Honest services fraud is a crime defined in 18 U.S.C. § 1346, the federal mail and wire fraud statute. The idea of this law was to criminalize not only schemes to defraud victims of money and property, but also schemes to defraud victims of intangible rights such as the "honest services" of a public official.

The statute states "For the purposes of this chapter, the term "scheme or artifice to defraud" includes a scheme or artifice to deprive another of the intangible right of honest services." The statute has been applied by federal prosecutors in cases of public corruption as well as in cases in which private individuals breached a fiduciary duty to another. In the former, the courts have been divided on the question of whether a state law violation is necessary for honest services fraud to have occurred. In the latter, the courts have taken differing approaches to determining whether a private individual has committed honest services fraud—a test based on reasonably foreseeable economic harm and a test based on materiality. The statute, which has been a target of criticism, was given a narrow construction by the Supreme Court of the United States in the case of Skilling v. United States (2010). In order to avoid finding the statute to be unconstitutionally vague, the Court interpreted the statute to cover only "fraudulent schemes to deprive another of honest services through bribes or kickbacks supplied by a third party who ha[s] not been deceived".

Since at least 1941, particularly in the 1970s and 1980s, and prior to 1987, the courts had interpreted the mail fraud and wire fraud statutes as criminalizing not only schemes to defraud victims of money and property, but also schemes to defraud victims of intangible rights such as the "honest services" of a public official. In 1987, the Supreme Court ruled in McNally v. United States that the mail fraud and wire fraud statutes pertained strictly to schemes to defraud victims of tangible property, including money. In 1988, Congress enacted a new law that specifically criminalized schemes to defraud victims of "the intangible right of honest services."

Honest services fraud is generally more easily proven in the public sphere than in the private, because honest services fraud by public officials can include most unethical conduct, whereas honest services fraud by private individuals only includes some unethical conduct. 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.

In 1997, the United States Court of Appeals for the Fifth Circuit decided in United States v. Brumley that in order for a state official to have committed honest services fraud, he or she must have violated a state statute defining the services which were owed to the employer (the state).

We find nothing to suggest that Congress was attempting in § 1346 to garner to the federal government the right to impose upon states a federal vision of appropriate services—to establish, in other words, an ethical regime for state employees. Such a taking of power would sorely tax separation of powers and erode our federalist structure. Under the most natural reading of the statute, a federal prosecutor must prove that conduct of a state official breached a duty respecting the provision of services owed to the official's employer under state law. Stated directly, the official must act or fail to act contrary to the requirements of his job under state law. 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.

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. As the Ninth Circuit decided in United States v. Weyhrauch in 2008,

Because laws governing official conduct differ from state to state, conditioning mail fraud convictions on state law means that conduct in one state might violate the mail fraud statute, whereas identical conduct in a neighboring state would not. Congress has given no indication it intended the criminality of official conduct under federal law to depend on geography.