The Supreme Court on Thursday threw out two fraud convictions during Gov. Andrew M. Cuomo’s administration in New York, dealing prosecutors the latest in a series of setbacks in their efforts to pursue federal charges of public corruption in state government.
The cases were among the blockbuster public corruption prosecutions brought by Preet Bharara, the former U.S. attorney for the Southern District of New York, that fed into Albany’s reputation as a cesspool of corruption.
One case concerned Joseph Percoco, a former aide to Mr. Cuomo convicted of taking illicit payments to benefit a Syracuse-area developer.
The other involved Louis Ciminelli, the owner of a Buffalo construction firm convicted of fraud in a bid-rigging scandal in connection with Buffalo Billion, a development project championed by Mr. Cuomo, a Democrat.
The question in the first, Percoco v. United States, No. 21-1158, was whether Mr. Percoco could be prosecuted under a federal law that makes it a crime to deprive the government of “honest services” for conduct that took place after he resigned his official position to run the governor’s 2014 re-election campaign.
Mr. Percoco was a former campaign manager and longtime confidant to Mr. Cuomo. They were so close that the former governor likened him to a brother.
In 2018, Mr. Percoco was convicted of several crimes, including soliciting and accepting more than $300,000 from executives of two companies with state business in return for taking official actions on their behalf.
Mr. Percoco’s lawyers argued that the honest-services law applies only to people who exercise the authority of the government, a power they said he had lacked when he received the payments. Prosecutors said that distinction was artificial.
Mr. Percoco returned to the government about eight months after he left it, following Mr. Cuomo’s re-election.
Justice Samuel A. Alito Jr., writing for seven members of the court, said that the jury instructions in the case had been flawed and that an appeals court should reconsider the matter.
The jury was told that it could convict Mr. Percoco of honest-services fraud while a private citizen if “he dominated and controlled any governmental business” or if “people working in the government actually relied on him because of a special relationship he had with the government.”
The instructions were too broad and too vague, Justice Alito wrote, as they could apply to people no longer in the government who were influential merely because of their lengthy careers.
“Some of these individuals have been reviled,” he wrote. “Others have been respected as wise counselors.”
The jury instructions, he wrote, “could be said to apply to many who fell into both of these camps. It could also be used to charge particularly well-connected and effective lobbyists.”
Still, Justice Alito wrote that some of Mr. Percoco’s arguments “sweep too broadly.”
“We reject the argument that a person nominally outside public employment can never have the necessary fiduciary duty to the public,” Justice Alito wrote. “Without becoming a government employee, individuals not formally employed by a government entity may enter into agreements that make them actual agents of the government.”
Mr. Percoco had urged the justices to reverse two other convictions in a separate scheme, saying there had been “prejudicial spillover” from the honest-services charge. Justice Alito said the Supreme Court would not address the argument, letting the other convictions stand.
In a concurring opinion, Justice Neil M. Gorsuch, joined by Justice Clarence Thomas, said the court should have gone further and defined precisely when a duty of providing “honest services” arose.
Yaakov Roth, a lawyer for Mr. Percoco, welcomed the ruling. “The Supreme Court has issued a unanimous opinion holding that the government cannot use vague fraud statutes to advance novel and sweeping theories in prosecutions of political actors,” Mr. Roth said in a statement.
A spokesman for the Southern District of New York declined to comment.
Daniel C. Richman, a law professor at Columbia and a former federal prosecutor, said the court’s decision was the latest in a series of rulings expressing skepticism of federal efforts to impose ethical standards on state officials. “As in so many of its other corruption cases,” he said, “the court acted to keep federal criminal law from reaching ‘politics as usual,’ defined here to include shadowy figures who heavily influence government decisions without having any formal power or responsibility to the public.”
The second case, Ciminelli v. United States, No. 21-1170, concerned what prosecutors said was a conspiracy to commit wire fraud by tailoring requests for proposals for work on the Buffalo development to include qualifications that would ensure the contracts would go to Mr. Ciminelli’s firm.
Mr. Ciminelli, a developer and a donor to Mr. Cuomo’s campaigns, was prosecuted for his role in a scheme to rig bids for contracts awarded for the state economic development project that aimed to invest $1 billion in Buffalo. The project was the target of federal investigations that led to the arrests of several officials and government contractors.
The prosecutors’ legal theory was that Mr. Ciminelli had committed fraud by depriving the government of its “right to control” the use of its assets by failing to disclose potentially valuable information.
By the time the case reached the Supreme Court, though, the government had disavowed the theory. That made for an awkward argument when the justices heard the case in November, one focused on how and how badly the government was going to lose.
Justice Thomas, writing for the court, said flatly that “the right-to-control theory is invalid,” returning the case to the appeals court for further proceedings.
“Because the theory treats mere information as the protected interest, almost any deceptive act could be criminal,” he wrote.
Professor Richman said the decision would have “far-reaching effects,” given that the underlying theory was one that prosecutors and lower courts had turned to in a range of cases, including ones involving “lies about student-athletes’ compliance with N.C.A.A. rules to munitions buyers lying to sellers about complying with arms export control laws.”
A lawyer for Mr. Ciminelli, Michael R. Dreeben, praised the court’s decision. “We are gratified by the Supreme Court’s unanimous holding today that the government’s theory of prosecution of Louis Ciminelli was invalid, root and branch,” he said in a statement.
The justices do not always divide along the usual lines in public corruption cases. In 2020, the court unanimously overturned the convictions of two defendants in the so-called Bridgegate scandal, in which associates of Chris Christie, who was the Republican governor of New Jersey, closed access lanes to the George Washington Bridge in 2013 to punish one of the governor’s political opponents. That was an abuse of power, the court ruled, but not a federal crime.
Similarly, the court in 2016 unanimously overturned the conviction of Bob McDonnell, a former Republican governor of Virginia who had accepted luxury products, loans and vacations from a business executive. Chief Justice John G. Roberts Jr., writing for the court, narrowed the definition of what sort of conduct can serve as the basis of a corruption prosecution.
He said that only formal and concrete government actions counted. What Mr. McDonnell had done, by contrast, the chief justice wrote, was arrange meetings for and attend events with his benefactor.
The rulings on Thursday marked the latest reversal for a State Capitol that has long been defined by its scandal-scarred history of public corruption, leading to the convictions of once- powerful legislative leaders in Albany.
But maintaining some of those convictions has proved difficult under a Supreme Court that has narrowed what constitutes abuse of public trust. Sheldon Silver, the former speaker of the State Assembly, fended off prison for nearly five years after being arrested in 2015 and convicted twice on corruption charges. Following a series of overturned convictions, Mr. Silver was finally sentenced in 2020 to more than six years in prison. Mr. Silver, a Democrat, died last year at 77 while serving his sentence.
In a separate case, Dean G. Skelos, the former Republican majority leader of the State Senate, was also arrested on federal corruption charges a few months after Mr. Silver in 2015. But in 2017, shortly after the Supreme Court overturned Mr. McDonnell’s conviction in Virginia, Mr. Skelos’s conviction was vacated on appeal. Like Mr. Silver, he was retried, convicted and sentenced to prison.