Public Corruption and the Phantom Electorate

Fractionally Legal v20(!) looks at how the feds deal with public corruption, and what the youth vote really wants

Hi, and welcome to the 20th edition of Fractionally Legal, and MY NEW PODCAST! Well, it's not me, but two fun AI voice bots discussing this newsletter. And it sounds like your favorite podcast. Really. It's pretty awesome. So if you’re more of a listener than a reader, this new format is for you.

And here we go.

Publicly Corrupt??

For reasons that don’t have a clear ideological or partisan bend, the US Supreme Court has made prosecuting public corruption cases very hard. Prosecutions of the governor of Virginia and people around the governor of New Jersey have all been set aside because, even though what these people did appears to be really corrupt and super distasteful—using the office of the governor to market dietary supplements, and creating a major traffic jam on an interstate highway to punish a local politician who endorsed a political opponent—there was some question about whether that is what Congress really had in mind when it passed anti-fraud laws. While I’m generally a law-and-order guy, I can see some unfairness in throwing people in federal prison when it’s unclear whether or not their actions actually violated the law. As a lawyer, it's never good to say, “I don't think it's illegal, but it's distasteful.” I always want to tell my clients that distasteful actions are also illegal. Most of the time, they are not.

But then there was the Snyder case, which was decided in July 2024, and seemed to be a public corruption slam dunk. The mayor of an Indiana town gave a $1.1 million contract to a local truck company. A year later, the company paid the politician $13,000 for “consulting,” even though everyone knew that there was no actual consulting. I would have advised, “don’t do that.” Seemed like public corruption. But not to the Supreme Court. The justices basically decided that federal law prohibits bribes, but not “gratuities.” The difference? Bribes are given before the official act to induce the politician to take an act, while gratuities are paid after the official act as a “thank you.” You can’t show the necessary nexus between an after-the-fact “thank you” and an official act, so many public corruption cases fail.

It would be a head-scratcher until you realize that it’s part and parcel of the court's federalism jurisprudence. States and localities decide how one can show their gratitude to local officials, and apparently, the Federal government should not disrupt that. Local politicians, not Congress, apparently decide when and where to place the tip jar. And local prosecutors police whose hands are in that jar. It’s an interesting legal principle. But in the real world, we call it the fox guarding the henhouse.

This all comes to mind because of the indictment of the mayor of my hometown, New York City’s own Eric Adams. Mayor Adams, it seems, has had a longstanding relationship with some Turkish businessmen and their national airline. He was able to get lots of airline and hotel upgrades, all for a nominal fee, as long as he flew through Istanbul. It would have been free, but Adams, in his infinite wisdom, knew he needed to pay something more than nothing and would pay a nominal amount. One of his brilliant aides even put that in writing. In addition to accepting gifts, Adams was also running a straw donor scheme where large Turkish donations were funneled through small donors to enjoy more City matching funds because of the structure of the City’s matching fund system. So, when Turkey needed to get its new consulate to pass the City’s notoriously tough fire codes, Adams was more than happy to help. The Turks loved Adams, and Adams loved them back. The thought of a chief executive of the largest city in the United States sitting around Istanbul airport waiting for a connecting flight to China or London to get the benefit of a low-cost business class ticket courtesy of someone who needs a favor is an abject lesson in how big city politics has devolved into a culture of graft.

Federal law is super clear that American politicians can’t take any money from non-US persons, like the Turks living in Turkey. The evidence is that Adams knew exactly where the money was coming from and understood what it was for. It's all rather ham-fisted and pretty embarrassing. In the past, this would have been a slam dunk. But since the Supreme Court has made it harder to prosecute public corruption, and because Adams has been raising money to pay his legal fees, we’re going to be hearing about this case for quite a while. Also, there is a provision of New York State law (Public Officers Law Section 19) that requires the reimbursement of legal expenses for State officials and employees who are acquitted of criminal charges. Adams is a City official, and not a State official. The City is a political division of the State, and so, in the event of an acquittal, you can be sure that Adams will be asking for his legal fees to be reimbursed. The possibility of reimbursement could force a trial.

Adams is also not doing himself any favors by alleging that he is the victim of some political payback because, essentially, Biden hates him. Sure. And those indictments of Republican swing-state politicians are coming next, I suppose. Oh wait. They are not. More to the point, Adams’ counsel, as if waiting for the charges, already filed a motion to dismiss that relies heavily on the Supreme Court’s odd distinction between bribes (bad) and gratuities (acceptable).

Adams is up for reelection in 2025, and the Democratic primary is in June. Interestingly, if Adams steps aside, there would be a nonpartisan election for his replacement within 90 days. That would clearly be the best outcome for New York, hopefully attracting some candidates from outside New York City’s stale political class who could appeal to independent voters, but it's highly unlikely that Adams is going to step aside or be replaced by New York State’s governor, the car-loving, feckless Kathy Hochul. If we’re stuck with Adams for another 15 months, let's hope that in New York City’s population of 8,000,000 engaged citizens, we can find one competent leader to take office on January 1, 2026.

Just for the record, none of this has much to do with Trump. He has been indicted for 91 violations of law and has been convicted of 34, but none of the charges are public corruption in the traditional sense. Falsifying business records to deceive the public, inciting an insurrection, stealing government records, and trying to have local officials “find votes” are all crimes, but it’s not public corruption as it's generally understood. And here the law is also in a state of flux because we’re told that presidents enjoy presumptive immunity for official acts. Whatever those may or may not be.

None of this is good, and at a very basic level, it feels like another example of little-d democratic decline. Personally, I’m cheering for the prosecutors. The foxes may be guarding the henhouse, but at least we still have some serious fox catchers on the job.

The Youth, Housing, and Crypto Election

The US election is fast approaching. For better or worse, we’ve stopped really trying to convince anyone to change their vote. It's really a vibe election. You can’t really change anyone's vibe with good policy, anyhow. The real question is not whether you want more legal immigration or less, more government spending, tax cuts, or a balanced budget, tariffs or free trade, reproductive choice or abortion bans. Nope. The only thing you need to think about is whether the vibe is aggrieved or optimistic.

I’m an optimist, and I’ll be voting that way. I don’t buy into the dark vision of America that some are shilling. But I don’t dismiss the grievance.

Because there are so few minds to change, the campaigns are really spending most of their time and money motivating voters who share their vibe. And one group that the party of grievance really hopes to reach is a group I know too well: the young and digitally native.

I’m not a digital native, and I’m no longer young. While my childhood was spent during a time when the middle class was still vibrant and my college years were spent during the sole superpower days of the late '90s, those 20 years younger than me had their childhood dominated by the Great Recession and their college years dominated by a pandemic. Not to mention endless nonsensical wars, and an internet that settled into a social media hellscape we can’t seem to regulate. Oh, and most of them have huge student loans and can’t afford to move out of their parents' house (the basement is the archetypal place for them). They have every reason to be aggrieved, indeed.

No one knows how big this cohort is, or whether they will actually vote. But in an election this close, everything matters. And this group doesn't show up in the tracking polls because no one knows how to reach them. Even if we could solve that problem, we’re actually not even polling them for the most part. Polling works by predicting the electorate based on who showed up last time. Since they did not show up last time, or showed up in numbers too minuscule to matter, they are not included in most polling samples.

But like a Phantom of the Electorate, the campaigns know they exist, and they are tailoring their messages to them. And the two issues the campaigns seem to think they care about in 2024? Well, there are two issues that I happen to know well: housing and crypto.

I’ve written extensively about housing policy in the past. One party has a real, slightly flawed, but still real policy, while the other party is talking about maintaining the NIMBY zoning policies and expropriating the homes of non-natural-born Americans. It's not really a plan. It's nice to see that Kamala Harris is doubling down on housing policy, namely bringing down the cost of housing by adding supply, as the centerpiece of her campaign. So if housing is your source of grievance, and you’re actually interested in solving the problem, the choice is clear.

Our financial system is another source of grievance. Access to opportunities to really make money investing in traditional assets seems out of reach to most young Americans because, with fewer US public companies to buy, prices as high as they are, and much of the wealth being kept in private markets that retail investors don’t have access to, investing is not what it used to be.

This was one of crypto's big promises. It was supposed to be a new decentralized system where people locked out of traditional finance could find new, cheap assets to build wealth. It worked for about 36 months (and lots of money was made) and then crashed. But that (fever) dream still exists among the young and aggrieved. Crypto was as much a movement as it was a technology. Crypto was born of grievance, and the party of grievance now positions itself as the party of crypto.

But as with housing, just being aggrieved is not a real solution. I’ve written before about the policy differences between Democrats and Republicans on the digital dollar. In my estimation, a digital dollar would legitimize crypto and get millions of adopters almost instantly. The Democrats have expressed interest in exploring a digital dollar. Republicans hate the idea. Any party that pretends to be the party of crypto should be embracing it, but their paranoia prevents that.

While eschewing endorsing a digital dollar, Kamala Harris is talking, cryptically (pun intended), about “encouraging innovative technologies like… digital assets.” So again, if your issue is that you feel locked out of traditional finance and think cryptographically secured assets on the blockchain are the solution, then there is a clear choice. One party supports a digital asset revolution, and the other does not. At least not beyond lip service.

November 5 is still weeks away. Let's hope reason prevails over grievance.

Keep thinking, keep building,

Jesse

Hi, and welcome to my newsletter! I’m Jesse Strauss, your Fractional General Counsel. I’m a lawyer with a private practice based in New York City, helping clients in the United States and globally with their US legal needs. My expertise spans various areas, including raising funding rounds, employment issues, negotiating master service agreements, intellectual property, compliance, legal process management, and dispute resolution. My focus is on founding and nurturing great companies from seed to exit. Discover more at www.yourfractionalgc.com and book a complimentary 30-minute consultation at Contact Your Fractional GC. You can also follow me on Instagram and Threads @lawyerjesse, on TikTok @lawyerjesse, on X @lawyerjesse, on YouTube @lawyerjesse, and my Substack https://fractionallyyours.substack.com/ (follow me on nNotes), and on LinkedIn https://www.dhirubhai.net/newsletters/fractionally-legal-7147764173140103168/.