Supreme Court Rules for Enron's Jeff Skilling and Conrad Black on "Honest Services" Fraud

Some good news for Enron's Jeff Skilling and for Conrad Black: The Supreme Court has ruled in their favor on their challenge to the "honest services" portion of the fraud statute.

Section 1346, which proscribes fraudulent deprivations of “the intangible right of honest services,” is properly confined to cover only bribery and kickback schemes. Because Skilling’s alleged misconduct entailed no bribe or kickback, it does not fall within the Court’s confinement of §1346’s proscription.

The 114 page Skilling opinion is here. The Conrad Black opinion is here.

But, the court did not throw out the statute entirely, and it didn't reverse Skilling or Black's convictions, finding the error might be harmless and it will be up to the lower court or appeals court whether to overturn them. Justices Scalia, Thomas, and Kennedy would have found the statute unconstitutional.

But the justices, in an opinion by Justice Ruth Bader Ginsburg, said prosecutors may continue to seek honest services fraud convictions in cases where they put forward evidence that defendants accepted bribes or kickbacks. "Because Skilling's misconduct entailed no bribe or kickback," Ginsburg said, "he did not conspire to commit honest-services fraud under our confined construction" of the law. [More...]

From the syllabus:

Because the indictment alleged three objects of the conspiracy—honest-services wire fraud, money-or-property wire fraud, and securities fraud—Skilling’s conviction is flawed. See Yates v. United States, 354 U. S. 298. This determination, however, does not necessarily require reversal of the conspiracy conviction, for errors of the Yates variety are subject to harmless error analysis. The Court leaves the parties’ dispute about whether the error here was harmless for resolution on remand, along with the question whether reversal on the conspiracy count would touch any of Skilling’s other convictions.

The Court was divided on whether to throw out Skilling's conviction because the court kept the trial in Houston where prejudice ran high against him. The majority ruled against him.

Justices Sonia Sotomayor, Stephen Breyer and John Paul Stevens also would have held that Skilling did not get a fair trial in a case in which "passions ran extremely high," Sotomayor said in her dissent.

Skilling was sentenced to more than 24 years, which he is serving at the prison camp in Englewood, Colorado, near Denver.

The Court made the same ruling for Bruce Weyhrauch in a one paragraph opinion based on Skilling.

This could also be good news for Rod Blagojevich and Don Siegelman.

The New York Times report on today's decisions is here and the Washington Post here.

It seems to me that since one of Skilling's conspiracy counts included the honest services allegation, the conspiracy conviction should also be vacated. But that will be up to the lower court. From the WaPo article:

Skilling was convicted on 19 charges -- one of which used the honest services law to further a conspiracy charge ....Ginsburg said a lower court should now consider Skilling's fate. "All of his convictions, Skilling contends, hinged on the conspiracy count and, like dominoes, must fall if it falls," Ginsburg wrote. "The District Court, deciding Skilling's motion for bail pending appeal, found this argument dubious."
< MassageGate? Al Gore's Alleged Sexcapades | Joran Van Der Sloot's Habeas Petition Grounds >
  • The Online Magazine with Liberal coverage of crime-related political and injustice news

  • Contribute To TalkLeft

  • Display: Sort:
    It is nice to see (none / 0) (#1)
    by Abdul Abulbul Amir on Thu Jun 24, 2010 at 11:43:24 AM EST

    that P.O.S. law in the dumper.  Surfing the web at work should not be a federal felony.

    occam's razor (none / 0) (#2)
    by diogenes on Thu Jun 24, 2010 at 12:08:44 PM EST
    Why not have specific laws against bribes and kickbacks rather than a "honest service" statute that applies to them?

    This statute allows federal prosecution (none / 0) (#3)
    by Peter G on Thu Jun 24, 2010 at 12:19:57 PM EST
    of what would otherwise be a crime under state law and only prosecutable by the state.  The federal "honest services" statute actually does not create a crime at all, but is rather a definitional extension of the meaning of "fraud" under the federal mail and wire fraud statutes.  It's a device for federal prosecutors to go after corrupt local officials or private frauds against employers that local prosecutors and police either will not go after or cannot get at.  The Supreme Court has narrowed the definition of what this "honest services" provision covers.  In particularly the new ruling excludes from the definition of a fraudulent deprivation of "honest services" profiting through exploitation of an undisclosed conflict of interest, if unaccompanied by a bribe or kickback.

    speak plainly (none / 0) (#5)
    by diogenes on Thu Jun 24, 2010 at 03:40:42 PM EST
    If you want to make bribery and kickbacks federal crimes, then do so directly without resorting to the penumbra of wire fraud.

    Yeah, well that position got 3 votes (5.00 / 1) (#6)
    by Peter G on Thu Jun 24, 2010 at 04:34:36 PM EST
    ... from Scalia, Thomas and Kennedy.  What's your point, other than that you agree with a minority of the justices?  Most of us find ourselves in that situation from time to time, or even most of the time.

    Ouch (none / 0) (#7)
    by Rojas on Thu Jun 24, 2010 at 09:42:29 PM EST
    "In particularly the new ruling excludes from the definition of a fraudulent deprivation of "honest services" profiting through exploitation of an undisclosed conflict of interest, if unaccompanied by a bribe or kickback."

    This seems license to steal. How is profit in this situation not a bribe or a kickback?
    I assume the justices believed such exploitation is not without risk even if one is guiding the ship?


    In fantasy land (none / 0) (#8)
    by jbindc on Fri Jun 25, 2010 at 10:06:27 AM EST
    This ruling would work to snuff out corrupt politicians.  However, since most politicians who deprive the public of their "honest services" aren't receiving envelopes full of cash in a parking garage somewhere, but instead have schemes where favors are traded through several intermediaries (thus not applicable under this ruling), then I guess very few corrupt politicians will be able to be prosecuted.  All it means is that champagne corks were popping all over DC and state legislatures across the country, and we can look forward to many more schemes being devised so that our interests are not going to be looked after.

    In a free and democratic society, (none / 0) (#9)
    by Peter G on Fri Jun 25, 2010 at 01:42:35 PM EST
    the courts do not write the criminal laws.  Only the legislature (Congress, in the case of federal laws) can do that, and to ensure liberty and control arbitrary police power, they must do so in clear language.  Here, Congress wrote a hopelessly vague law.  A majority of the Supreme Court, by a dubious method of interpretation, found a way to salvage the law in part, thus doing prosecutors and Congress a big, undeserved favor.  It is not only not their job, it would be a violation of basic principles for the Court to address the case by asking themselves what ruling would work best to "snuff out corrupt politicians."  Any problem you have with the result, if there is a problem, should be laid at the doorstep of Congress, not the Supreme Court.

    Of course (none / 0) (#10)
    by jbindc on Fri Jun 25, 2010 at 01:44:03 PM EST
    But asking Congress to write more specific and tougher laws that will regulate the actions of politicians, including (wait for it) members of Congress is completely laughable.

    Meanwhile (none / 0) (#11)
    by Untold Story on Sat Jun 26, 2010 at 10:07:59 AM EST
    while we are waiting for Congress to start regulating themselves, why don't we get Jeff Skilling to figure out how to cap that darn well in the Gulf!