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

August 21, 2019

Businessman giving bribe money in the envelope to partnerNote: This is the second part of an article that was first published in the ABA Criminal Justice magazine.

By: Sara Kropf

In Part I of this article, we analyzed the difference between blackmail and extortion and examined the various federal statutes that govern those offenses. In this second part, we’ll look at the related Hobbs Act and Travel Act, as well as the sentencing guidelines for these federal statutes.

The Hobbs Act and the Travel Act

There are two other statutes that can be used to charge an individual with extortionate conduct, the Hobbs Act and the Travel Act.

The Hobbs Act, 18 U.S.C. §?1951, prohibits interference with commerce by threats or violence. It provides for a maximum sentence of twenty years in prison. The key section is the following:

(a) Whoever in any way or degree obstructs, delays, or affects commerce or the movement of any article or commodity in commerce, by robbery or extortion or attempts or conspires so to do, or commits or threatens physical violence to any person or property in furtherance of a plan or purpose to do anything in violation of this section shall be fined under this title or imprisoned not more than twenty years, or both.

The Hobbs Act defines extortion as “the obtaining of property from another, with his consent, induced by wrongful use of actual or threatened force, violence, or fear, or under color of official right.”

The Justice Manual (formerly the U.S. Attorney’s Manual) sets forth four questions that “must be answered affirmatively” to bring a Hobbs Act charge:

  • Did the defendant induce or attempt to induce the victim to give up property or property rights?
  • Did the defendant use or attempt to use the victim’s reasonable fear of physical injury or economic harm in order to induce the victim’s consent to give up property?
  • Did the defendant’s conduct actually or potentially obstruct, delay, or affect interstate or foreign commerce in any (realistic) way or degree?
  • Was the defendant’s actual or threatened use of force, violence or fear wrongful?

Although the Hobbs Act has most famously been used in the union context, federal prosecutors have also made us of it aggressively in cases involving both public officials and private citizens. Plus, under the statute’s express language, corporate entities may be charged as well as individuals.

Courts have interpreted the Hobbs Act broadly. For example, “property” has been defined as “any valuable right considered as a source of wealth.” This definition means that almost anything can be the focus of an extortion charge. Moreover, the defendant need not create the fear of injury or harm himself; he may merely exploit an existing fear of injury to induce the victim to give up property.

The Hobbs Act is a confusing statute, particularly when trying to determine what conduct by private individuals – not acting “under color of official right” – falls within its bounds. Some courts have divided it into three types of offenses: (1) extortion by public officials under color of official right; (2) extortion by private individuals by force, and (3) extortion by private individuals by non-violent threat.

Courts have held that the use of threats of economic threats may be “wrongful” under the statute if the defendant has no claim of right to that property. However, there are some limits to the Hobbs Act in private commercial settings, even according to the Department of Justice. The Justice Manual provides that

the payment of money in response to a commercial bribe solicitation, that is, under circumstances where the defendant does not threaten the victim with economic harm, but only offers economic assistance in return for payment to which the defendant is not entitled, is not sufficient to prove extortion by fear of economic loss.

The Hobbs Act has been analyzed in hundreds of court decisions and numerous academic articles, and its exact contours are well beyond the scope of this article. Nonetheless, it is important to keep in mind that this statute addresses extortion by private individuals even where the threat is of economic loss rather than of physical injury.

The Travel Act, 18 U.S.C. §?1952, is not as complicated as the Hobbs Act, but still has a powerful reach. It prohibits interstate or foreign travel that aids “racketeering enterprises.” Specifically, it provides that “[w]hoever travels in interstate or foreign commerce or uses the mail or any facility in interstate or foreign commerce” with the intent to (among other things) “further any unlawful activity” is guilty of a crime.

The key point here is that the Travel Act’s definition of “unlawful activity” includes “extortion, bribery, or arson in violation of the laws of the State in which committed or of the United States.” Therefore, under this definition, a violation of a state extortion law could form the basis of a federal Travel Act charge.

Sentencing Guidelines for Extortion and Blackmail

The federal Sentencing Guidelines have three sections that cover extortion and blackmail.  For extortion by force or threat of injury, §2B3.2 applies. This section can include charges under the Hobbs Act or 18 U.S.C. §§875(b), 876, or 877. The base offense level is 18, with enhancements for the amount demanded by the defendant or the loss to the victim. That enhancement can add up to 7 levels to the Guideline offense calculation. This Guideline section, however, is aimed at extortion that uses threats of force of physical harm.

For extortion and blackmail that does not include threats of force or injury, the appropriate section is § 2B3.3. According to the Guidelines, “[t]his section applies only to blackmail and similar forms of extortion where there clearly is no threat of violence to person or property.” It may be applied to convictions of the Hobbs Act, as well as 18 U.S.C. §§ 873 or 875–877. Not surprisingly, the base offense level for these non-violent offenses is 8, lower than the offenses included in §2B3.2.

Finally, there are separate Guidelines sections for racketeering charges, which include Hobbs Act and Travel Act charges. Section 2E1.2 provides for a base offense level of 6 for a Travel Act violation. Section 2C1.1 covers Hobbs Act violations under color of right, and provides for a base offense level of 14.

As with many criminal statutes, the Guidelines calculation will usually result in a far lower sentence than the maximum sentence in the statue. Consider the Hobbs Act, which contains a 20-year statutory maximum but could result in a Guidelines sentence of less than a year.

Does the AMI “Offer” Constitute Extortion or Blackmail?

There is no doubt that Jeff Bezos understood AMI’s offer to be blackmail. It certainly had coercive elements and threatened to expose Bezos to embarrassment and ridicule. It is clear that AMI’s offer was not blackmail under the federal statute since it had nothing to do with coercing Bezos not to report AMI for any legal violation.

As for extortion, there are two potentially fatal roadblocks to finding an extortion violation here. First, the Department of Justice would need to conclude that AMI’s demand that Bezos’ team provide a public statement “affirming that they have no knowledge or basis for suggesting that AM[I]’s coverage was politically motivated or influenced by political forces, and an agreement that they will cease referring to such a possibility” was a demand for “property” or a “thing of value.”

Extracting this type of public statement is not within the common-sense understanding of “property” or a “thing of value” since most people’s public statements would have little effect. But Bezos is not a typical victim and his public statements could have considerable influence. He is a powerful, wealthy owner of a major corporation and a major medial outlet. Imagine the value of having Bezos make a public statement that a particular start-up company has a bright future. That statement is a “thing of value” to the start-up, perhaps helping it obtain venture capital funding. But is it a “thing of value” to Bezos? Arguably, it is valuable to him to have control over what public statements he makes and does not make.

This analysis, however, is highly theoretical. The federal prosecutors who negotiated the AMI non-prosecution agreement may have little desire to press a novel legal theory about what constitutes a “thing of value” or “property” in court. As result, even if there is a legal theory that AMI sought to extract a “thing of value” or “property” from Bezos under threat of releasing damaging photographs, it seems unlikely that the prosecutors would press this theory such that AMI would lose the benefit of its non-prosecution agreement.

Second, the Department of Justice would have to find that AMI’s “threat” was a threat to cause physical or economic harm. There was no hint of physical violence in the emails. Although releasing information that Bezos was engaged in an extra-marital affair may conceivably cause economic harm if investors or business partners backed away from his company, that would be an attenuated theory of injury even under the Hobbs Act. Once again, federal prosecutors may be unwilling to press this theory in court.

If Bezos’ public statement is “property,” then AMI’s conduct may have violated the New York statute, since AMI used a threat that it would “expose a secret or publicize an asserted fact, whether true or false, tending to subject [Bezos] to hatred, contempt or ridicule.” As mentioned above, violation of state law would also be a breach of the non-prosecution agreement. Even that theory is a stretch since some texts exposing Bezos’ affair had already been published and any ill effects likely already felt by him.

Even if AMI’s conduct is not extortion, the Department of Justice will be on high alert for future violations. It will no doubt continue to use these federal statutes to aggressively prosecute other defendants under more straightforward facts.

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