APPLICABILITY OF THE ETHICS IN GOVERNMENT ACT TO FEDERAL JUDGES

APPLICABILITY OF THE ETHICS IN GOVERNMENT ACT TO FEDERAL JUDGES Alliance for Justice 11 Dupont Circle NW, Second Floor Washington, DC 20036 www.afj.org

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Applicability of the Ethics in Government Act to Federal Judges The Ethics in Government Act, also known as the Ethics Act or EIGA, 1 is a federal statute that requires federal officials to make certain annual financial disclosures and limits outside employment and income. In January, 2010, it has been discovered that Justice Thomas had for several years failed to disclose his wife s income earned from the Heritage Foundation. The same day that Common Cause brought Justice Thomas failure to disclose his wife s income to the attention of the Judicial Conference, Justice Thomas amended his forms, and explained that he had misunderstood the reporting requirement. 2 More recently, additional reports have raised questions as to whether the Justice may have failed to report certain travel reimbursements. In light of these recent reports, this memorandum provides an overview of the Ethics in Government Act s applicability to members of the judiciary. Background The Ethics in Government Act was passed in 1978 following the Watergate scandal, and was intended to bring transparency to the financial connections of government officials. 3 Nearly all federal officials in all three branches of government must file disclosures detailing investments, outside income, spousal and dependent children s income, reimbursements, gifts, and household liabilities. 4 The Act explicitly applies to the entire federal judiciary, including the Supreme Court. 5 Any person who knowingly and willfully fails to disclose or falsifies information required to be reported may be subject to civil penalties and can be criminally prosecuted. 6 Judges are required to file their disclosure forms with the Judicial Conference, the policymaking body for the federal courts. 7 The Act requires the Judicial Conference (and its counterparts in other branches) to refer to the Attorney General any person the Conference has reasonable cause to believe has willfully failed to file a report or has willfully falsified or willfully failed to file information required to be reported. 8 What Must Be Reported Under the Act? The Act requires judges to disclose several pieces of information, such as reimbursements, gifts, outside income, the source of a spouse s income, liabilities, property interests, and other financial information. 9 Reimbursements Reimbursements are any payment or other thing of value to cover travel related expenses, including the cost of travel, food, lodging, and other miscellaneous fees paid by a non-governmental organization or private party. 10 Reimbursements of $335 or more must be reported. 11 Judges are required to report the source of the funding for the reimbursement, the purpose of the trip, and the dates and location of travel. 12 3

Gifts The judge need not identify the exact dollar value of the reimbursements. 13 Judges are not required to report food, lodging, or entertainment received as personal hospitality defined as hospitality extended for nonbusiness purposes at the residence or property of the individual providing the hospitality. 14 The Ethics Act defines a gift as an uncompensated payment, advance, forbearance, rendering, or deposit of money, or any thing of value. 15 Judges are required to report gifts exceeding $335 in value, or any gifts from a source aggregating to more than $335 in a calendar year. Gifts include honorary club memberships, 16 tickets to sports games, or lodging or entertainment not incident to travel. There are several exceptions to the definition of a gift, including gifts received from relatives, 17 inheritance, 18 mementos from a function honoring the judge, 19 subscriptions to newspapers and periodicals, and personal hospitality. 20 Unlike reimbursements, judges must disclose the value of gifts. Outside Income Judges must also any report outside income received. Outside income is capped at $26,550, 21 and there are limitations on what sorts of outside income a judge may receive. 22 While judges may, within limits, receive outside income, judges are categorically prohibited from receiving honoraria, 23 defined as compensation given in exchange for an appearance or speech. 24 Income received for teaching does not constitute honoraria. 25 While the limitations on outside income and the prohibition on receiving honoraria do not formally apply to Supreme Court Justices, the Court in Conference passed a resolution stating that the Court would comply with the regulations. 26 Spousal Income A judge must disclose the fact that his or her spouse earned outside income exceeding $1,000, 27 or honoraria exceeding $200. 28 The judge is only required to report the fact that income was earned, and the source of the income not the particular amount. Reimbursements and gifts received by a judge s spouse must also be reported, unless they were received totally independently of the spouse s relationship to the judge. 29 Penalties Under the Ethics in Government Act The Ethics Act provides for civil and criminal sanctions, for any individual who knowingly and willfully falsifies or fails to file any information required to be reported on his or her financial disclosure forms. Inappropriately checking the None box constitutes a failure to file reportable information for purposes of the 4

Act. The Filing Instructions for Judicial Officers and Employees alert judges that checking the None box constitutes an affirmative declaration of fact, 30 and the disclosure form itself explicitly clarifies what checking None means (noting, for instance: NONE (no reportable non-investment income.)). Civil penalties under the Act can range up to $50,000, and may be brought against any person who knowingly and willfully fails to file or falsifies information. 31 A civil prosecution under the Act is much more straightforward than a criminal prosecution, and does not require materiality as a prerequisite for penalizing failures to disclose or falsifications. The Act also provides for criminal enforcement, 32 and is punishable by criminal fines and/or incarceration. Failures to file are punishable by criminal fines, whereas falsifications are punishable by criminal fines and incarceration for up to one year. 33 Violations of the Ethics Act are typically prosecuted under 18 U.S.C. 1001, a statute that criminalizes making material false statements. The recent history of 1001 reflects a clear Congressional intent to include the judiciary within the reach of its criminal sanctions. 34 A criminal prosecution for violations of the Ethics in Government Act must meet a more stringent threshold than a civil prosecution. In order to criminally prosecute violations of the Ethics Act under 18 U.S.C. 1001, several elements must be satisfied: (1) there must be a falsification or failure to disclose information, (2) the falsification or failure must be knowing and willful, (3) the information in question must be material. As then-judge Scalia explained in U.S. v. Hansen, materiality for the purposes of the EIGA means falsification or omission of any required disclosure which tends to conceal in any degree... material that would prompt or affect an investigation. 35 The Department of Justice and the Judicial Conference Share Responsibility for Enforcing the Act The Ethics in Government Act has two main vehicles of enforcement against members of the judiciary: the Judicial Conference and the Department of Justice. The Judicial Conference is tasked with flagging potential violations for the Department of Justice, and the Department of Justice is tasked with pursuing legal sanctions against violators. The Act requires the Judicial Conference to refer an individual to the Department of Justice for investigation when there is reasonable cause to believe there have been willful violations of the Act, including failures or falsified disclosures. 36 The Ethics in Government Act s reasonable cause standard sets a lower threshold for the Judicial Conference s duty to refer possible violators to the Department of Justice than it does 5

for the Attorney General to enforce civil and criminal penalties. The Ninth Circuit has explained that reasonable cause amounts to specific articulable facts, together with rational inferences from those facts, that reasonably warrant suspicion [of illegal activity]. 37 Once this standard has been met, the Ethics Act provides that the Judicial Conference... shall refer the individual to the Attorney General creating a nondiscretionary duty for the Judicial Conference to take action. 38 Once the case has been referred by the Judicial Conference to the Department of Justice, civil or criminal prosecution is at the discretion of the Attorney General. 39 The Department of Justice has discretion to take action even in the absence of a referral from the Judicial Conference. 40 Civil or criminal enforcement of the Act by the Department of Justice is not dependent on the initiation of impeachment proceedings. 41 Conclusion The Ethics in Government Act explicitly requires all federal judges to follow clear reporting requirements, and requires them to publicly disclose information such as gifts or reimbursements the judge has received, or outside income the judge has earned. This information ensures that the public is able to discern potential conflicts of interest and ensure their case is heard by an unbiased judge. More broadly, the Act was passed to preserve and promote the integrity of all public officials and institutions including the judiciary. The Judicial Conference and the Department of Justice must take seriously their obligations to uphold and enforce the Act to ensure that these ends are met. 6

Notes 1 See Ethics in Government Act of 1978, 5 U.S.C. app. 4, 101-111 (1996). 2 Justice Thomas Amends Financial Disclosure Forms, CNN Political Ticker (Jan, 24, 2011). 3 See, e.g., Arnold Rochvarg, Enron, Watergate and the Regulation of the Legal Profession, 43 WASHBURN L.J. 61, 73 (2003). 4 Certain low-level federal government employees, particularly low-level workers, are exempted from EIGA. The Act also establishes an Office of Government Ethics, but its authority is limited to the Executive Branch. 5 101(f)(11) requires compliance with EIGA by all judicial officer[s] as defined under section 109(10). 109(10) defines judicial officer to include the Chief Justice of the United States, the Associate Justices of the United States, along with all other lower federal judges. The Act s applicability to the judiciary has been upheld in federal court. In Duplantier v. United States, the Fifth Circuit upheld the Act s applicability to the judicial branch against a constitutional challenge in a class action brought by federal judges. The plaintiffs in Duplantier did not challenge enforcement of the Ethics Act, but sought to enjoin the required disclosures. Duplantier v. United States, 606 F.2d 654 (5th Cir. 1979). 6 Criminal prosecutions of the Ethics in Government Act are typically enforced via 18 U.S.C. 1001. 1001 is a catch-all criminal enforcement statute for acts not otherwise specified in Title 18. That is, other statutes commonly refer to criminal sanctions, which are enforced through 1001, even if the section itself is not specified. 7 103(h)(1)(A)(ii)(B). 8 Id. 9 See 5 U.S.C. 102. 10 See Filing Instructions for Judicial Officers and Employees, at 25. 11 Id. 12 Id. 13 Id. 14 102(a)(2)(A). Personal hospitality is hospitality extended for a nonbusiness purpose by one, not a corporation or organization, at the personal residence of that person or his family or on property or facilities owned by that person or family. 109(14). 15 5 U.S.C. 109(5). 16 Note that since October 2008, judges are barred from receiving honorary club memberships exceeding $50. 17 5 U.S.C. 102(a)(2)(A). 18 5 U.S.C. 109(5)(A). 19 5 U.S.C. 109(5)(B). 20 5 U.S.C. 109(5)(E). 21 See Filing Instructions, supra note 8, at 22. 22 Id., 1020.35. For example, a judge cannot affiliate with or be employed by a firm, partnership, association, or other entity to provide professional services which involve a fiduciary relationship for compensation. 23 5 U.S.C. app. 501(b); Judicial Conference Guide to Judiciary Policy, Vol. 2C, Ch. 10, 1020.30. In lieu of honoraria, a payment of up to $2,000 on behalf of the judge can be diverted to a charitable organization which does not financially benefit the judge or the judge s family. 5 U.S.C. app. 501(c). 24 5 U.S.C. 505(3). 25 Judicial Conference Guide to Judiciary Policy, Vol. 2C, Ch. 10, 1020.30. Honoraria for speaking events are distinguished from outside income received from teaching events, which include[s] meaningful participation in bona fide components of an educational curriculum or plan... Thus, a lecture, lecture series, symposia, moot courts, and jurist-in-residence programs may be compensated as teaching. Judicial Conference Guide to Judiciary Policy, Vol. 2C, Ch. 10, 1020.50(l). 26 See National Commission on Judicial Discipline & Removal, Report of the National Commission on Judicial Discipline and Removal, 152 F.R.D. 265, 361 (1994). [I]n January 1991 the Court in Conference passed a resolution stating that Justices, Retired Justices, and Officers of the Court would comply with the substance of Judicial Conference regulations concerning outside earned income, honoraria, and outside employment. 7

27 5 U.S.C. 102(e)(1)(A). 28 See Filing Instructions for Judicial Officers and Employees, at 17. 29 5 U.S.C. 102(e)(1). 30 Administrative Office of the U.S. Courts Committee on Financial Disclosure, Filing Instructions for Judicial Officers and Employees, January 12, 2010, at 5. 31 5 U.S.C. 104(a)(1) 32 5 U.S. C. 104(a)(2). 335 U.S.C. 104(a)(2)(B). 34 After the 1995 Supreme Court holding in Hubbard v. United States, 514 U.S. 695 (1995), limited 1001 to false statements made to the executive branch, Congress swiftly responded by passing the False Claims Accountability Act of 1996 (FSAA), Pub. L. No. 104-292, H.R. 3166 (October 11, 1996), which explicitly included statements made in any matter within the jurisdiction of the executive, legislative, or judicial branch of the Government of the United States. Subsequent federal court rulings are consistent with the U.S. Attorneys view that the 1996 amendments to 1001 effectively overrule[d] Hubbard, and expressly provide[d] that section 1001 covers false statements that are made to all three branches of the federal government. United States Attorneys Manual 9-42.001, available at http://www.justice.gov/usao/eousa/foia_reading_room/usam/title9/crm00902.htm For example, an Ethics Act violation was used as the basis for a 1001 criminal action against former Representative William Jefferson in 2009, United States v. Jefferson, 623 F. Supp. 2d 678 (E.D. Va. 2009), and 1001 has also been used to prosecute individuals for false statements made to probation officers, who are members of the judicial branch. See, e.g., U.S. v. Manning, 526 F.3d 611 (10th Cir. 2008); In re Morrissey, 305 F.3d 211, 218 (4th Cir. 2002) 35 United States v. Hansen, 772 F.2d at 951. 36 5 U.S.C. 104(b). 37 See U.S. v. Taghizadeh, 87 F.3d 287, 289 (9th Cir.1996) (quoting United States v. Most, 789 F.2d 1411, 1415 (9th Cir.1986)). 38 5 U.S.C. 104(b) (emphasis added). 39 5 U.S.C. 104(a) ( The Attorney General may bring a civil action ) (emphasis added). 40 The late Chief Justice William Rehnquist endorsed this authority while serving in President Nixon s Office of Legal Counsel, arguing that the Department of Justice could prosecute judges (and particularly, Justice Abe Fortas) for illegal activity independent of Congressional impeachment authority. See Arthur John Keefe, The Lawyer s Washington, 59 A.B.A. J. 885, 886 (1973). Rehnquist was particularly arguing that President Nixon s Department of Justice had sufficient evidence to prosecute Justice Abe Fortas separately from any Congressional impeachment action or inaction. 41 Federal judges have been criminally prosecuted, convicted, and incarcerated before -- or even without impeachment proceedings. The Ninth Circuit, in its highly controversial decision in United States v. Claiborne, upheld the conviction and incarceration of Judge Harry Claiborne prior to his impeachment by the House of Representatives., explaining that the Constitution does not immunize a sitting federal judge from the processes of criminal law. U.S. v. Claiborne, 727 F.2d 842, 845 (9th Cir. 1984). Claiborne was decided amidst a period of turmoil for the federal judiciary, which included calls for a constitutional amendment to significantly reform impeachment and the removal of three federal judges in less than three years. See John H. Holloman, III, The Judicial Reform Act: History, Analysis, and Comment, 35 LAW & CONTEMP. PROBS. 129, 133 (1970). See also Stephen B. Burbank, Procedural Rulemaking under the Judicial Councils Reform and Judicial Conduct and Disability Act of 1980, 131 U. PA. L. REV. 283, 284-86 (1982). 8