Giving or Receiving a Commercial Bribe in New York

Under the New York Penal Code, offering the following items in hopes of influencing an employee’s conduct is considered punishable as commercial bribery: 

• Money
• Tickets
• Dinner
• Anything else

Examples

[1] Offering $200 to a Con Ed employee to expedite installation of a gas meter is commercial bribery, and a misdemeanor. [2] If the bribe is for more than $1000, and it causes harm to the employer in an amount over $250, it is first-degree commercial bribery, a class E felony.

For the employee to solicit, accept or offer to accept anything, with the understanding that it will influence their conduct, is also commercial bribery. It comes in the same first and second degrees. [3]

The temptation for commercial bribery arises in every situation where an employee is in a position to give favorable treatment to someone. The most recent scandal is the bribes to universities to get children admitted. 

These people may have committed felonies under New York law, since the bribes exceeded $1000, but as we will see there are elements of proof that could be problematic in those cases, to prove the first-degree felony. 

Under New York law, it also must be shown that the conduct of the employee who accepted the bribe must result in economic harm to the University in an amount greater than $250, which is not as easy to prove as you might think.

There are many cases involving contract bidding, in various industries, where an employee gets a bribe in exchange for giving favorable attention to a particular bid. Bribes are often made to get an employee to accept a particular contract offer, or to purchase from a particular vendor.

Examples

Bribes are often provided in order to get information from an employee that can be useful, such as:

• Insider stock information, 
• The number of other contract bids
• The names of potential personal injury clients at a hospital [4]

While it might seem that a bribery case would be easy to prove, there are essential elements of the crime that must be proven beyond a reasonable doubt and those elements are not so easily established. The initial problem is that most bribes are not articulated; they are done with a wink and a nod, in private.  

As such, it must be proven that there was an “agreement or understanding” to accept a benefit to influence the employee’s behavior. The “agreement or understanding” is the entire “gist” of the crime. [5] A criminal information charging commercial bribery cannot even make it past the pleading stage, if it doesn’t lay out the basis of the alleged “understanding.”  [6]

There could be a mutual agreement, and a mutual understanding, between the employee and the person making the bribe. But there doesn’t have to be. It could be a unilateral understanding of the mind of the person making the bribe that the bribe will influence the employee’s conduct.

But a unilateral perception or belief by the person making a bribe that it will influence the employee’s conduct is required, at a minimum. [7] The employee could be at any level in the company. They may be a clerk, or they may be the company CEO. They may be an athlete in some sport. 

Any time an employee is in a position to receive favorable treatment, to modify their behavior to help someone, they are the target of bribes. It may be against company policy to give favorable treatment to one person over another, but it is not a crime unless the motivation for giving favorable treatment was to obtain a benefit.

Therefore proof of the crime involves proof of a person’s subjective mental state – either the person giving the bribe or the person accepting the bribe. 

It may seem obvious, but proof beyond a reasonable doubt is a rigorous standard, and the Court of Appeals has recognized that while such a standard of proof makes proving commercial bribery difficult sometimes, the court cannot relax that rigorous standard. [8]

For example, a defendant passes an envelope in a bathroom containing $3000 to a union official; no words are exchanged, but the unarticulated understanding is that the bribe is to keep the union official from raising complaints on the job. The union official is wired and cooperating with the prosecution.  

The trial court convicts the person who passed the envelope of criminal bribery, and the Appellate Division affirms. The Court of Appeals reversed, finding that there was inadequate proof that the defendant, who passed the envelope, knew of the agreement, or that he intended to influence the officer, or that he even knew there was money in the envelope.  

The Court of Appeals said he could have been a “blind mule,” also known as an unsuspecting courier. There must be proof beyond a reasonable doubt that the defendant knew the money was being exchanged as an inducement to an “understanding.” Obviously, common sense would say that it was more likely than not that the person knew what he was doing.  

But this was not enough proof to justify a criminal conviction. Such proof is not an affirmative defense that must be proven by the defendant. It is an element of the crime, and the prosecution’s burden to establish concrete evidence.

First Degree Commercial Bribery – A Felony

The difference between first-degree and second-degree commercial bribery is significant.  First-degree is a class E felony, while second-degree is a class A misdemeanor. The difference may seem minimal – first-degree requires a bribe in excess of $1000, and economic harm to the employer of more than $250. the economic harm element is not always easy to prove.

Some people assume that any bribe that influences the conduct of an employee results in economic harm to the employer, in at least the amount of the bribe. It is easy to assume that the amount of the bribe would have readily been paid to the employer, rather than the employee, and therefore the employer has been harmed at least in that amount.  

But the Court of Appeals has held that it is improper to make that assumption. [9] There must be “concrete evidence” of economic loss. And in this case, it could be that there is no harm to the employer at all. As such, it would be seen as second-degree commercial bribery, only.

The mere fact that a negotiating employee receives a bribe from making a deal does not automatically or inevitably infer that the employer could have made a better deal. For instance, an insurance adjuster is bribed to settle a case quickly. There must be proof that the amount paid in the settlement would have been less if the adjuster had not received the bribe.  

[10] And it must be “concrete” evidence, not a mere common sense assumption. 

If a trustee of a pension fund receives a bribe to invest in a particular investment, to prove first-degree commercial bribery the prosecution must show that a better investment was available and would have been selected, yielding a better return.  

If no better investment was available, the kickback caused no economic harm, and it is, therefore, second-degree commercial bribery, only.  [11] 

In a contract negotiation, it must be shown with concrete evidence that the employer would’ve received a better price, or better terms with an economic value if there had not been the bribe.  Absent such proof, the felony charge has not been proven. It may be that no one was offering a better deal.  

The briber may think he’s getting a better deal, but unless he actually is, and there is concrete proof to substantiate that fact beyond a reasonable doubt, he is not guilty of first-degree commercial bribery.

The temptation is to think someone who gives a bribe obviously gets a better deal, pays less, and that the employer is economically harmed. But you cannot just assume this; it must be proven beyond a reasonable doubt, with concrete evidence, to sustain the first-degree charge. [12]

The statute of limitations may arise as a defense in situations where the bribe is intended to induce the employee not to do something. It may be difficult to determine when the omission took place, starting the statute of limitations ticking. There must be proof of this; it cannot be just a continuing omission over a period of time. 

So the statute of limitations is a possible defense in some situations. [13]

Commercial Bribery in Civil Cases

The fact that an employee was bribed is often raised in civil cases. It may be the key evidence offered to void a contract, or it could be used to sue the employee or the third person who offered the bribe. In most of New York state, though, there is no private cause of action for commercial bribery.  [14]

Bribery though is often the key fact that underlies other causes of action, such as:

• Fraud
• Conspiracy
• Breach of fiduciary duty  

These causes of action have more elements that must be proven than just a violation of the commercial bribery statute.

A cause of action for fraud may use evidence that the employee received a bribe. For instance, when a CEO of a Corporation receives a bribe to induce the Corporation to enter into a detrimental contract, the CEO can be held liable for fraud – a tort claim. But proof of the bribe is not enough; there also must be proof of the element of damages, which is an element of fraud.  

[15] The entity that paid the bribe to induce a contract may be a co-conspirator in that fraud.

If an employee accepts bribes and kickbacks from vendors to induce him to purchase products at inflated prices, there is a civil cause of action for breach of fiduciary duty. [16] There are additional elements to the cause of action though, and not just the bribe. The pleading must set forth the facts giving rise to the fiduciary relationship. [17] 

In summary, establishing the crime of commercial bribery may be more difficult for the prosecution than it seems at first glance. A careful analysis of the facts and the proof must be performed, with a deep understanding of the requirements set forth by New York law.

[1] Penal Law Section 180.02.

[2] People v. Barbera, 48 Misc.3d 374, 8 N.Y.S.3d 894 (Crim ct Bx Co 2015). 

[3] Penal Law 180.05.

[4] See, e.g., Matter of Sorkin, 28 A.D.3d 23, 812 N.Y.S.2d 461 (1st Dep’t 2006)(medical records from hospital to identify potential personal injury clients);

[5] People v. Harper, 75 NY2d 313 (1990).

[6] People v. Barbera, 48 Misc.3d 374, 8 N.Y.S.3d 894 (Crim. Ct. Bx Co 2015).

[7] People v. Ban Tran, 80 NY2d 170 (1992).

[8] People v. Ban Tran, 80 NY2d 170 (1992); People v. Reynolds, 174 Misc.2d 812, 667 N.Y.S.2d 591 (SC NY Co 1997); see People v Schepis, 206 A.D.2d 278, 614 N.Y.S.2d 719 (1st Dep’t 1994).

[9] People v. Reynolds, 174 Misc.2d 812, 667 N.Y.S.2d 591 (SC NY Co 1997) .

[10] Id.

[11] People v. Wolf, 98 N.Y.2d 105, 772 N.E.2d 1124, 745 N.Y.S.2d 766 (2002). 

[12] Id.

[13] People v Agha Hasan Abedi, 156 Misc.2d 904, 595 N.Y.S.2d 1011 (SC NY Co 1993).

[14] In the fourth department, the fact a bribe was used to induce an employee to enter into a contract can be raised as a defense to the validity of the contract. Tag Mech. Sys., Inc. v V.I.P. Structures, Inc., 63 A.D.3d 1504, 880 N.Y.S.2d 437 (4th Dep’t 2009).  This cannot be the sole evidence in the first and second departments; there must be more elements of a different cause of action proven. Sardanis v. Sumitomo Corp.,  279 A.D.2d 225, 718 N.Y.S.2d 66 (1st Dep’t 2001); Wint vs. ABN AMRO Mortgage Group, Inc., 19 AD3d 588 (2d Dept. 2005).

[15] Pramer S.C.A. v Abaplus Intl. Corp., 76 A.D.3d 89, 907 N.Y.S.2d 154 (1st Dep’t 2010).

[16] Rushaid v. Pictet & Cie, 28 N.Y.3d 316, 68 N.E.3d 1, 45 N.Y.S.3d 276 (2016).

[17] Norex Petroleum Ltd. v Blavatnik, 48 Misc.3d 1226(A), 22 N.Y.S.3d 13822 N.Y.S.3d 138 (SC NY Co 2015).