18 U.S. Code § 1346: Honest Services Fraud Laws & Defense
Congress added this in 1988 under Title 18 U.S.C. Chapter 63;18 U.S.C. § 1346 defines "honest services fraud."
The federal statute expands the definitions of mail fraud (18 U.S.C. § 1341) and wire fraud (18 U.S.C. § 1343) by explicitly stating that a "scheme or artifice to defraud" includes any scheme to deprive another person or entity of the intangible right of honest services.
This federal law targets public corruption, corporate misconduct, and breaches of fiduciary duty involving bribery or kickbacks.
High-profile prosecutions—including the 2019 "Operation Varsity Blues" college admissions scandal—frequently rely on 18 U.S.C. § 1346 to prosecute individuals who use bribes to corrupt official decision-making.
What Constitutes Federal Honest Services Fraud?
Under 18 U.S.C. § 1346, honest services fraud involves violating a fiduciary duty through a bribery or kickback scheme.
A fiduciary duty is a legal obligation to act solely in another party's best interests, such as the public, an employer, shareholders, or union members.
Following the landmark U.S. Supreme Court ruling in Skilling v. United States (2010), 18 U.S.C. § 1346 applies only to schemes involving bribes or kickbacks.
To prosecute honest services fraud, a case must involve three elements:
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The Offeror: An individual who offers or pays a bribe or kickback.
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The Recipient: A public official or private fiduciary who accepts the bribe or kickback in exchange for official action or breach of duty.
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The Victim: The public, company, or institution deprived of the intangible right to honest, unbiased services.
18 U.S.C. § 1346 Penalties & Statutory Enhancements
Because honest services fraud is prosecuted in connection with federal mail fraud or wire fraud statutes, convictions carry severe federal penalties:
|
Conviction Type |
Maximum Prison Term |
Maximum Criminal Fine |
| Standard Honest Services Fraud | Up to 20 years in federal prison | Up to $250,000 |
| Fraud Affecting a Financial Institution | Up to 30 years in federal prison | Up to $1,000,000 |
| Fraud Involving Presidential Disaster/Emergency | Up to 30 years in federal prison | Up to $1,000,000 |
Note: Defendants convicted of 18 U.S.C. § 1346 charges also face mandatory asset forfeiture, restitution orders, and supervised release.
Real-World Examples of Honest Services Fraud
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Public Sector Corruption: An elected public official accepts undisclosed payments or gifts from a developer in exchange for voting to approve specialized zoning permits. The official deprives constituents of their right to honest governmental services.
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Corporate & Executive Kickbacks: A Chief Financial Officer (CFO) receives personal discounts or cash kickbacks from an outside contractor in exchange for awarding that contractor a lucrative construction deal. The CFO violates their fiduciary duty to shareholders and deprives competing contractors of a fair bidding process.
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Admissions & Testing Schemes: Parents pay bribes to university coaches or test administrators to falsify athletic credentials or entrance exam scores. The scheme deprives the educational institution and other applicants of an honest admissions process.
Related Federal Fraud Statutes
Prosecutors rarely file 18 U.S.C. § 1346 charges in isolation. Honest services fraud is commonly charged alongside related statutes under Chapter 63 of Title 18:
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18 U.S.C. § 1341: Mail Fraud
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18 U.S.C. § 1343: Wire Fraud
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18 U.S.C. § 1344: Bank Fraud
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18 U.S.C. § 1347: Health Care Fraud
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18 U.S.C. § 1348: Securities and Commodities Fraud
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18 U.S.C. § 1349: Attempt and Conspiracy to Commit Fraud
Legal Defenses Against 18 U.S.C. § 1346 Charges
To secure a conviction for honest services fraud, federal prosecutors from the U.S. Department of Justice (DOJ) must prove beyond a reasonable doubt that you intentionally participated in a bribery or kickback scheme using interstate wires or mail. Key legal defense strategies include:
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Lack of Fraudulent Intent (Good Faith): Demonstrating that you did not act willfully or with intent to defraud. For instance, believing in good faith that a financial transaction was a legitimate consulting fee or lawful campaign contribution negates criminal intent.
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Absence of a Bribe or Kickback: Under the Skilling standard, undisclosed conflicts of interest or general breaches of fiduciary duty without a clear bribe or kickback do not violate 18 U.S.C. § 1346.
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No Fiduciary Duty Owed: Proving that the accused did not owe a legal or contractual fiduciary duty to the alleged victim entity.
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Insufficient Use of Interstate Wires or Mail: Challenging the federal jurisdictional nexus by demonstrating that mail or wire communications were not utilized in furtherance of the alleged scheme.
Frequently Asked Questions (FAQs)
What is the Supreme Court's Skilling v. United States ruling, and how does it affect 18 U.S.C. § 1346?
In Skilling v. United States (2010), the Supreme Court narrowed the scope of 18 U.S.C. § 1346. The Court held that the statute applies strictly to schemes involving kickbacks or bribes, invalidating broader prosecutions based merely on undisclosed conflicts of interest.
Can private corporate employees be charged with honest services fraud?
Yes. 18 U.S.C. § 1346 applies to both public officials and private sector individuals—such as executives, corporate officers, trustees, and agents—who owe a fiduciary duty to an employer, shareholders, or clients and accept bribes or kickbacks.
What is the difference between standard mail/wire fraud and honest services fraud?
Standard mail and wire fraud (18 U.S.C. §§ 1341, 1343) involve schemes to deprive victims of money or physical property. Honest services fraud (18 U.S.C. § 1346) focuses on depriving victims of the intangible right to honest, uncorrupted services through bribery or kickbacks.
Does honest services fraud require the victim to suffer a financial loss?
No. Prosecutors do not need to prove that the victim suffered a direct economic loss. The criminal act is the deprivation of the intangible right to honest services caused by the bribe or kickback transaction itself.
What should I do if I receive a federal target letter regarding an 18 U.S.C. § 1346 investigation?
A DOJ target letter indicates that federal prosecutors believe they have substantial evidence linking you to a crime. You should remain silent, refrain from discussing the case or altering documents, and contact an experienced federal criminal defense attorney immediately to handle all communications with federal agents.
Your best chance for a positive outcome is with an experienced California criminal defense attorney at Eisner Gorin LLP. To schedule a consultation, call (818) 781-1570 or use the contact form. Our law firm is based in Los Angeles.