White-Collar Crime

2nd Circuit OKs Extortion Case Based On Lost Value of GC's Legal Advice, Due to Blackmail Threat

In what the defendant’s lawyer called a novel and mistaken application of criminal law to an investment adviser who tried to blackmail the former general counsel for the New York comptroller, a federal appeals court has ruled that the potential lost value in compromised legal advice is sufficient “property” to justify an attempted extortion charge.

Giridhar Sekhar had contended, through his counsel, that his attempted extortion conviction should be reversed because it lacked the proper factual predicate. Under the Hobbs Act, “property” must be obtained, albeit with the victim’s consent, via the “wrongful use of actual or threatened force, violence, or fear, or under color of official right,” Reuters reports.

Sekhar argued that his threat to expose a claimed affair between Luke Bierman and a co-worker, in an attempt to obtain the then-GC’s non-binding recommendation that the comptroller invest $35 million worth of pension money in a fund managed by Sekhar’s company, didn’t involve property, as required. But the 2nd U.S. Circuit Court of Appeals disagreed.

“According to Sekhar, the government had to show that the general counsel derived wealth from his ability to make the recommendation or that he would have suffered monetarily had Sekhar succeeded in forcing him to change his recommendation,” a three-judge panel noted in its June 26 written opinion (PDF). However, “[t]he value and worth of a lawyer’s services may be said generally to depend on freedom from conflict, including a conflict created by personal blackmail.”

Attorney Paul Clyne represents Sekhar. He called the decision “a complete overreach” and said his client will appeal to the U.S. Supreme Court, the news agency reports.

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