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Indictment Alleging Honest Services Fraud Sufficient Where Charges Allege Intentional Violation of Clearly Defined Fiduciary Duty

By Candace Hom, Melinda Ghilardi, Nancy Rimmer, Sarah Gannett, Renee Pietropaolo and Tieffa Harper

The issue in United States v. McGeehan, Nos. 05-1954 & 05-2446 (3d Cir.,10/22/2009) , was whether the defendants, the President/CEO and Vice-President/COO of a publicly-funded, non-profit corporation, could be prosecuted for ?honest services? fraud under 18 U.S.C. §§ 1341, 1343 and 1346. The defendants ran the Ben Franklin Technology Center (hereinafter ?BFTC?). The purpose of BFTC was to administer funds provided by the Commonwealth of Pennsylvania for other organizations in an effort to foster the development and commercialization of new technology. One of BFTC?s clients during the course of this fraudulent scheme was the U.S. Navy. The government indicted the defendants for defrauding BFTC of their honest services by misusing BFTC funds for personal expenditures and thwarting the efforts of subordinate employees to investigate their actions...continue to full post

Full post as published by Third Circuit Blog on November 05, 2009 (boomark / email).