The Reach of Federal Extortion and Blackmail Statutes (Part I)

Businessman giving bribe money in the envelope to partnerNote: This article was first published in the ABA’s Criminal Justice magazine in Summer 2019.

By Sara Kropf

In early February 2019, Amazon CEO Jeff Bezos published an explosive blog post accusing the National Enquirer’s owner, American Media Inc. (AMI), of blackmailing him. Bezos’ accusations could have serious consequences for AMI. In September 2018, AMI signed a non-prosecution agreement with the U.S. Attorney’s Office for the Southern District of New York.

As part of the non-prosecution agreement, AMI must cooperate with the government’s investigation of a hush-money payment made to Karen McDougal from President Donald Trump. The non-prosecution agreement also mandates that AMI “shall commit no crimes whatsoever” after its execution. If the government determines that AMI did blackmail or extort Bezos, then it may charge AMI “for any federal violation of which this Office has knowledge.” In other words, if this was a crime, then all bets are off and AMI no longer enjoys the protection of the non-prosecution agreement.

In addition to heading Amazon, Bezos owns The Washington Post, which has been critical of President Trump’s administration. AMI and its CEO, David Pecker, are closely linked to President Trump. After the National Enquirer published texts between Bezos and his girlfriend, Bezos hired private investigators to find out how the media group had obtained his texts.

In two emails quoted in Bezos’ post, AMI employees describe salacious photos of Bezos in its possession and offer not to publish additional intimate texts and these salacious photos in return for certain concessions by Bezos. The “proposed terms” of the agreement are outlined in an email from AMI’s deputy general counsel. Central to the proposal is that AMI will not publish other texts and photos in return for

A public, mutually-agreed upon acknowledgment from the Bezos Parties, released through a mutually-agreeable news outlet, affirming that they have no knowledge or basis for suggesting that AM’s coverage was politically motivated or influenced by political forces, and an agreement that they will cease referring to such a possibility.

It is worth noting that the AMI proposal also includes some legal terms that one would not normally expect in a blackmail threat, such as a “full and complete mutual release of all claims” between AMI and Bezos, and the use of JAMS mediation to resolve any disputes.

Following Bezos’ public accusation, there have been media reports that the New York federal prosecutors are considering whether AMI broke the law with respect to its demands to Bezos. AMI’s conduct may have been questionable, but it is far from clear that federal law makes it a crime.

Blackmail Versus Extortion

Blackmail and extortion are related, but different, crimes. Extortion is generally defined as using threats of force or fear to coerce someone to take action when the person has a legal right to take action. It also applies when a threat of force is used to coerce someone not to take action. Here is a classic example of extortion in the Mafia style: “If you don’t pay me $1000 a month to protect your store, then we will kill you.”

The other side of the coin is blackmail. Blackmail is generally understood to be a threat to reveal embarrassing or damaging personal information about someone unless they comply with a demand. Blackmail usually does not involve the threat of physical force, only a demand for money. Here is a classic example of blackmail: “If you don’t pay me $1000, then I will tell your wife that you are having an affair.”

There has been much academic commentary about the “blackmail paradox.” The so-called paradox is that although the two parts of blackmail are technically legal but their combination is a crime. There is nothing illegal about revealing true information about someone, even if it is extremely damaging, and there is nothing illegal about demanding money from someone. But if you demand money not to reveal damaging information, it is illegal. Despite this “paradox,” blackmail remains a crime on the federal and state books.

Federal Extortion and Blackmail Statutes

States have statutes prohibiting extortion and blackmail. For example, New York law provides that a “person obtains property by extortion when he compels or induces another person to deliver such property to himself or to a third person by means of instilling in him a fear that, if the property is not so delivered, the actor or another will” take certain action, including causing “physical injury to some person in the future,” causing “damage to property,” accusing the person of a crime or “expos[ing] a secret or publicize an asserted fact, whether true or false, tending to subject some person to hatred, contempt or ridicule.”

Many prosecutions for blackmail and extortion will be handled on the state level. The prosecutors handling the AMI matter will no doubt consider whether AMI violated state laws because under the terms of AMI’s non-prosecution letter, if AMI committed a state crime, that would be a breach of the agreement as well.

This article will focus on the federal statutes that prohibit blackmail and extortion and then analyze the Bezos situation in light of them. Some of the statutes have a broader reach and others have a limited scope.

First is 18 U.S.C. § 872 (Extortion by Officers or Employees of the United States). This statute prohibits federal employees, or anyone representing himself to be a federal employee, from “commit[ting] or attempt[ing] an act of extortion.” “Extortion” is separately defined in 18 U.S.C. § 3559(c)(2)(C) as “the extraction of anything of value from another person by threatening or placing that person in fear of injury to any person or kidnapping of any person.” The penalty for violating § 872 depends on the amount of the extortion. If it is under $1000, then it is only a misdemeanor. If the amount demanded is over $1000, then it is a felony punishable with up to three years in prison.

Second is 18 U.S.C. § 873 (Blackmail). This statute is limited to threats to report someone for violating the law unless payment is made. It provides “[w]hoever, under a threat of informing, or as a consideration for not informing, against any violation of any law of the United States, demands or receives any money or other valuable thing, shall be fined under this title or imprisoned not more than one year, or both.” The scope of the federal blackmail statute is very limited since it does not cover threats to reveal personal or embarrassing information, as in the Bezos matter.

Third is 18 U.S.C. § 874 (Kickbacks from Public Works Employees). On first glance, this statute appears quite limited in scope. It provides that “[w]hoever, by force, intimidation, or threat of procuring dismissal from employment” induces someone else who is “employed in the construction, prosecution, completion or repair of any public building, public work, or building or work financed in whole or in part by loans or grants from the United States” to give up part of the compensation for the work. Given the scope of federal grants, it is possible that this statute could be employed in a variety of contexts where federal grant money is used for public projects.

Fourth is the statute that prohibits transmitting extortion threats, 18 U.S. Code § 875 (Interstate Communications). This statute makes it a felony to send an interstate communication with the “intent to extort from any person, firm, association, or corporation any money or other thing of value” when the communication either includes a “threat to kidnap any person, “ a “threat to injure the person of another,” or a “threat to injure the property or reputation of the addressee or of another or the reputation of a deceased person or any threat to accuse the addressee or any other person of a crime.”

Fifth is 18 U.S.C. § 876, which prohibits mailing threatening anonymous communications. It provides that anyone who sends “any communication with or without a name or designating mark subscribed thereto, addressed to any other person” that contains the type of threats contained in § 875 is guilty of a felony.

Sixth is 18 U.S.C. § 880, which prohibits anyone from “receiv[ing], possess[ing], conceal[ing], or dispos[ing] of any money or other property which was obtained from the commission of any offense under this chapter.” This statute covers the situation where extortion is “successful” and the victim makes the payment.

These statutes can be employed together to enlarge the scope of charges against a defendant. Imagine a government employee who sends an extortionate letter and then receives money in return. He could be charged with the underlying offense under § 872, with sending the threat under § 875, and with receiving the money under § 880. Used together, these statutes provide federal prosecutors with a powerful arsenal of charges.

Federal statutes also prohibit extortionate conduct in other specific contexts. For example, 18 U.S.C. § 152(6) prohibits this conduct in a bankruptcy proceeding. It provides that a person who “knowingly and fraudulently gives, offers, receives, or attempts to obtain any money or property, remuneration, compensation, reward, advantage, or promise thereof for acting or forbearing to act in any [Chapter 11] case” could face up to five years in prison.

In Part II of this series, we’ll look at the Hobbs Act, the Travel Act and the sentencing guidelines for these offenses. Plus, I’ll give my take on whether the AMI/Bezos situation is actually a crime.

 

This entry was posted in Blackmail/extortion, Travel Act. Bookmark the permalink.

1 Response to The Reach of Federal Extortion and Blackmail Statutes (Part I)

  1. Pingback: This Week in FCPA-Episode 166 - the El Paso and Dayton tragedies edition - Compliance ReportCompliance Report

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