September 30, 2010 12:54 PM

Estrada v. Posner: Soak In the Goodness

Posted by Zach Lowe

It's been a difficult couple of months for those parties interested in going after alleged white-collar criminals.

In rapid-fire succession, the U.S. Supreme Court dealt prosecutors a setback by gutting much of the so-called honest services statute and, in a separate case, made it much more difficult for investors and regulatory agencies to apply U.S. securities laws in suits alleging fraud that involve non-U.S. securities bought on foreign exchanges. (It is the latter decision, in fact, upon which the infamous "Fabulous Fab" Fabrice Tourre has based his argument to have fraud charges brought against him by the Securities and Exchange Commission dismissed, according to Bloomberg). 

But prosecutors may be feeling a bit better after reading about Wednesday's battle of wits between Judge Richard Posner and Gibson, Dunn & Crutcher partner Miguel Estrada in the Conrad Black case currently before the U.S. Court of Appeals for the Seventh Circuit.

The appeals court is hearing the Black case again because of the U.S. Supreme Court's ruling in the honest services case, which involved Black and Jeffrey Skilling. In that case, the Court ruled that the honest services law could apply only to cases of clear bribery and kickbacks, and sent Black's case back to the Seventh Circuit to determine if his conviction should now be thrown out.

Estrada, who represents Black, argued Wednesday that exposing the jury at the press baron's trial to the honest services statute tainted Black's conviction on charges of mail fraud and obstruction of justice, according to this rundown by our colleague Andrew Longstreth of The Am Law Litigation Daily. 

Posner, perhaps the most feared and respected judge on any federal appeals court, appeared skeptical and pressed Estrada throughout the hearing, according to The Lit Daily and this AP rundown.

Posner indicated that it would be difficult to determine whether jurors based their vote to convict Black on the honest services statute or traditional fraud laws--and told Estrada it seemed reasonable to believe that jurors simply concluded Black stole money from his Hollinger International empire, The Lit Daily says. "The jury must have found there was an intent to defraud--if they found no intent to defraud, they can't convict on honest services," Posner said, per the AP. 

Posner also hinted that he did not necessarily accept Estrada's argument that prosecutors' use of the honest services statute against Black might imperil the underlying obstruction-of-justice conviction, which is based on security video showing Black removing boxes from his office after he learned he was under investigation, the AP and Lit Daily report.

Estrada says any finding that the use of the honest services statute tainted Black's case would also taint that conviction, but Posner wasn't sure. The argument involved a theoretical scenario in which Estrada conducts an illicit affair with Minnie Mouse. You read that right. Click on Longstreth's piece to see where that argument went. 

A decision on the Black matter is not expected immediately but could come at any time. 

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