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"Honest Services" statute more defined

Marketplace Staff Jun 24, 2010

"Honest Services" statute more defined

Marketplace Staff Jun 24, 2010


Kai Ryssdal: The Enron case the Supreme Court decided today — about a law known as the “honest services statute” — is more complicated than might seem. The justices said it’s not enough that former CEO Jeffrey Skilling might have deprived Enron shareholders of an honest day’s pay for an honest day’s work. In the process, they made it harder to prosecute public corruption and white-collar crime.

From Washington, Brett Neely has more.

Brett Neely: Today’s unanimous decision won’t set Jeffrey Skilling free. But the Supreme Court sent parts of his case, and that of convicted newspaper CEO Conrad Black, back to lower courts for review. The court said the government applied the honest services statute way too broadly.

Former government prosecutor Randall Eliason says the law was commonly used to nail executives and public officials. But…

RANDALL ELIASON: The term is so broad you could argue that anything that looks dishonest was maybe a federal crime — and that was the problem.

The ruling will have big implications, says law professor Bennett Gershman at Pace University.

BENNETT GERSHMAN: The governor of Illinois is now being prosecuted under this law. The governor of Alabama was convicted under this law. The speaker of the New York State Senate was convicted under this law. So all of these convictions are vulnerable.

The court’s decision means that prosecutors will have to show more than just dishonest behavior. Prosecutors will now have to prove bribery or kickbacks. But for corporate cases…

MELANIE SLOAN: Very frequently there’s not. Frequently, top officials in corporations have violated their duties to their shareholders for personal financial gain and that will no longer be criminal conduct.

That’s Melanie Sloan of the group Citizens for Responsibility and Ethics in Washington. She’s worried that today’s decision ties prosecutors’ hands.

But former prosecutor Randall Eliason doesn’t think any U.S. attorneys are going to lose sleep.

ELIASON: There are a lot of tools in the federal prosecutor’s tool bag.

He says most fraud and corruption cases rely on lots of different charges. Throwing out the honest services charge won’t make much of a difference.

In Washington, I’m Brett Neely for Marketplace.

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