Court of Appeals, 2nd Circuit Construes Attorney’s Advice as Property

07/03/12

In a curious case of extortion, the 2^nd Circuit U.S. Court of Appeals upheld last week the conviction of investment adviser Giridhar Sekhar, holding that an attorney's legal counsel can be construed as “property” to justify extortion charge.

In 2011, Sekhar was convicted by a jury of attempted extortion and related federal crimes for attempting to blackmail one Bierman into suggesting that the comptroller invest $35 million pension funds in a fund managed by Sekhar's company. Sekhar pressurized Bierman by claiming to have evidence of Bierman's extramarital affair with a co-worker and he threatened to expose Bierman if he did not do Sekhar's bidding.

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Sekhar was convicted for attempted extortion on the premise that Biermann's recommendation to the comptroller qualified to be construed as “property” under the Hobbs Act. Sekhar argued that the recommendation to the comptroller made by Bierman was not binding and could not be considered as property for the purposes of the charge, as it did not represent a source of wealth for Bierman.

Under the Hobbs Act, extortion is defined to include, “obtaining of property from another, with his consent, induced y wrongful use of actual or threatened force, violence, or fear, or under color of official right.” Time and again, the courts have held that “property” can be any title, interest or right that represents a “source or element of wealth.”

However, the court held, “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. … The 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.”

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The court rejected Sekhar's contention unanimously and held that Bierman's job was to provide legal counsel to the comptroller and the threat exercised by Sekhar affected the value inherent in his advice.

Paul Clyne, Sekhar's lawyer said that the decision was wrong and his client would appeal the matter to the Supreme Court. According to Clyne, this was the first time that a lawyer's advice is being construed as “property.” He said, “It's a complete overreach … It has no pecuniary effect on (Bierman) whatsoever.”

According to court papers, had Bierman succumbed to Sekhar's pressure then Sekhar's company, FA Technology Ventures stood to earn $7 million from the investment. Sekhar had represented himself in his trial and had been sentenced to 15 months in prison by U.S. District Judge Thomas McAvoy.

The case is U.S. v. Giridhar Sekhar, U.S. Court of Appeals for the Second Circuit, No. 11-4298.