• Yes, an Investigation Is a “Thing of Value”

    Yes, an Investigation Is a “Thing of Value”

    In a Politico article published yesterday, Renato Mariotti holds that the alleged Trump – Zelensky incident could not meet the definition of bribery under 18 U.S. Code § 201.

    While I don’t intend to outlawyer Mariotti or, much less, engage in politics, I disagree.

    Mariotti’s central contention is that the investigation (of Mr. Biden) itself cannot be considered “a thing of value” because “the result of the investigation would be uncertain”, and emphasizing his point by rhetorically asking “What if the investigation turned up no wrongdoing by either Hunter Biden or his father? Would that still be a thing of value?”. He is misguided.

    Let’s look at the question from a financial viewpoint. All financial assets (stocks, bonds, etc.) have a random component affecting their value (future earnings, future credit conditions, etc.). Yet, they have value. The presence of uncertainty merely modifies that value but does not negate it. Take, for example, a run-of-the-mill FCPA case, where the “facilitator” is paid, say, in corporate (i.e. defaultable) bonds. While the value of the bonds may deteriorate if the issuer experiences financial distress and may even, conceivably, go to zero, it was not zero at the time the benefit was granted. The facilitator received something “of value”. This addresses the “the result of the investigation would be uncertain” argument.

    What about the rhetorical corollary? Still wrong but, in this case, we need to resort to something a bit more complex (options theory) to prove that the answer is Yes. To illustrate, consider a stock option to purchase AAPL (current price $217.73/share) at $235/share on November 15, 2019. The option clearly has no intrinsic value (because the current price is lower than the strike price), yet, because the stock has volatility (i.e. its price has randomness), the option has value, precisely $0.37/share. Sure, it’s possible (even likely) that at expiration of the option the stock will still be trading below $235/share, but that doesn’t negate that the option has value today. Similarly, an investigation of the Bidens may find no wrongdoing but that does not negate that, at the time of Mr. Trump’s phone call, it had value. An investigation, just like the process that governs the movement of stock prices, has randomness. Randomness over a period of time entails volatility which, in turn, results in value.

    The federal bribery statute does not specify which value is necessary to prove the crime (in fact, the statute doesn’t even subclassify the offense according to the amount of value received or given), its value element is plainly “something of value”.

    Further, no creative legal theory is required to prove that the desired investigation has value. We are not arguing here that the value is something abstract like depriving Biden from the attention required to run a campaign or something of the sort. We are talking about dollars and cents.

    Political campaigns require money; and, all other things being equal, the more money a campaign has in its coffers the higher the chances it will prevail. At the same time, money is a scarce resource, both for economic reasons (the amount of money available in the economy is not unlimited) and for legal reasons (campaign contribution limits).

    Thus, discrediting an opponent results in pecuniary (the kind an accountant can tally up) benefits. Indeed, the reputational damage from the investigation i) hampers the opponent’s ability to raise money, and ii) relieves the instigator of the investigation from the burden of further investing in fundraising for his own campaign. In both cases, the benefit received reduces to cash.

    I don’t know if the Trump – Zelensky conversation went like the press described it, and I didn’t take the time (nor presumed to have the ability to) analyze if the remaining elements of the offense were fulfilled but I can conclude, without a shadow of a doubt, that receiving from someone a commitment to investigate a political opponent is “something of value”.

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    Carlos A. Abadi

    Carlos is a 30-year veteran international investment banker who pioneered a number of financial products, such as the trading and swapping of emerging markets sovereign loans in the wake of the 1982 Mexican debt crisis, the trading market for derivatives on emerging markets bonds and loans, the first non-dilutive CET1 transaction compliant with Basel III rules, and the first Chapter 11 filing for a Latin American issuer.

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