The United States Supreme Court, in Snyder v. United States, No. 23-108, decided on June 26, 2024, weighed in on the application of a federal statute to payments made to a municipal official by a successful bidder following a contract award. The federal statute in question, 18 U.S.C. § 666 – Theft or Bribery Concerning Programs Receiving Federal Funds (the “Federal Bribery Statute”), at subsection (a)(1)(B), criminalizes the actions of any state and local official who “corruptly solicits or demands for the benefit of any person, or accepts or agrees to accept, anything of value from any person, intending to be influenced or rewarded in connection with any business, transaction, or series of transactions of such organization, government, or agency involving any thing of value of $5,000 or more.”

The facts of the case, in summary, concerned a payment of $13,000 made to the Mayor of Portage, Indiana, by a successful bidder following the award of two (2) contracts to purchase garbage trucks. The Mayor maintained the payment was a fee for consulting work he had done for the winning bidder throughout the year. Specifically, the Mayor argued that because there was no evidence to support a finding that there was an agreement to exchange money for the truck contracts before they were awarded, the payment was a gratuity as opposed to a bribe, and the Federal Bribery Statute could not therefore apply.

A federal jury disagreed, and convicted the Mayor, who was sentenced to prison by the district court. The United States Court of Appeals for the 7th Circuit then affirmed the conviction. The question presented to the Supreme Court on appeal was whether the Federal Bribery Statute prohibited the making of payments to government officials in recognition of actions taken, or that an official has committed to take, without any quid pro quo agreement to take the action(s). The Supreme Court, in a 6-3, opinion, reversed and remanded the judgment of the 7th Circuit, and held that while the subsection of the Federal Bribery Statute at issue prohibited bribes to state and local officials, it did not make it illegal for those officials to accept gratuities for their past actions. In the Court’s majority opinion, Justice Kavanaugh noted that the Federal Bribery Statute was narrowly focused on proscribing bribes to state and local officials, while allowing state and local governments to regulate gratuities to state and local officials. He further noted that while Congress could expand the scope of the Federal Bribery Statute, it had not, presumably because Congress understood “that state and local governments may and often do regulate gratuities to state and local officials.” The Court’s opinion reversed the judgment of the U. S. Court of Appeals for the Seventh Circuit and remanded the case for further proceedings consistent with the Court’s opinion.

While the Opinion exonerates the Mayor under the Federal Bribery Statute at issue in the case, the Court’s references to the “nuanced” regulation of gratuities and gifts by state and local governments should be heeded as a warning to municipal officials to tread extremely carefully in the area of contract awards, and the acceptance of any gift or gratuity from an entity doing business, or seeking to do business, with the municipality. Extreme caution in this area is warranted given the criminal nature of the State and federal laws concerning gratuities, gifts, bribes and prohibited interests in contracts, and municipal officials are urged to contact their legal counsel for guidance if there is any question in their mind as to the propriety of accepting a payment from a party contracting with the municipality.

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