In my anger over the federal raid of escort site Rentboy.com's New York City offices yesterday, I glossed over the justification for federal involvement. Blame it on a growing desensitization as federal officials repeatedly get involved in matters that have nothing to do with them, from going after medical marijuana dispensary operators in states that have legalized medical pot, to dragging in unnecessary hate crime enhancements just so that they can get their names on state-level cases, to charging a fired media outlet employee with hacking for giving his old password to a member of Anonymous.
But there is some definite confusion out there about how exactly the Department of Homeland Security and the Department of Justice could possibly be arresting and charging seven people with violating New York state's prostitution laws, so let's clear that up. The seven defendants are charged with conspiring to violate the federal Travel Act. First passed in 1961, the Travel Act makes it a federal crime to use the mail or interstate or international travel or communications for the purposes of engaging in certain illegal acts or for distributing the proceeds of certain illegal acts. The list of illegal acts covered by the law includes crimes like gambling, prostitution, drug trafficking, extortion, bribery, and arson. This is not a complete list.
The important detail here is that these illegal acts don't have to be federal crimes to be covered by the Travel Act. They can be violations of the laws of the state where the crime took place. That's what is happening here. Rentboy.com allegedly violated New York's laws against prostitution, but the U.S. Attorney's Office for the Eastern District of New York is arguing that Rentboy.com facilitated and promoted prostitution crimes across state and international borders. For that they could face up to $250,000 fines and five years in prison each (though this is the maximum penalty and none of them are likely to face sentences this harsh).
The Travel Act had not been seeing much use, but the Department of Justice under President Barack Obama has dusted it off and is now using it as a way to go after private business leaders accused of bribing foreign officials. The Travel Act allows the DOJ to get around gaps in the Foreign Corrupt Practices Act (FCPA). Magazine Inside Counselexplains:
This exceptionally broad language allows federal prosecutors to reach criminal acts committed abroad that would not otherwise violate federal law. For instance, federal law doesn't prohibit commercial bribery—bribery between private parties that does not involve a government official. However, many state laws criminalize commercial bribery. Therefore, if bribery is committed abroad using any cross-border transmissions, such as mail, Skype or wire transfers, such that the crime has some significant contact with the U.S., the DOJ can snag the perpetrator under the wide umbrella of the Travel Act.
"The Travel Act allows the DOJ to federalize a state commercial bribery statute if the transaction touches any state with a commercial bribery statute," [Attorney H.L.] Rogers says. "The DOJ is looking to see if there is any aspect of the crime that involves crossing state lines, even if it has nothing to do with any government official."
Likewise, the DOJ has made foreign bribery of government officials an enforcement priority for years. But the FCPA doesn't reach all parties to a bribe. The FCPA targets only the payor, not the bribe's recipient. Once again, the Travel Act, as in the Direct Access Partners case, can step in to fill that gap.
That explains how the DOJ and DHS could go after Rentboy.com, but not really why. Inside Counsel notes that the prosecution both gives the DOJ leverage to force pleas and settlements (recall the feds are asking to seize $1.4 million from Rentboy), and it's easier to get jury convictions:
When Travel Act charges are tacked onto FCPA, Racketeer Influenced and Corrupt Organizations Act or money laundering charges, the defendants face increased risks of financial penalties and jail time. This puts the DOJ in a stronger position for negotiating favorable settlements.
"Adding additional theories gives prosecutors an alternative for plea bargaining," says Adam Hoffinger, a partner at Morrison Foerster. "Charges under the Travel Act also provide an alternative for jurors—in some cases it may be easier for a jury to find that this statute was violated than the FCPA. The DOJ is willing to go as far and wide as possible and use all of the statutes and laws available to it to go after FCPA cases."
This isn't a FCPA case though, so it's not entirely clear if we can expect the same.