ALBANY — A federal appeals court on Tuesday vacated three of the seven counts on which former state Assembly Speaker Sheldon Silver was convicted of corruption, but also affirmed four of the counts, including a money-laundering charge.

The ruling sets up the possibility that the U.S. attorney's office in Manhattan, which filed its criminal case against Silver five years ago, may forego a third trial and ask the court to re-sentence the former state leader on the four felony counts that were affirmed by the appellate ruling.

Silver has stood trial twice on federal corruption charges and remained free on $200,000 bond since his arrest on Jan. 22, 2015. He appealed both of his convictions to the U.S. Second Circuit Court of Appeals: his first conviction was vacated; his latest appeal focused on the judge's instructions to the jury that had convicted him a second time.

It was not immediately clear what the ruling will mean for Silver, who was sentenced to concurrent seven-year prison terms in 2018 after a jury convicted him a second time. He was convicted of two counts each of honest services mail fraud, honest services wire fraud and Hobbs Act extortion, and one count of money laundering.

At his second sentencing, the court ordered Silver to pay a fine of $1.75 million and to forfeit $3.7 million.

Photo: Mary Altaffer Photo: Mary Altaffer Photo: Mary Altaffer Photo: Peter Foley

Richard S. Hartunian, a former U.S. attorney in New York's Northern District, said that if federal prosecutors opt not to retry Silver on the dismissed counts, another pre-sentence report will need to be completed that could lower the sentencing guidelines. However, the guidelines — which judges can stray from if they state their reasons for doing so on the record — would still allow the judge to consider the allegations surrounding the dismissed charges when meting out any punishment.

"The court can still consider all relevant conduct in determining what an appropriate sentence should be," said Hartunian, who is in private practice and specializes in white-collar defense cases for Manatt, Phelps & Phillips in Manhattan.

Tuesday's ruling by the U.S. Second Circuit Court of Appeals dismissed two honest services counts and one Hobbs Act count against Silver, remanding the case back to the district court judge for further action, including formal dismissal of those three counts.

Silver, 75, was convicted on charges that he accepted nearly $4 million in fees in exchange for taking actions as a legislator that benefited a cancer researcher and real estate developers. Silver was convicted of engaging in a two-pronged corruption scheme that padded his bank account with what prosecutors characterized as bribes and kickbacks disguised as legal fees.

But Silver's appeals were based in large part on recent U.S. Supreme Court rulings that have whittled away at the federal honest services fraud statutes that had long been among the Justice Department's favored weapons in white-collar and political corruption cases.

In this week's appellate ruling, the circuit panel found Silver was "correct that each offense demands more than a nonspecific promise to undertake official action on any future matter beneficial to the payor." They said the judge's instructions to the jury were "harmless" with respect to three of the counts on which he was convicted, but "the evidence was insufficient to sustain a guilty verdict against Silver on three other counts."

Silver, once among the state's most powerful elected officials, has waged a fierce legal battle against the U.S. attorney's office in Manhattan. Following his first conviction, which was overturned and remanded for a second trial, Silver had been sentenced to 12 years in prison in May 2016.

The Second Circuit decision to overturn Silver's 2015 conviction had cited a U.S. Supreme Court decision a year earlier that narrowed the definition of bribery. The appellate judges in Silver's case agreed that, under the Supreme Court's ruling, the instructions given to the jury at Silver's first trial were improper and prejudicial.

The Supreme Court's retooling of the federal honest-services statute was handed down in the case of former Virginia Gov. Bob McDonnell, who along with his wife was convicted of taking government action on behalf of a business executive who gave the couple loans, vacations and gifts.

The Supreme Court, in reviewing what actually constitutes corruption and what constitutes everyday government action for a benefactor, threw out McDonnell's conviction after determining that setting up a meeting, calling another public official or hosting an event does not qualify as an "official act."

In a 2010 ruling, the Supreme Court had chipped away at the honest services statute in a ruling on former Enron CEO Jeff Skilling, finding that bribery and kickbacks must be part of honest services prosecution. That decision led to a retrial of former state Senate Majority Leader Joseph L. Bruno on federal corruption charges, where he was acquitted.

The appellate ruling in Silver's case this week "means that prosecution of public officials will continue to be a challenging exercise for federal prosecutors, as the rules announced in the Supreme Court’s seminal rulings in Skilling and McDonnell are further refined," said Hartunian, who was at the helm of the Northern District when Bruno was acquitted. "Notwithstanding the dismissal of several counts of conviction, Mr. Silver still faces the prospect of jail time, with the trial judge able to consider the entirety of his conduct under the broad reach of the federal sentencing guidelines."

Silver, who was of counsel for the Manhattan law firm of Weitz & Luxenberg, was accused of helping steer state grants to a doctor who funneled mesothelioma patients to the law firm. The three counts overturned by the circuit court this week related to that work.

Silver also did legal work for another Manhattan firm, Goldberg & Iryami, that handled property tax assessment appeals, and was similarly was accused of receiving legal fees through that firm from real estate developers that had extensive business before the Legislature.

Silver's attorneys argued that the definition of an official act was "the exercise of actual governmental power, the threat to exercise such power or pressure imposed on others to exercise actual government power." Federal prosecutors, whom U.S. District Judge Valerie Caproni ultimately agreed with, said an official act includes "any action taken or to be taken under color of official authority."