Kelly v. United States

In September 2013, New Jersey Governor Chris Christie's Deputy Chief of Staff Bridget Anne Kelly and Port Authority official William Baroni secretly ordered a cut in George Washington Bridge toll lanes reserved for Fort Lee commuters — from three to one — to punish the town's mayor for refusing to endorse Christie's reelection bid. The move caused four days of gridlock in Fort Lee, delayed school buses, and impeded emergency vehicles. The officials used a fake traffic study as a cover story. Both were convicted under federal wire fraud and federal-program fraud statutes.

Did New Jersey officials commit federal property fraud when they secretly reduced George Washington Bridge toll lanes to punish a mayor who refused to endorse the governor, causing days of gridlock?

No — the Court ruled that Baroni and Kelly did not commit federal property fraud because their scheme was never aimed at obtaining the Port Authority's money or property. Their decision to realign the bridge lanes was an exercise of regulatory power — deciding how to allocate a public roadway among different groups of drivers. The Court's earlier ruling in Cleveland v. United States (2000) establishes that manipulating a government's regulatory choices is not the same as stealing its property, and that rule applies fully here.

The employees' labor used to carry out the scheme did not change the analysis. While a government's right to paid employee time can qualify as property for fraud purposes, the work of the traffic engineers and backup toll collectors here was only an incidental cost of implementing the lane change — not something the officials sought to obtain for their own benefit. Because neither theory the government offered satisfied the property requirement in the fraud statutes, the convictions had to be reversed.

Federal wire fraud and program-fraud laws cannot be used to prosecute every corrupt or deceptive act by state and local officials. Unless a scheme actually aims to obtain money or property, it falls outside these federal statutes. Political abuses of regulatory power — however harmful or dishonest — must be addressed through state law, state courts, or voters rather than federal criminal prosecution.

The case goes back to the lower courts for further proceedings consistent with the Supreme Court's ruling. Because the federal fraud convictions cannot stand, Baroni and Kelly will not face punishment under federal property fraud law for the Bridgegate scheme. The Court notes that New Jersey state law addresses unauthorized exercises of official power, and the ruling does not foreclose state-level accountability for this kind of political misconduct.

The Court explicitly calls the conduct an "abuse of power" and does not say it was legal or acceptable. The ruling does not address whether state criminal law could punish the officials, does not reach the honest-services fraud statute (not charged here), and does not affect bribery or kickback prosecutions, which remain squarely within federal fraud law.