United States v. Sekhar, No. 11-4298 (2d Cir. June 26, 2012) (Jacobs, Parker, Hall, CJJ)

Defendant Skhar was convicted of Hobbs Act extortion and the interstate transmission of extortionate threats based on a particularly bizarre set of facts. He was a managing partner of a tech company into which the New York State Comptroller was considering investing state retirement funds. An earlier investment in the fund had been cleared, but never closed. That investment had been marketed by a placement agent, a process that was later banned. The current investment was not marketed by a placement agent but was "essentially the same" as the earlier one. While the Comprtroller’s General Counsel was considering the issue, he learned from the New York State Attorney General that the placement agent was under investigation; the General Counsel advised against moving forward with the deal, and that decision was then communicated to the fund.

Shortly thereafter, the General Counsel started receiving emails threatening that if he did not have a change of heart, and recommend moving forward with the investment, the writer would disclose that the General Counsel was having an extra-marital affair. This correspondence went on for several weeks. In the end, the emails were traced to Sekhar, who admitted sending them.

Sekhar moved to dismiss the indictment on the ground that it failed to state an offense, because the General Counsel’s recommendation was not "property," a core element of the definition of extortion. He defended at trial on this theory, and also raised it in a Rule 29 motion, all without success. On appeal, the circuit affirmed.

The Hobbs Act defines extortion as "the obtaining of property from another, with his consent, induced by the wrongful use of ... fear.' This definition is also incorporated into 18 U.S.C. § 875(d), which covers extortionate threats. According to the circuit, the "obtaining ... property" element has two parts: whether the defendant attempted to carry out "the deprivation of a property right from another" and whether he had "the intent to exercise, sell, transfer, or take some other analogous action with respect to that right." And property is not limited to "physical or tangible property or things," but also includes, "in a broad sense, any valuable right considered as a source or element of wealth." This includes the "right to pursue a lawful business."

The General Counsel’s job was to "provide legal advice to the Comptroller," in essence the sale of "time and advice." Thus, he had "a property right in rendering sound legal advice to the Comptroller and, specifically to recommend – free from threats – whether the Comptroller" should pursue the investment. Moreover, the government did not have to prove that the General Counsel would derive wealth specifically from his ability to make the recommendation. His ability to give unconflicted legal advice is itself a "source or element of wealth," but, more generally, the property right in an extortion case need not be a "source of wealth to the target of the extortion."

Thus, here, not only was there a deprivation of property, there was also sufficient evidence of an acquisition of property on the part of the defendant. A positive recommendation from the General Counsel was a means for the defendant to profit, and that is enough. That recommendation would have increased the chances that the investment would have occurred, and Sekhar, as a managing partner, would have profited. Since "opportunities have value," the evidence was sufficient.