Court narrows use of fraud law in Skilling case

A television light is set up in the plaza in front of the U.S. Supreme Court Building in Washington, D.C.

TEXT OF INTERVIEW

Steve Chiotakis: The U.S. Supreme Court set aside today a ruling that upheld the conspiracy conviction of former Enron executive Jeffrey Skilling. The high court said prosecutors were mistaken in the way they prosecuted Skilling. But justices left it to a lower appeals court to determine whether his conviction should be overturned. We're going to get some analysis of the ruling. Michael Connor is editor of Business Ethics Magazine. He's with us live from New York. Good day to you sir.

Michael Connor: Hi Steve, how are you?

Chiotakis: Doing well. This is centered around this "honest services fraud law." I mean without getting into obnoxious legalese, what is that?

Connor: Well it's a law, a part of the U.S. federal code passed in 1988, that makes it a crime to use either the mail or wire services in the scheme, and the language used is "to deprive another of the intangible right of honest services." Now the problem is that neither the 28-word provision nor the legislative history has shed any light on what the "intangible right of honest services" means or to whom it is owed. So that's why the court decision today.

Chiotakis: And how has the law been used in the past?

Connor: Well it's been used extensively in a large number of white-collar criminal cases as well as the prosecutions of public officials. And prosecutors love it because it's short, it's vague and it's capable of seemingly endless elasticity. One lawyer I talked to said it is the most brazen and obvious attempt to criminalize behavior that may be bad, but that would not otherwise be considered criminal. So prosecutors have loved it, defense lawyers and obviously defendants have hated it.

Chiotakis: And so the Supreme Court left it up to the lower courts to determine whether the conviction should be overturned. What's that going to mean for other white-collar cases?

Connor: Well it means a number of things. One is is that in cases that are pending, the courts are going to have to look at the underlying charges. In other words honest services law usually is accompanied by specific charges such as bribery or kickbacks or other more specific instances of misbehavior There's one case in Chicago, the case of former Rod Blagojevich which began about a week or so ago, maybe two weeks now, in which prosecutors anticipated this decision and actually revised their charges against the former governor to include more specific charges.

Chiotakis: Wow. Sounds like there's a precedent there.

Connor: There is. You know, one of the things that I think in the arguments before the court back in December, some of the justices noted that when applied broadly, the honest services law has implications for many people, including many people goofing off at work . . .

Chiotakis: We're going to have to wrap it up there. Michael Connor, from Business Ethics magazine. Thanks for your time.

Connor: Thank you.

About the author

Steve Chiotakis was the host of Marketplace Morning Report until January 2012.

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