[5] In 1988, Congress enacted a new law that specifically criminalized schemes to defraud victims of "the intangible right of honest services.

Federal courts have generally recognized two main areas of public-sector honest service fraud: bribery (direct or indirect), where a public official was paid in some way for a particular decision or action, and failure to disclose a conflict of interest, resulting in personal gain.

This means that if the official does all that is required under state law, alleging that the services were not otherwise done "honestly" does not charge a violation of the mail fraud statute.

[7]However, the First, Fourth, Ninth, and Eleventh Circuit Courts have all held that the federal statute does not limit the meaning of "honest services" to violations of state law.

[11] Although the law is most often applied to corrupt public officials, several federal courts have upheld honest services fraud convictions of private individuals who breached a fiduciary duty to another, such as an employer.

In addition to many other charges, Frost and Turner were convicted of three counts of mail fraud for defrauding the University of Tennessee of their honest services as employees.

Circuit upheld the wire fraud conviction of Sun-Diamond Growers of California for defrauding its hired public relations firm of the honest services of one of its agents, James H. Lake, in order to curry favor with the United States Secretary of Agriculture, Mike Espy.

The corporation's vice president for corporate affairs, Richard Douglas, had acted in the scheme in such a manner that potentially could have caused economic harm to the public relations firm (tarnishing its reputation by engaging Lake in illegal activity) – he and Lake had illegally funneled contributions to a congressional candidate, Espy's brother.

However, the court ruled that an intent to do economic harm was not necessary to have committed wire fraud, affirming a pre-McNally decision in light of the 1988 statute: In the private sector context, § 1346 poses special risks.

The district court dismissed the honest services charges for lack of evidence before the trial began; the government appealed.

His brother, James Vinyard, was an employee of the Sunoco Products Corporation who was charged with finding an independent broker to research recycled resins for their manufacture of plastic bags.

The brothers instead created their own brokerage, "Charles Stewart Enterprises," incorporated in the state of Iowa, and misrepresented it to Sunoco as a legitimate, independent firm that was supplying recycled resins at the lowest possible price.

They purchased recycled resins from plastic vendors and, marking up the price, sold them to Sunoco, which eventually yielded $2.8 million in profits.

Kevin Gray, Gary Thomas, and Troy Drummond were three members of the men's basketball coaching staff at Baylor University in Texas.

The appellate court reversed his conviction, deciding that the government did not provide sufficient evidence that Cochran had actually defrauded SSM or its bondholders of his honest services, applying the "materiality" test: Though Stifel misrepresented that SGC would not pay an additional fee to Stifel for the forward supply contract, this information resulted in no actual or potential harm to SSM.

The broker and consultant both funneled a portion of their money from Harvest Foods and its supplier to Pennington – through a sham corporation, Capitol City Marketing – as kickbacks.

The court upheld the conviction, stating that there was sufficient evidence that his actions were a breach of his duty as a fiduciary of Harvest Foods to disclose his material interest in their contracts with Oldner and the broker.

However, proof of intent to harm may be inferred from the willful non-disclosure by a fiduciary, such as a corporate officer, of material information he has a duty to disclose.

The court affirmed the conviction, determining that all of the necessary elements for the crime of honest services fraud to have occurred were present, including material misrepresentation.

The court defined the crime as follows: The phrase "scheme or artifice [to defraud] by depriv[ing] another of the intangible right of honest services," in the private sector context, means a scheme or artifice to use the mails or wires to enable an officer or employee of a private entity (or a person in a relationship that gives rise to a duty of loyalty comparable to that owed by employees to employers) purporting to act for and in the interests of his or her employer (or of the other person to whom the duty of loyalty is owed) secretly to act in his or her or the defendant's own interests instead, accompanied by a material misrepresentation made or omission of information disclosed to the employer or other person.

[6] The law is reportedly a favorite of federal prosecutors because the language of statute is vague enough to be applied to corrupt political officials' unethical or criminal activities when they do not fall into a specific category, such as bribery or extortion.

[22] Often, defendants plead guilty to honest services fraud so as to avoid greater liability under the incredibly broad RICO statute.

[22] The late U.S. Supreme Court Justice Antonin Scalia criticized the statute, stating that the clause was so poorly defined that it could be the basis for prosecuting "a mayor for using the prestige of his office to get a table at a restaurant without a reservation.

"[24] In The Perfect Villain: John McCain and the Demonization of Lobbyist Jack Abramoff, investigative journalist Gary S. Chafetz argued that honest-services fraud is so vague as to be unconstitutional, and that prosecutors abused it as a tool to increase their conviction rates.

"[26] The case of former Alabama Governor Don Siegelman is often cited as an example of possible prosecutorial misconduct and abuse of the honest services law.

[26] Many interest groups oppose the usage of the honest services law, including the conservative United States Chamber of Commerce and Washington Legal Foundation, as well as the more liberal National Association of Criminal Defense Lawyers.

[44] In December 2009, the Associated Press reported that the Justices of the Court "seemed to be in broad agreement that the law is vague and has been used to make a crime out of mistakes, minor transgressions and mere ethical violations.

[45] Richard Thornburgh, a former United States Attorney General, has remarked that he expects the court to issue "something fairly sweeping...without doing violence to proper law enforcement.

"[26] On June 24, 2010, the Supreme Court ruled unanimously in the cases of Black and Skilling that the law against "honest services" fraud is too vague to constitute a crime unless a bribe or kickback was involved.