Advertising Disclosure Email Disclosure

The United States Supreme Court holds that, for purposes of extortion, the property extorted must be "obtainable" and "transferrable" from the victim to another.

July 1, 2013
Sekhar v. United States, 2013 U.S. LEXIS 4920 (U.S. 6/26/13)

The Supreme Court of the United States held that intangible property cannot be extorted under "The Hobbs Act, § 18 U.S.C. 1951(a)." In this case, the Court questioned whether an internal recommendation regarding a government decision constitutes "property" for purposes of extortion under the Hobbs Act. In a unanimous decision, with one concurrence, the Court held that the issue of what property can be extorted turned on whether the property in question was "obtainable" and, more specifically, "transferable" from one person to another.

In this case, the general counsel for the comptroller of New York was responsible for advising the comptroller on which funds to invest in for an employee retirement fund. This advice is generally known as a Commitment and sent in writing to the comptroller. A Commitment does not bind the fund, rather it is only an advisory opinion. This Commitment only becomes binding when the fund and the recipient enter into a limited partnership. The petitioner's company managed one of these potential investment funds. The general counsel advised the comptroller not to invest in this particular fund because he learned the petitioner's company was under investigation by the Office of the New York Attorney General.

The petitioner learned the general counsel was allegedly having an extramarital affair. After making the recommendation not to invest in the fund, the general counsel began to receive several anonymous e-mail threats. These threats stated that if he did not recommend a Commitment to this particular fund, his alleged extramarital affair would be exposed to his wife, government officials and the media. After the general counsel reported the threats, authroties determined the petitioner was the source. The petitioner was ultimately indicted for, and convicted of, attempted extortion in violation of the Hobbs Act.

The Hobbs Act exposes a person to criminal liability when an individual "obstructs, delays or affects commerce or the movement of any article or commodity in commerce, by robbery or extortion or attempts to conspire so to do." The Hobbs Act defines extortion as "the obtaining of property from another, with his consent, induced by wrongful use of actual or threatened violence, or fear, under color of official right." § 1951(b)(2). At trial, the jury was given three options on the verdict form regarding what "property" was attempted to be extorted in this case. The jury decided only the third of the three options applied, namely, "the general counsel's recommendation to approve the Commitment."

The Court's opinion, authored by Justice Scalia, exhaustively goes through the common law and statutory use of the term "extortion." As Scalia's opinion states, "As far as is known, no case predating the Hobbs Act—English, federal, or state—ever identified conduct such as charged here as extortionate. Extortion required the obtaining of items of value, typically cash, from the victim." Relying on the plain meaning of the Hobbs Act, the Court stated that the obtaining of property is critical. However, in this case, the recommendation to approve the Commitment could not be obtained because extortion requires the "acquisition of property," and the victim to "part with his property," giving the extortionist the opportunity to gain the property. Id. at *9-10. Thus, the key is the transferable nature of the property. Id. at 10. If the property cannot be passed from one person to another, it is not transferable and, thus, cannot be extorted.

Further, the Court stated the actions of the petitioner may be considered coercion—the use of threats to compel or abstain another person to do or not to do an act one has a legal right to do—but were not extortion. The Court reviewed the origins of the Hobbs Act and found it was modeled after the New York Penal Law. In the New York Penal Law, the felony charge of extortion, and a misdemeanor charge of coercion, were both present. Since both crimes of coercion and extortion were present in the Penal Law, the Court found that Congress must have intentionally omitted the definition of coercion for purposes of the Hobbs Act.

Finally, the Court found the government's argument untenable on appeal when it argued the property right extorted was the "general counsel's 'intangible property right to give his disinterested legal opinion to his client free of improper outside interference.'" The Court again opined that this is not transferrable property because the only property gained would be the right of the extortionist to give a disinterested legal opinion, which cannot be transferred. Thus, this "absurd" result was not one the Court was willing to believe.

The Court's emphasis on obtainable and transferable property helped create a new concrete definition of extortion. However, at the same time, excluding intangible property from this dominion, especially in the technological society we live in, may create more challenges in the future. As the Court alluded, "It may be well proper under the Hobbs Act for the government to charge a person who obtains money by threatening a third party, who obtains funds belonging to a corporate or government entity by threatening the entity's agent … or who obtains 'good will and customer revenues' by threatening a market competitor[.]" Id. at *10 n.2 (internal citations omitted). As further noted in the concurrence by Justice Alito, "The right to make a recommendation" is not property in and of itself, id. at *25, and therefore, could not be extorted from the general counsel; however, Justice Scalia is not so sure of this fact, because "[i]f one defines property to include anything of value, surely some rights to make recommendations would qualify[.]" Id. at *15 n.5. As such, the distinction for Scalia again turns on the issue of the ability to "transfer" the object of value. In this increasingly technological world where timely and accurate information becomes progressively more profitable by the day, this definition of extortion is one that could become troublesome in the future.

Case Law Alerts, 3rd Quarter 2013

Affiliated Attorney

Practice Areas

Before you send this email please note:

You are attempting to send email, through a link on our website, to an attorney of Marshall Dennehey Warner Coleman & Goggin or an employee in our firm. Please note that your email may not be treated as confidential and does not create an attorney-client relationship. You should not rely upon the transmission of an email through this website if you are seeking to enter into such a relationship. Until such time as we have agreed to represent you, no information in your email will be treated as confidential. Please contact us directly by telephone at 1.800.220.3308 if it is your intent to seek legal counsel with our firm or convey confidential information.

If it is still your intent to send this email, knowing that it may not be treated as confidential, you may accept our terms of agreement by pressing "OK". If you choose not to accept these terms of agreement you may navigate away from this page by pressing "Cancel."