[Congressional Record Volume 156, Number 132 (Tuesday, September 28, 2010)]
[Senate]
[Pages S7631-S7632]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. LEAHY (for himself, Mr. Whitehouse, and Mr. Kaufman):
  S. 3854. A bill to expand the definition of scheme or artifice to 
defraud with respect to mail and wire fraud; to the Committee on the 
Judiciary.
  Mr. LEAHY. Mr. President, today, I am pleased to introduce the Honest 
Services Restoration Act with Senator Whitehouse and Senator Kaufman. 
The legislation will restore critical tools used by investigators and 
prosecutors to combat public corruption and corporate fraud, which the 
Supreme Court dramatically weakened in Skilling v. United States.
  In Skilling, the Court sided with an Enron executive who had been 
convicted of fraud, and in doing so, held that the honest services 
fraud statute may be used to prosecute only bribery and kickbacks, but 
no other conduct. That leaves other corrupt and fraudulent conduct 
which prosecutors in the past addressed under the honest services fraud 
statute to go unchecked. Most notably, the Court's decision excluded 
undisclosed ``self-dealing'' by state and federal public officials, and 
corporate officers and directors, which is when those officials or 
executives secretly act in their own financial self-interest, rather 
than in the interest of the public or, in the private sector cases, 
their shareholders and employees. The Honest Services Restoration Act 
restores the honest services statute to cover this undisclosed ``self-
dealing'' by state and Federal public officials, and corporate officers 
and directors.
  In a hearing earlier today, the Judiciary Committee heard testimony 
from experts who explored the kinds of problematic conduct that may now 
go unchecked in the wake of the Skilling decision. The testimony also 
considered what Congress can and should do to fill those gaps and 
restore strong enforcement to combat corrupt and fraudulent conduct.
  It is clear that in recent years, the stain of corruption has spread 
to all levels of government. This is a problem that victimizes every 
American by chipping away at the foundations of our democracy and the 
faith that Americans have in their government. Recent years have also 
seen a plague of financial and corporate frauds that have severely 
undermined our economy and hurt too many hardworking people in this 
country. These frauds have robbed people of their savings, their 
retirement accounts, college funds for their children, and have cost 
too many people their homes.
  Congress has acted, by passing the Fraud Enforcement and Recovery Act 
and other key provisions, to give prosecutors and investigators more 
tools to combat fraud. But we must remain vigilant, as the methods and 
techniques used by those who would defraud hardworking Americans 
continue to change. Too often, loopholes in existing laws have meant 
that corrupt conduct can go unchecked. The honest services fraud 
statute has enabled prosecutors to root out corrupt and fraudulent 
conduct that would otherwise slip through those loopholes; we must 
tighten it so it can perform that important role again.
  Congress must act aggressively but carefully to strengthen our laws 
to root out corruption and fraud. By preventing public officials and 
corporate executives from acting in their own self-interest at the 
expense of the people they serve, the Honest Services Restoration Act 
closes a gap created by Skilling and strengthens a critical law 
enforcement tool. I look forward to working with Senators from both 
parties to quickly pass this bill.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 3854

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Honest Services Restoration 
     Act''.

[[Page S7632]]

     SEC. 2. AMENDMENT TO TITLE 18.

       (a) In General.--Chapter 63 of title 18, United States 
     Code, is amended by inserting after section 1346 the 
     following:

     ``Sec. 1346A. Definition of `scheme or artifice to defraud'

       ``(a) For purposes of this chapter, the term `scheme or 
     artifice to defraud' also includes--
       ``(1) a scheme or artifice by a public official to engage 
     in undisclosed self-dealing; or
       ``(2) a scheme or artifice by officers and directors to 
     engage in undisclosed private self-dealing.
       ``(b)(1) In subsection (a)(1)--
       ``(A) the term `undisclosed self-dealing' means that--
       ``(i) a public official performs an official act for the 
     purpose, in whole or in part, of benefitting or furthering a 
     financial interest of--
       ``(I) the public official;
       ``(II) the public official's spouse or minor child;
       ``(III) a general partner of the public official;
       ``(IV) a business or organization in which the public 
     official is serving as an employee, officer, director, 
     trustee, or general partner;
       ``(V) an individual, business, or organization with whom 
     the public official is negotiating for, or has any 
     arrangement concerning, prospective employment or financial 
     compensation; or
       ``(VI) a person, business, or organization from whom the 
     public official has received a thing of value or a series of 
     things of value, otherwise than as provided by law for the 
     proper discharge of official duty, or by rule or regulation; 
     and
       ``(ii) the public official knowingly falsifies, conceals, 
     or covers up material information that is required to be 
     disclosed regarding that financial interest by any Federal, 
     State, or local statute, rule, regulation, or charter 
     applicable to the public official, or knowingly fails to 
     disclose material information regarding that financial 
     interest in a manner that is required by any Federal, State, 
     or local statute, rule, regulation, or charter applicable to 
     the public official;
       ``(B) the term `public official' means an officer, 
     employee, or elected or appointed representative, or person 
     acting for or on behalf of the United States, a State, or 
     subdivision of a State, or any department, agency, or branch 
     thereof, in any official function, under or by authority of 
     any such department agency or branch of Government;
       ``(C) the term `official act'--
       ``(i) includes any act within the range of official duty, 
     and any decision, recommendation, or action on any question, 
     matter, cause, suit, proceeding, or controversy, which may at 
     any time be pending, or which may by law be brought before 
     any public official, in such public official's official 
     capacity or in such official's place of trust or profit;
       ``(ii) can be a single act, more than one act, or a course 
     of conduct; and
       ``(iii) includes a decision or recommendation that the 
     Government should not take action; and
       ``(D) the term `State' includes a State of the United 
     States, the District of Columbia, and any commonwealth, 
     territory, or possession of the United States.
       ``(2) In subsection (a)(2)--
       ``(A) the term `undisclosed private self-dealing' means 
     that--
       ``(i) an officer or director performs an act which causes 
     or is intended to cause harm to the officer's or director's 
     employer, and which is undertaken in whole or in part to 
     benefit or further by an actual or intended value of $5,000 
     or more a financial interest of--
       ``(I) the officer or director;
       ``(II) the officer or director's spouse or minor child;
       ``(III) a general partner of the officer or director;
       ``(IV) another business or organization in which the public 
     official is serving as an employee, officer, director, 
     trustee, or general partner; or
       ``(V) an individual, business, or organization with whom 
     the officer or director is negotiating for, or has any 
     arrangement concerning, prospective employment or financial 
     compensation; and
       ``(ii) the officer or director knowingly falsifies, 
     conceals, or covers up material information that is required 
     to be disclosed regarding that financial interest by any 
     Federal, State, or local statute, rule, regulation, or 
     charter applicable to the officer or director, or knowingly 
     fails to disclose material information regarding that 
     financial interest in a manner that is required by any 
     Federal, State, or local statute, rule, regulation, or 
     charter applicable to the officer or director;
       ``(B) the term `employer' includes publicly traded 
     corporations, and private charities under section 501(c)(3) 
     of the Internal Revenue Code of 1986; and
       ``(C) the term `act' includes a decision or recommendation 
     to take, or not to take action, and can be a single act, more 
     than one act, or a course of conduct.''.
       (b) Chapter Analysis.--The chapter analysis for chapter 63 
     of title 18, United States Code, is amended by inserting 
     after the item for section 1346 the following:

``Sec. 1346A. Definition of `scheme or artifice to defraud'.''.
                                 ______