Thursday was a relatively good day at the Supreme Court for infamous white-collar criminal defendants. Jeffrey Skilling,
the disgraced former Enron executive, and Conrad Black, the former media tycoon, both received favorable rulings from the justices on the issue of the federal "honest services" law. In both cases, the court unanimously tossed convictions based upon that statute and inaccurate instructions given to jurors before they deliberated the fate of the men. And in each instance the justices unanimously ordered the trial judges to consider whether all of their many other
fraud convictions ought to be tossed as well because of the taint of those unlawful jury instructions.
Skilling was convicted in 2006 on 19 fraud-related charges, one of which used the honest services law. He is serving a 24-year sentence at a federal prison in Colorado. Black, the internationally renowned former chief of Hollinger International, was convicted in 2007 of fraud and obstruction of justice. He is serving a 6½ year sentence at a federal prison in Florida. Neither man is likely to be freed by today's rulings. But both have a better chance now than they did before the justices took their action.
The 1988 law in question, the court declared, made it a crime to "scheme . . . to deprive another of the intangible right of honest services" on behalf of a corporation. But the common law before the statute was enacted focused upon "cases involving fraudulent schemes to deprive another of honest services through bribes or kickbacks supplied by a third party who had not been deceived." Because Skilling did not receive a bribe or a kickback, he did not commit honest-services fraud, the court ruled.
The ruling thus precludes federal prosecutors from aggressively using the statute against white-collar defendants. In most cases, an "honest services" claim is icing on the cake for the Justice Department -- an added count here or there in a much larger conspiracy case (as it was with Skilling) -- but there is little doubt that the feds are relieved that the court did not strike down the law completely as too vague. That was an option, one which some court observers believed was the most likely outcome. The court clearly compromised: limiting the statute but enabling it still to be used in certain circumstances.
The lower court judges now must determine whether the mistake by the trial judges in giving jurors broad "honest services" instruction taints the other jury instructions and thus the other convictions of both Skilling and Black. The former lead prosecutor in the latter's case, Eric Sussman, doesn't think so. He said the rulings "will have very little impact on the convictions of Black and Skilling. Both were convicted of multiple offenses, and under the Supreme Court's ruling, if any one of those other offenses is supported by the evidence, their convictions will stand." This is, at least, what government lawyers will argue. In any event, the two cases will be alive and well for at least another two years.
In the meantime, and not insignificantly
, the court rejected Skilling's claim that he should not have been tried in Houston, Enron's headquarters town. Skilling's lawyers had argued that he was denied a fair trial because of undue and prejudicial pretrial publicity surrounding himself and the energy company at that time. "News stories about Enron," Justice Ruth Bader Ginsburg wrote for the six-member majority, "did not present the kind of vivid, unforgettable information the Court has recognized as particularly likely to produce prejudice, and Houston's size and diversity diluted the media's impact. Nor did Enron's sheer number of victims trigger a presumption."
In a stinging dissent, Justice Sonia Sotomayor, the only former trial judge on the court, didn't buy the majority's fair-trial reasoning. She wrote: "In this case, passions ran extremely high. The sudden collapse of Enron directly affected thousands of people in the Houston area and shocked the entire community. The accompanying barrage of local media coverage was massive in volume and often caustic in tone. As Enron's one-time CEO, Skilling was at the center of the storm.
"Even if these extraordinary circumstances did not constitutionally compel a change of venue," Sotomayor continued, "they required the District Court to conduct a thorough voir dire in which prospective jurors' attitudes about the case were closely scrutinized. The District Court's inquiry lacked the necessary thoroughness and left serious doubts about whether the jury empaneled to decide Skilling's case was capable of rendering an impartial decision based solely on the evidence
presented in the courtroom."