Media Advisory: Supreme Court’s Decision Will Cause Further Confusion

Published June 25, 2010

The U.S. Supreme Court today narrowed the scope of the “honest services” federal criminal statute used to prosecute Enron CEO Jeffrey Skilling, remanding the case to the federal trial court for further proceedings on his conviction.

At issue was a federal statute criminalizing the use of the U.S. mail or U.S. wires (now usually telephones) in furtherance of “any scheme or artifice to defraud” or to obtain money by fraudulent pretenses. The lower federal courts expanded this to include a court-made “intangible right to honest services” from public officials and some private business employees. Defendants were convicted under the statute even if they did not profit from breach of this intangible right.

In 1987 the Supreme Court found the statute and its accompanying “intangible right to honest services” ambiguous. Congress responded shortly thereafter to add the “intangible right” language to the statute itself. The Court today ruled “honest services” violations were limited to a defendant’s acceptance of bribes or kickbacks.

Skilling was charged with conspiring to commit “honest services” wire fraud, money or property wire fraud, and securities fraud. All three charges were lumped together in one count, so it is unclear which particular charge or charges the jury convicted on. Hence the Supreme Court remanded the case for further proceedings.

Attorneys Maureen Martin, The Heartland Institute’s senior fellow for legal affairs, and Paul Fisher, a member of Heartland’s Board of Directors, criticize the Court’s opinion. In your coverage of this ruling, you may quote from their comments below or contact them directly for more information.

“Skilling argued the ‘honest services’ statute is void because it is so vague no person can understand what conduct it criminalizes. The Court undertook to define the statute in a way that is less vague, but then found it was unclear whether the jury convicted on this vague statute. This was the wrong thing to do, for two reasons.

“First, the Court undertook to narrow the statute despite unambiguous language from Congress that it included the ‘intangible right to honest services.’ The Court has no constitutional right to narrow the statute in the way it did, so it simply should have declared it void for vagueness and reversed Skilling’s conviction, as Justices Scalia and Thomas urged.

“Second, the Court remanded the case to the lower courts, demanding they figure out whether the jury convicted Skilling on one, or two, or all three of the government’s charges: ‘honest services,’ wire fraud, and/or securities fraud. This is an impossible task, and these three charges are fatally intertwined. Again, the Court simply should have reversed the conviction.

“The Court’s decision is intellectually bankrupt and, at base, political. Unwilling to undo a politically popular though legally incorrect conviction, the Court took a middle ground that will cause confusion in the courts for years to come.” 
Maureen Martin
Senior Fellow for Legal Affairs
The Heartland Institute
(920) 229-6670
[email protected]
“The Court is putting its own gloss on what Congress intended, saying Congress could not have intended to reach anything more than bribes and kickbacks. To reach anything more would make the statute vague, and Congress could not have intended that, the Court said. This is creative interpretation, to put it mildly.

“An obvious question is why a federal statute is even needed to cover bribery and kickbacks. These are already crimes. Is the Court trying to ‘federalize’ what are already crimes under state law?
“Furthermore, the Court says there must be a tangible gain to the accused under the statute as it construes it, but a tangible loss to the public or a corporation or its shareholders is irrelevant. What’s the point of a statute that concerns itself only with gain to the accused but no loss to the victim?”
Paul Fisher
McGuire Woods LLP
Member, Board of Directors, The Heartland Institute
(312) 752-0578