Ruling to put spotlight on fraud cases

Marketplace Staff Feb 26, 2010
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Ruling to put spotlight on fraud cases

Marketplace Staff Feb 26, 2010
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TEXT OF STORY

BOB MOON: Have you heard the story of the Enron scandal is headed for Broadway? Yep, starting in April. But maybe they’ll want to do some rewrites between now and then, because the story might not be over. The company’s CEO, Jeffrey Skilling, is serving a 24-year federal prison sentence in one of the country’s biggest accounting fraud cases. But on Monday, the Supreme Court is set to hear his appeal. And the justices could yet overturn a widely used statute that was key to convicting Skilling.

As Brett Neely reports, the decision could have a big impact on corporate crime cases.


Brett Neely: The Supreme Court took Skilling’s appeal because it’s interested in the honest services statute. It was originally used to fight government corruption, but prosecutors now use it against businesses. Tom Ajamie is a lawyer in Houston.

Tom Ajamie: It’s basically used anytime there’s some type of corporate fraud, saying that well, what the employee was doing really wasn’t providing honest services, and see, the evidence here is that there was a fraud.

Defense lawyers argue the law is too vague and lets prosecutors go after suspects with much weaker evidence than other fraud statutes. Robert Mintz is a former federal prosecutor in New Jersey.

Robert Mintz: On its face, there are people who will argue that you would actually deprive your employer of honest services merely by taking an unauthorized day off.

The Skilling case is one of three similar cases before the Supreme Court this term. Another involves the convicted newspaper publisher Conrad Black. It’s unusual for the Court to take so many similar cases, which means there could be a major ruling. Melanie Sloane of the group Citizens for Responsibility and Ethics in Washington says the court shouldn’t reverse.

Melanie Sloane: There may be cases where honest services fraud has been applied too broadly, but neither the Black case nor the Skilling case are those cases.

She says a reversal will weaken the fight against corporate crime. If the Supreme Court does overturn some or all of the honest services statute, Jeff Skilling could be set free or face a retrial.

In Washington, I’m Brett Neely for Marketplace.

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