June 24, 2010 11:50 AM

SCOTUS Rules for Skilling, Black

Posted by Zach Lowe

In what could turn out to be a major blow for white-collar crime prosecutions, the U.S. Supreme Court has just ruled that federal prosecutors overreached in using the so-called honest services law to score convictions against former Enron chief Jeffrey Skilling and the media mogul Conrad Black, according to early stories in The Wall Street Journal and The Associated Press. 

The statute in question makes it a crime "to deprive another of the intangible right of honest service," and lawyers for Skilling (O'Melveny & Myers) and Black (Gibson, Dunn & Crutcher at SCOTUS) argued the law is unconstitutionally vague. The Court, in a majority opinion by Justice Ruth Bader Ginsburg, ruled that the law should not have been used to convict Skilling (pictured here) and Black. The Court did not toss out any portion of either man's convictions, choosing instead to send the cases back to lower courts to decide whether parts of the convictions should be thrown out. Skilling is serving a 24-year prison sentence after being convicted of 19 counts, on charges ranging from securities fraud to insider trading, the AP reports. Skilling was found to have violated the honest services law when he provided false statements about Enron's financial condition, the WSJ reports. A jury found Black violated the honest services law in defrauding his company, Hollinger International, through bogus management fees and noncompete agreements linked to Hollinger's divestment of assets, the WSJ says.

Lawyers for both men have said the convictions should be tossed out entirely. Reacting to the ruling, Black's lawyer, Miguel Estrada of Gibson Dunn, said in a statement, "Given that the jury already decisively rejected the government's attempt to convict Mr. Black for 'traditional' fraud, we are confident the lower courts will quickly conclude that the errors that the Supreme Court has now conclusively found tainted every aspect of this case."

What happens now--to both the defendants and the honest services law--remains anyone's guess. In her opinion, Ginsburg said the honest services law should be used only in fraud schemes involving bribery and kickbacks, the WSJ says.

RELATED STORIES FROM ALM

Supreme Court Focuses on Jury Impartiality in Enron Case
The National Law Journal, March 2, 2010

High Court Justices Take Aim at 'Honest Services' Law
The National Law Journal, December 9, 2009

Three Supreme Court Cases Challenge Law Used to Secure High-Profile Fraud Convictions
The National Law Journal, December 7, 2009

Photo by Brett Coomer/Getty Images

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