Skilling v. United States

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To be argued March 1, 2010.

Authorship: Lyle Denniston of SCOTUSblog

Docket: 08-1394

Issue: Whether the federal “honest services” fraud statute, 18 U.S.C. § 1346, requires the government to prove that the defendant’s conduct was intended to achieve “private gain” rather than to advance the employer’s interests, and, if not, whether § 1346 is unconstitutionally vague. Whether the government must rebut the presumption of jury prejudice, which arose because of pretrial publicity and community impact of the alleged conduct, and, if so, whether the government must prove beyond a reasonable doubt that no juror was actually prejudiced.

Contents

Briefs and Documents

Merits Briefs

Amicus Briefs

Certiorari-Stage Documents

Pre-Argument Articles

Petitioner's Brief

Lawyers for a former Enron Corp. executive bluntly told the Supreme Court on Friday that it is not the Justices’ job to rewrite a federal criminal law to give it meaning that Congress failed to provide. They thus contended that the so-called “honest services fraud” must be struck down as too vague to survive the Constitution’s limits. The merits brief for Jeffrey K. Skilling (in Skilling v. U.S., 08-1394) thus gives the Court a full constitutional argument to consider, if, as expected, the Justice Department now mounts a strong defense of the law.

In two oral arguments earlier this week in other “honest services fraud” cases, some of the Justices seemed almost eager to examine its constitutionality, though they appeared unsure that it was clearly at issue in either of those cases. The new Skilling brief puts it front-and-center.

One way to salvage the law, “if the Court were inclined to complete Congress’s work and define the conduct criminalized” by so-called Section 1346, the brief argued, would be to make it apply only to two forms of dishonesty: bribes and kickbacks “received from a third party as a quid pro quo for some advantage from the employer.” Other kinds of dishonesty can be dealt with under traditional laws against fraud in money or property dealings, it said.

“Everyone agrees that Sec. 1346 on its face says nothing about the conduct it prescribes,” Skilling’s lawyers noted. The only way to figure out what Congress meant when it passed the law in 1988, it added, is to consult almost two decades of federal court rulings that pre-dated the law’s passage. Going over those cases, though, will not help, the brief contended, because those cases together are a “morass of conflict and confusion.”

When Congress passed the “honest services fraud” law 21 years ago, to overcome a Supreme Court ruling barring such prosecutions under then-existing law, the lawmakers did not accept the Court’s invitation to define the crime clearly, the brief said. “And it is beyond the judicial function to identify…the crime that Congress failed to define,” it asserted.

The Court agreed on Oct. 13 to hear Skilling’s challenge to his conviction growing out of the collapse of Enron Corp. eight years ago. Skilling was sentenced to 292 months in prison, but a new sentencing has been ordered; that is on hold, as is a Skilling plea for a new trial, until the Supreme Court rules on his present appeal. The Justices are expected to hold oral argument on the case in late March.

When Skilling’s counsel filed their petition for review in May, the constitutionality of the “honest services fraud” law was not a central point, although it figured in the argument. The petition asked the Court to decide whether prosecutors should have had to prove that he gained personally from his actions in order to violate Section 1346. If that was not required, it added, the provision “is unconstitutionally vague.”

The merits brief, with no hesitation, advances the constitutional challenge as a main point — along with renewed challenges to the conviction because of the massive, accusing publicity before and during his trial in Houston (a community that suffered deeply from the collapse of Enron amid an accounting scandal). The second question under review in Skilling is the government’s burden of proof on the question of whether a jury was biased because of such publicity. “The community passion surrounding Skilling’s prosecution,” the new brief commented, “was as dramatic as any in U.S. criminal trial history.”

The brief went on: “Skilling not only was tried by jurors drawn from a community passionately committed to convicting him, but he was prosecuted under a vague statute that virtually ensured jurors would vindicate that oble right jective.”

The reference in the law to “the intangible right of honest services” and the history of its consideration in Congress, indicate, the brief said, that the lawmakers believed they were codifying “some specific, preexisting right whose meaning could be easily discerned” from lower-court decisions that preceded the 1987 ruling in McNally v. U.S., the decision that excluded “honest services fraud” from coverage of the then-existing mail fraud law.

Congress, however, was wrong about that, the brief said. While some principles in those lower court rulings “approach coherence,” it contended, that would be so only for “the most discriminating lawyer or judge.” What all of those rulings amounted to, it went on, was “a hodgepodge of oft-conflicting holdings, statements, and dicta. Reading those cases into Sec. 1346 by the common-law method thus does nothing more than substitute a multitude of vague and inconsistent standards for the facilly meaningless phrase that Congress plucked out of the caselaw.”

The brief’s critique of the pre-McNally court rulings is a frontal assault on the Justice Department’s key argument: that is, that Section 1346 draws sufficient clarity from the way lower courts had previously understood the “honest services” concept to be. “Honest-services fraud,” Skilling’s lawyers summed up, is simply a “made-up crime” with no real foundation in prior court rulings.

Ticking off a list of five core disagreements in those rulings about what Section 1346 meant, the Skilling document said: “Without a consensus on those basic questions, any argument that the statute codified a single, coherent, preexisting conception of honest services — a conception obviously available to ordinary persons from prior caselaw — falls apart completely.”

Moreover, the document added, “this Court has never approved that kind of common-law rescue operation of an otherwise vague statute. To the contrary, the Court has made clear that such creativity exceeds the judicial function.”

“Under the foregoing legal principles,” the brief concluded, “Skilling’s convictions — all of which rested at least in part on the honest-services theory the Government has now abandoned…– must be reversed. That is true, of course, if the Court invalidates Sec. 1346 as unconstitutionally vague. But it is also true if the Court adopts anyh of the limiting principles discussed above.”

The Justice Department’s merits brief is due in 30 days, under the usual Court schedule.

Grant Write-Up

The Supreme Court agreed on Tuesday to rule on claims that “searing media attacks” on longtime Enron executive Jeffrey K. Skilling tainted his criminal trial and conviction on various fraud charges. The case of Skilling v. U.S. (08-1394) also raises an issue on the scope of the federal law punishing the failure to provide “honest services” as a corporate executive. This was one of four cases granted review, to be argued early next year. The Court, however, took no action on a significant new Guantanamo Bay detainee case, Kiyemba v. Obama (08-1234). (UPDATE: The Court will again consider the Kiyemba case at its next private Conference, next Monday, according to the Court’s electronic docket.)

...

The Skilling case puts before the Court the third case this Term on the proof that prosecutors must offer in order to win a conviction for failing to provide “honest services” to someone else — the public, a government agency, or one’s employer. Two of those cases will be heard back-to-back on December 8, and the Skilling case is likely to be scheduled for argument in February or March.

In Skilling, the issue is whether “honest services” fraud requires proof of personal gain from a private individual’s alleged fraud. The case of Black v. U.S. (08-896), granted review last May, tests whether there must be proof of economic harm to the victim as a result of a private individual’s alleged fraud — in that case, one’s own corporation. And the case of Weyhrauch v. U.S. (08-1196), granted review in June, involves a state official and asks whether there must be proof that the accused violated a duty imposed by state law — in that case, a duty to disclose significant information.

The Court, in agreeing to add the Skilling case to the mix, rejected the advice of the U.S. Solicitor General either to deny review of that case, because of contemplated further proceedings on it in lower courts, or at least to hold it until it had ruled in the Black case.

Skilling, the former CEO of Enron Corp., was convicted of conspiracy to commit securities and wire fraud and a wide array of other criminal charges. He was sentenced to 292 months in prison and ordered to pay $45 million in restitution. The Fifth Circuit Court upheld his conviction, but ordered a new sentencing, concluding that the trial judge had miscalculated under the federal Sentencing Guidelines.

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