Supreme Court Overturns Enron CEO’s Conviction, Strikes “Honest Services” Law

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.

Administration Has Zero Tolerance For Stimulus Fraud, Says Biden

By Sarah Mamula
Talk Radio News Service

Despite the fact that his administration has received frequent criticism over the Recovery Act, Vice President Joe Biden told reporters on Friday that it has been a success. By acting with “transparency, responsibility, and accountability,” he argued that the Recovery Act, or stimulus bill, has revived the U.S. economy by spurring growth and creating jobs with minimal cases of fraud.

According to Biden, out of 170,000 checks that have been sent out to companies and individuals involved in stimulus projects, only .2% are under investigation for fraud.

Biden who was tapped by President Barack Obama last year to oversee the implementation of the Recovery Act, echoed the President's desire to fully account for all money spent, and that appropriate actions will be taken to handle evidence of fraud.

"We should take every action possible [and] legally under our power to...impose sanctions in freezing those funds," said Biden.

The Vice President said he believes new technologies and programs that allow the government to detect fraud more easily will deter future attempts at fraud.

“We have weapons,” he said. “We have weapons that we didn’t have, didn’t use before.”

Days Of Medicare Fraud Are Over

By Michael Combier - Talk Radio News Service

Attorney General Eric Holder and Health and Human Services (HHS) Secretary Kathleen Sebelius announced the formation of a new interagency effort, the Health Care Fraud Prevention and Enforcement Action Team (HEAT), to fight against Medicare and Medicaid fraud around the country. Holder and Sebelius also announced this afternoon the expansion of the Strike Force Team to Detroit and Houston. This Strike Team was already operating in South Florida and Los Angeles to fight Medicare fraud on a local level.

“This is part of the administration’s ongoing commitment to fiscal responsibility and accountability and putting the best minds and resources together to combat fraud and return much needing dollars into the United States’ Treasury”, said Attorney General Holder adding that when “individuals and corporations cross the line and defraud the public, we will hold them accountable.”

“The Obama administration and the American people will not stand by while criminals and health care fraud perpetrators steal from the Medicare and the Medicaid programs”, said Secretary Sebelius. “A Small but significant number of criminals and bad operators are cheating the system and costing taxpayers billions of dollars.”

Senior officials from the Department of Justice (DOJ) and HHS will integrate the HEAT team to strengthen the existing programs fighting against fraud. HEAT will not only go against unlawful practices but will also prevent fraud, waste and abuse from happening the first place. The new program will be helped by a joint DOJ-HHS Medicare Fraud Strike Force teams which have successfully fought against fraud perpetrators in South Florida and Los Angeles. In the former, the Strike Force convicted 146 defendants and succeeding in securing $186 million while in the latter, started in May 2008, 37 individuals have been charged with criminal health care fraud offenses resulting in $55 million being restored to the Medicare program.

The Attorney General and the HHS Secretary pointed out that HEAT will work with Congress to work on legislation making it more difficult for fraud perpetrators to use the taxpayers money. The American taxpayers are called upon by Sebelius “to blow the whistle on thieves and criminals who are stealing from all of us.”

Enron Executive to Supreme Court: I’m being unjustly prosecuted

By Michael Ruhl, University of New Mexico – Talk Radio News Service

Today one of Enron’s former executives found himself back in the lime light as the Supreme Court heard his case of being unjustly prosecuted. F. Scott Yeager, an executive at Enron Broadband Services, was caught up in the hunt for white-collar wrongdoing after the Enron scandal. He was charged with wire fraud, securities fraud, insider trading, money laundering, and conspiracy to engage in securities fraud and wire fraud. The original trial saw Yeager acquitted of three of the charges, but the jury couldn’t agree on the charges of insider trading and money laundering.

The United States government then tried to re-try the insider trading and money laundering charges, since the jury was undecided on the matter, something that Yeager says violates his rights against being prosecuted twice for the same matter. Yeager moved to have the case thrown out. He argued that he is protected by collateral estoppel, which prohibits the same issue from being tried twice, and is similar to double jeopardy. Yeager’s legal team relied on a good-faith defense in his initial trial, saying he was not guilty because he had a reasonable belief in his company’s financial stability. The argument for collateral estoppel was that since he was acquitted based on the good-faith defense, it would not be possible to prosecute him on insider trading, since the jury established he could not have illegality at the heart of his actions.

Both the District and Circuit Courts denied Yeager’s motion to have the case thrown out. Yeager then took the matter before the Supreme Court, in Yeager v. United States.

The Justices were undecided in the courtroom about whether or not the acquittal on the similar charges was enough to remove Yeager from any shadow of wrongdoing. Justices Samuel Alito and David Souter felt that he might have been acquitted for other reasons than simply the good-faith defense, although it was self evident that they could not know with certainty why the jury did what it did. The counsel for the United States said that the jury should have said Yeager was not guilty on the two undecided charges if they really meant it. Chief Justice John Roberts showed concern at the effect this decision could have on the Seventh Amendment in the Constitution, which protects the right to jury trials. Roberts questioned whether or not retrial of the undecided charges would undermine the jury’s decisions in the acquitted charges. Although Justice Stephen Breyer did not display a firm position on the case at large, he did say that he can’t think of why this wouldn’t be a second trial, and why collateral estoppel should not apply.

The Court is expected to return a decision on this case in May or June of this year.

$55 Billion in Fraud Anticipated

University of New Mexico, Talk Radio News

At the House Committee on Oversight & Government Reform Earl Devaney, chairman of the Recovery Act Transparency and Accountability Board, said that he was creating a user friendly website: http://www.doioig.gov/index.php?menuid=460&viewid=613&viewtype=PAGE , and that some reporters are already using it.

Rep. Dennis Kucinich (D-Ohio) asked Devaney for assurance that the Recovery Act funds that have gone to existing programs are being spent quickly. Devaney said that he could not provide that.

Dan Burton (R-Ind.) asked Devaney about an expected $55 billion in fraud as the Recovery Act funds go out. Devaney confirmed that about seven percent fraud is a credible estimate, and the best law enforcement can provide is zero tolerance.

Rep. Jimmy Duncan (R-Tenn.) points out that not all of the stimulus money is creating jobs, citing $40 million in his own district that went to raises, standing bills and only two new jobs.