Supreme Court to Consider Honest Services Convictions

A federal fraud statute known as the “honest services” statute, enacted in 1988, establishes that it is a crime for officers of a corporation to cause losses for shareholders by depriving them of their right to honest services by those officers.  Defense attorneys have argued that prosecutors have obtained convictions under this statute because it is too vague and, therefore, easy to charge and hard to defend. 

Earlier this year, the former CEO of Enron, Jeffrey Skilling, appealed to the United States Supreme Court to overturn his conviction under the honest services statute.  Prosecutors obtained conviction of Skilling in 2006 when they accused him of lying to shareholders about the financial condition of Enron which ultimately led to losses when the energy company collapsed into bankruptcy.  Skilling contends that he never lied and the law was misinterpreted.  In October, the Supreme Court agreed to hear his appeal.

The Supreme Court had already agreed to hear another appeal of an honest services conviction, that of former publisher Conrad Black of Hollinger International.  It is possible that the Court will consider the two appeals at the same time and provide guidelines as to the interpretation and enforcement of the statute.

To read more about Jeffrey Skilling’s appeal, consult the Wall Street Journal at http://online.wsj.com/article/SB125544222770882429.html
To read more about the honest services statute and its use by prosecutors see http://www.encyclopedia.com/doc/1G1-146899809.html

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