A good example of the Hobbs Act being applied to threats of reputational harm can be found in the federal prosecution of attorney Michael Avenatti.  Mr. Avenatti, an outspoken critic of President Donald Trump, shot to fame with his representation of adult-film actress Stormy Daniels.  However, he was later prosecuted by the United States Attorney’s Office for the Southern District of New York for allegedly engaging in a scheme to extort money from Nike, Inc. (the shoe and sportswear).  According to the government’s indictment, Mr. Avenatti “used threats of economic harm in an attempt to obtain multi-million dollar payments from Nike, a multinational company.”  He was later found guilty by a federal jury in New York.

While the Hobbs Act was originally a tool to combat organized crime, it has evolved over the years to become a statute that gets applied by prosecutors to a range of situations that have little or nothing to do with organized crime.  A good and illustrative example of how broadly the Hobbs Act has been applied by federal prosecutors can be found in the case of Sekhar v. United States.  The issue presented in that case was whether attempting to compel a person to recommend that his employer approve an investment constitutes the “obtaining of property from another” within the meaning of the Hobbs Act.  The Supreme Court of the United States answered the question with a “no.” 

In the Sekhar case, the General Counsel of the Office of the State Comptroller of New York advised against investing in a fund managed by a company called FA Technology Ventures.  A managing partner of FA Technology Ventures was Giridahr Sekhar.  The investment would have given FA Technology millions of dollars in service fees.  Upset at the recommendation by the General Counsel and presumably motivated by his personal financial interests, Mr. Sekhar sent the General Counsel an anonymous email threatening to expose his extramarital affair to his wife.  The General Counsel contacted the FBI which was able to trace the email back to Mr. Sekhar.  Subsequently, Mr. Sekhar was prosecuted under the Hobbs Act for extortion. 

Speaking for the majority of the Supreme Court, Justice Antonin Scalia found that attempting to compel a person to issue a favorable recommendation does not amount to “extortion” under the Hobbs Act because the law requires the “property” at issue to be “obtainable” and “transferable” from one person to another in the same manner that cash would be clearly transferable.  Justice Scalia and the other Justices of the Supreme Court were skeptical of Mr. Sekhar’s prosecution for a Hobbs Act violation concluding that the right to give a recommendation is not “property” in and of itself. 

Ultimately, Mr. Sekhar’s Hobbs Act conviction was set aside.  The takeaway from the Sekhar case is that in order for the government to successfully prosecute a person under the federal extortion law, the “property” at issue must be something that is tangible and transferable from one person to another.  In the Michael Avenatti case this issue did not arise because the “property” at issue was millions of dollars that were clearly transferable from Nike to Mr. Avenatti.  The Sekhar case perfectly illustrates how criminal law can turn on the slightest interpretation and meaning of words.