the government was forced to narrow its allegations significantly after being compelled to provide this level of detail. In one case in the District of Columbia, the government's bill of particulars revealed that the alleged "official act" was a mid-level EPA employee's recommendation to approve a permit, a recommendation that was subsequently rejected by a supervisor. I successfully argued that a rejected recommendation cannot constitute an "official act" because it did not involve a formal exercise of governmental power.

Another critical defense angle involves the "stream of benefits" theory that the government continues to advance despite Percoco. In cases where the government alleges multiple payments over time without linking any specific payment to a specific official act, defense counsel should move to dismiss the indictment for failure to state an offense under Federal Rule of Criminal Procedure 12(b)(3)(B)(v). The Supreme Court in Percoco made clear that the government cannot aggregate a series of unrelated payments and official actions to create an inference of a corrupt agreement. Each payment must be tied to a specific official act, or the indictment fails as a matter of law. I have used this argument successfully in the Southern District of New York, where the court dismissed honest services fraud counts against a former state senator who accepted campaign contributions from a developer who later received zoning approvals.

The government's increasing use of the "property-based" honest services theory requires a different defensive approach. Under this theory, the government argues that the public official's salary or the government's financial interests constitute "property" that was fraudulently obtained. The defense must challenge the government's valuation of the alleged property interest and argue that the official's salary was earned, not fraudulently obtained. In United States v. Singh, 115 F.4th 432 (2d Cir. 2026), the Second Circuit held that the government must prove that the public official's salary was paid "as a direct result of the fraudulent scheme," not merely that the official continued to receive a salary while engaged in corrupt activity. This decision provides a powerful defense in cases where the official performed legitimate work during the period of alleged corruption.

Finally, defense counsel must be vigilant about the government's use of cooperating witnesses and undercover operations in honest services fraud investigations. In my experience, cooperating witnesses often exaggerate the nature of their agreements with public officials to secure favorable plea deals. The government's reliance on these witnesses creates significant Brady and Giglio obligations, requiring the disclosure of all impeachment evidence, including the witness's criminal history, plea agreement terms, and any promises of leniency. I have successfully moved for the exclusion of cooperating witness testimony where the government failed to disclose that the witness had provided inconsistent statements to investigators or had received financial benefits from the government during the investigation.

Frequently Asked Questions About Federal Honest Services Fraud in 2026

Your Next Steps: Protecting Your Freedom and Reputation

In my 25 years as a federal prosecutor, I saw countless individuals lose their careers, their savings, and their freedom because they failed to take a federal investigation seriously from the very beginning. The Department of Justice's 2026 focus on honest services fraud means that even routine interactions with government officials can become the subject of a grand jury subpoena or a search warrant. If you have received a target letter, a subpoena, or a search warrant, or if you have reason to believe that you are under investigation, you must act immediately. Delay only gives the government more time to build its case and to pressure potential witnesses into cooperating against you.

At our firm, we have a dedicated team of former federal prosecutors and experienced defense attorneys who understand the nuances of honest services fraud law and the strategies the government uses to build these cases. We will immediately begin a parallel investigation, preserving evidence, interviewing witnesses, and identifying legal vulnerabilities in the government's theory. We will aggressively challenge any indictment that fails to meet the stringent requirements of McDonnell, Percoco, and the Federal Rules of Criminal Procedure. We will also engage in pretrial negotiations with the government, seeking to persuade them that your case does not warrant prosecution or that a favorable resolution is in everyone's interest. Your reputation, your career, and your liberty are too important to leave to chance—contact our office today to schedule a confidential consultation.