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

By Jeralyn

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."

Full post as published by TalkLeft on June 24, 2010 (boomark / email).