Thursday
Jun242010
Supreme Court Overturns Enron CEO’s Conviction, Strikes “Honest Services” Law
Thursday, June 24, 2010 at 11:46AM
The Supreme Court Thursday unanimously ruled that a federal law often used in corruption prosecutions is unconstitutionally vague. The law in question, making it illegal “to deprive another of the intangible right of honest services,” was used in cases where there the accused had not clearly stolen money or had not provided a concrete benefit in exchange for money.
Jeffery Skilling, former CEO of Enron, was convicted in 2006 of—among other things—depriving shareholders of his “honest services” when he made false statements about Enron's financial state and benefitted from Enron's inflated stock price. Skilling appealed his conviction, arguing that the “honest services” law was unconstitutionally vague.
Justice Ruth Bader Ginsburg, writing for the Court, said that when Congress passed the “honest services” law it had not intended the law to reach this broadly. Instead, she wrote, Congress had likely intended the law to codify language in an earlier Supreme Court decision regarding bribery and kickback schemes. The law should therefore be limited to those kinds of schemes, she wrote, and under that interpretation the law does not cover Skilling's actions.
Justice Antonin Scalia, joined by Justices Clarence Thomas and Anthony Kennedy, wrote separately but agreed with Ginsburg’s conclusion. Rather than limit the law to bribery and kickbacks, though, Scalia argued the Court should have thrown out the law entirely.
In either case, all 9 Justices agreed that the “honest services” law cannot be applied in cases like Skilling’s.
In a separate section of Ginsburg’s opinion, the Court decided that Skilling had received a fair trial in Houston, the city of Enron’s former headquarters, despite significant media coverage and the economic impact on the city from Enron’s collapse. Justice Sonia Sotomayor, the only former trial judge on the Supreme Court, disagreed, faulting the trial court for inadequately screening potential jurors for bias. Justices John Paul Stevens and Stephen Breyer agreed on this point.
The case will now return to lower courts, where judges will have to decide whether any of the charges on which Skilling was convicted can stand without the “honest services” conviction. If not, Skilling will likely face a new trial.
The case is Skilling v. US.
Jeffery Skilling, former CEO of Enron, was convicted in 2006 of—among other things—depriving shareholders of his “honest services” when he made false statements about Enron's financial state and benefitted from Enron's inflated stock price. Skilling appealed his conviction, arguing that the “honest services” law was unconstitutionally vague.
Justice Ruth Bader Ginsburg, writing for the Court, said that when Congress passed the “honest services” law it had not intended the law to reach this broadly. Instead, she wrote, Congress had likely intended the law to codify language in an earlier Supreme Court decision regarding bribery and kickback schemes. The law should therefore be limited to those kinds of schemes, she wrote, and under that interpretation the law does not cover Skilling's actions.
Justice Antonin Scalia, joined by Justices Clarence Thomas and Anthony Kennedy, wrote separately but agreed with Ginsburg’s conclusion. Rather than limit the law to bribery and kickbacks, though, Scalia argued the Court should have thrown out the law entirely.
In either case, all 9 Justices agreed that the “honest services” law cannot be applied in cases like Skilling’s.
In a separate section of Ginsburg’s opinion, the Court decided that Skilling had received a fair trial in Houston, the city of Enron’s former headquarters, despite significant media coverage and the economic impact on the city from Enron’s collapse. Justice Sonia Sotomayor, the only former trial judge on the Supreme Court, disagreed, faulting the trial court for inadequately screening potential jurors for bias. Justices John Paul Stevens and Stephen Breyer agreed on this point.
The case will now return to lower courts, where judges will have to decide whether any of the charges on which Skilling was convicted can stand without the “honest services” conviction. If not, Skilling will likely face a new trial.
The case is Skilling v. US.
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