Corruption in America by Teachout Zephyr

Author:Teachout, Zephyr
Language: eng
Format: epub
Publisher: Harvard University Press

CHAPTER TEN

The Jury Decides

IT WAS THE MID-1930S in New Orleans. Huey Long had just died, and one of Long’s closest associates, Abraham Shushan, was using political connections to make money. The political economy of prosecution was changing in the early twentieth century, with the press eager to cover corruption scandals. Elected prosecutors, keenly aware of how they were portrayed in the media, knew they could gain political acclaim—which could lead to political power—for prosecuting elected officials under corruption statutes. As these public prosecutors flexed their newfound abilities to take on those in power, courts affirmed their convictions with references to the principles that were used to disavow lobbying in the previous generations. For most of the twentieth century, that meant that juries were given broad authority to determine whether something was corrupt or merely friendly. The courts were permissive, rarely describing exactly what constituted “corrupt” behavior or a failure to provide honest services but allowing prosecutors to bring cases and allowing juries to choose between innocent and “corrupt” gifts and actions. The use of the mail fraud statute exemplified this permissiveness.

The use of influence by Shushan, the former head of the New Orleans Levee Board, and Herbert Waguespack, a member of the finance committee of the same board, was at the heart of the case. They had successfully persuaded the board to authorize a New Orleans bond repayment at a lucrative percentage when they both had a major financial interest in the authorization. They stood to earn hundreds of thousands of dollars in fees, to be split between them and their coconspirators.

Shushan’s job had been to persuade the Louisiana governor, who had influence but lacked formal authority. Waguespack had argued for the bonds in his official role. An employee of the board was paid to spy on what competitors in the bond business were doing. None of the people involved had direct decision-making authority except Waguespack, and he did not have a deciding vote. All of these agreements were concealed from the other decision makers.

The story stank when it came out, but prosecutors had two problems. First, there was no evidence that the city of New Orleans was actually hurt by the decision. Second, the general federal bribery law did not reach state officials. To solve both of these problems they turned to a federal law that had been passed sixty years earlier, the federal mail fraud statute. The mail fraud provision, enacted in 1872, was designed to combat abuse of the post office. It criminalized using the mail to advance “any scheme or artifice to defraud.” In 1909 Congress amended it to prohibit “any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises.” It was written in a broad way, and the prosecutors took a chance by trying to convict using this archaic tool.

Shushan and Waguespack argued that they had done nothing wrong: Shushan had merely used personal influence, well within the right of any citizen. Waguespack argued he had a right to obtain personal income outside of his professional role.

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