Supreme Court Rejects Expansive Interpretation of ‘Honest Services’ Fraud Statute
Washington, DC (June 24, 2010) – In Skilling v. United States, the Supreme Court effectively vacated Mr. Skilling’s conviction and remanded because the indictment relied, in part, on what the Court called “an improper construction of the ‘honest services’ component of the federal ban on mail [and wire] fraud.” The Supreme Court held that the “honest services” fraud statute, “properly confined,” criminalizes only schemes to defraud that involve bribes or kickbacks. So limited, the Court found that the law passes constitutional muster, though its application must stick to “core cases” involving dishonest personal gain of some kind. Agreeing with NACDL’s position, however, Associate Justices Antonin Scalia, Clarence Thomas and Anthony Kennedy dissented from that portion of the honest services cases decided today, as they would have found that the statute is simply unconstitutionally vague.
In Skilling, on which the Court relies in its decisions in both Black v. United States and Weyhrauch v. United States, also decided today, the Court’s opinion is clear, “To preserve the statute without transgressing constitutional limitations, we now hold that § 1346 criminalizes only the bribe-and-kickback core of the pre-McNally case law,” citing a 1987 case that overturned a previous version of the law. The Court goes on to specifically exclude from the ambit of this statute the pre-McNally conflict-of-interest cases. “In sum, our construction of §1346 ‘establish[es] a uniform national standard, define[s] honest services with clarity, reach[es] only seriously culpable conduct, and accomplish[es] Congress’s goal of ‘overruling’ McNally.’” But NACDL President Cynthia Hujar Orr explained that, “We are nonetheless disappointed that the Court has held that there remains a place in our criminal justice system for a statute on whose meaning few can agree.”
Orr did say that she is “heartened that the Court has unambiguously rejected government arguments that the ‘honest services’ fraud statute can be properly used across as broad a range of conduct as the government has sought to do in recent years.” Nonetheless, Orr expects “to see future litigation surrounding efforts by prosecutors to wedge their cases into the ‘bribe or kickback’ paradigm to which the Court has now limited this statute.”
On a separate issue in today’s Skilling opinion, the Court shockingly found that pre-trial publicity and community prejudice did not prevent Mr. Skilling from obtaining a fair trial. In fact, though, there has not been a more poisoned jury pool since the notorious first robbery and murder trial of Wilber Rideau in Louisiana. As Justice Sonia Sotomayor noted in her dissent, the greater Houston community was devastated by the Enron collapse. Not only did thousands of employees lose their jobs and their retirement savings, the company’s demise sent a shockwave through the local economy, directly and indirectly causing the loss of thousands of more jobs. With Enron’s demise affecting the lives of so many Houstonians and their families, friends and neighbors, local media saturated the community with collective misery. Articles deriding the company’s senior executives were juxtaposed with sympathetic pieces on the company’s victims. The news was bad enough – very bad – but op-eds, editorials and letters to the editor calling for “justice” echoed the shouts of the lynch mobs of yesteryear. Against this backdrop, Jeffrey Skilling could not have gotten, and did not get, a fair trial before an impartial jury. As NACDL warned in its amicus brief, future courts faced with widespread community hostility toward a defendant will compare their circumstances to this case and conclude that a perfunctory voir dire meets constitutional standards. On this issue, unfortunately, it is hard to imagine a worse case than this one.
Today’s Supreme Court Opinions
In addition, for your convenience, here are links to NACDL’s amicus briefs in each of the “Honest Services Fraud” cases decided by the Supreme Court today: Conrad M. Black v. U.S.; Skilling v. U.S.; Weyhrauch v. U.S.