USA v. Georgia Thompson,  06-3676.  In 2005 Wisconsin selected Adelman Travel Group as its travel agent for about 40% of its annual travel budget of $75 million. The selection came after an elaborate process presided over by Georgia Thompson, a section chief in the state’s Bureau of Procurement. Statutes and regulations require procurement decisions to be made on the basis of cost and service rather than politics. Wis. Stat. §§ 16.70-16.78; Wis. Admin. Code §10.08. Thompson steered the contract to Adelman Travel, the low bidder, even though other members of the selection group rated its rivals more highly. A jury convicted Thompson of violating 18 U.S.C. §666 and §1341.

The prosecution’s theory was that any politically motivated departure from state administrative rules is a federal crime, when either the mails or federal funds are involved. Thompson was sentenced to 18 months’ imprisonment and compelled to begin serving that term while her appeal was pending. After concluding that Thompson is innocent, we reversed her conviction so that she could be released.

Thompson was convicted of violating two federal statutes, and we start with §666. This statute applies to entities that receive more than $10,000 annually from the federal government, as Wisconsin does.

Section 666 is captioned "Theft or bribery concerning programs receiving Federal funds", and the Supreme Court refers to it as an anti-bribery rule. See Sabri v. United States, 541 U.S. 600 (2004). Neither Thompson nor anyone else in state government was accused of taking a bribe or receiving a kickback.

A statute’s caption does not override its text, but the word "misapplies" is not a defined term. We could read that word broadly, so that it means any disbursement that would not have occurred had all state laws been enforced without any political considerations. Or we could read it narrowly, so that it means a disbursement in exchange for services not rendered (as with ghost workers), or to suppliers that would not have received any contract but for bribes, or for services that were over-priced (to cover the cost of baksheesh), or for shoddy goods at the price prevailing for high-quality goods. All of these conditions were satisfied in cases such as United States v. Spano, 421 F.3d 599 (7th Cir. 2005), and United States v. Martin, 195 F.3d 961 (7th Cir. 1999). None is satisfied here.

Faced with a choice between a broad reading that turns all (or a goodly fraction of) state-law errors or political considerations in state procurement into federal crimes, and a narrow reading that limits §666 to theft, extortion, bribery, and similarly corrupt acts, a court properly uses the statute’s caption for guidance. That plus the Rule of Lenity, which insists that ambiguity in criminal legislation be read against the prosecutor, lest the judiciary create, in common-law fashion, offenses that have never received legislative approbation, and about which adequate notice has not been given to those who might be ensnared. See, e.g., Staples v. United States, 511 U.S. 600, 619 n.17 (1994).

Public employees often implement rules with which they disagree, and they are tempted to bend these rules to achieve what they deem better outcomes. As long as the state gets what it contracts for, at the market price, no funds have been misapplied, even if the state’s rules should have led it to buy something more expensive (and perhaps of higher quality too).

Thompson was convicted under 18 U.S.C. §1341 as well as under §666. Section 1341 forbids "any scheme or artifice to defraud" that predictably employs the United States mails. What "fraud" did Thompson commit, and who was the victim? Thompson did not bilk the state out of any money or pocket any of the funds that were supposed to be used to buy travel.

We held in United States v. Bloom, 149 F.3d 649, 655 (7th Cir. 1998), that "[m]isuse of office (more broadly, misuse of position) for private gain is the line that separates run of the mill violations of state-law fiduciary duty . . . from federal crimes."

Treating an incorrect application of state procurement law as a "misuse of office" and a raise as a "private gain" would land us back in the soup-once again, simple violations of administrative rules would become crimes. Nothing in the language of §1341 or §1346 suggests that Congress has created such an equation.

It would stretch the ordinary understanding of language, however, to call a public employee’s regular compensation, approved through above-board channels, a kind of "private gain." We now hold that neither an increase in salary for doing what one’s superiors deem a good job, nor an addition to one’s peace of mind, is a "private benefit" for the purpose of §1346.

Sections 666 and 1346 have an open-ended quality that makes it possible for prosecutors to believe, and public employees to deny, that a crime has occurred, and for both sides to act in good faith with support in the case law. Courts can curtail some effects of statutory ambiguity but cannot deal with the source. This prosecution, which led to the conviction and imprisonment of a civil servant for conduct that, as far as this record shows, was designed to pursue the public interest as the employee understood it, may well induce Congress to take another look at the wisdom of enacting ambulatory criminal prohibitions. Haziness designed to avoid loopholes through which bad persons can wriggle can impose high costs on people the statute was not designed to catch.

Thompson’s conviction is reversed, and the case is remanded with instructions to enter a judgment of acquittal.

For the full opinions visit the 7th Circuit Court of Appeals Web Site.

For more about attorney Michael J. Petro, visit www.mjpetro.com .

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