High court rejects ex-Enron CEO’s jury-bias claims

Thursday, June 24, 2010

WASHINGTON — The Supreme Court ruled today that prosecutors erred in using a certain federal fraud statute to convict former Enron CEO Jeffrey Skilling, but left it to a lower appeals court to determine whether his conviction should be overturned.

Ruling in Skilling v. United States, the justices were unanimous in imposing limits on the use of the “honest services” fraud law that has been a favorite of white-collar crime prosecutors.

At the same time, by a 6-3 vote, the Court rejected Skilling’s claim that he did not get a fair trial in Houston because of the harsh publicity surrounding the case in Enron’s hometown.

“Skilling’s fair-trial argument fails,” the Court said in an opinion by Justice Ruth Bader Ginsburg. “Skilling, we hold, did not establish that a presumption of juror prejudice arose or that actual bias infected the jury that tried him.”

In dissent, however, Justice Sonia Sotomayor, joined by Justices Stephen Breyer and John Paul Stevens, said she would have held that Skilling did not get a fair trial in a case in which “passions ran extremely high.”

The honest-services law has been criticized as vague, subjecting people to prosecution for mistakes and minor transgressions in the business and political worlds. Skilling asked that it be struck down as unconstitutional.

But the justices said prosecutors may continue to seek honest-services fraud convictions in cases where they put forward evidence that defendants accepted bribes or kickbacks.

“Because Skilling’s misconduct entailed no bribe or kickback, he did not conspire to commit honest-services fraud under our confined construction” of the law, Ginsburg said. Three justices, Anthony Kennedy, Antonin Scalia and Clarence Thomas, would have found the law unconstitutional.

Today’s decision does not necessarily mean that any of the 19 counts against Skilling will be thrown out, Ginsburg said.

The new limits on honest-services prosecutions also will lead to new a hearing for former newspaper magnate Conrad Black and could mean the end of federal prosecutors’ case against former Alaska lawmaker Bruce Weyhrauch.

The government argues that both Skilling’s and Black’s convictions should be sustained, even with the court’s decisions today.

Lawyers for the two men say that the entire case against them should be thrown out.

The ongoing prosecution of former Illinois Gov. Rod Blagojevich and the convictions of former Alabama Gov. Don Siegelman and ex-HealthSouth CEO Richard Scrushy also could be affected.

Skilling was convicted in 2006 on 19 counts of conspiracy, securities fraud, insider trading and lying to auditors for his role in the downfall of the once-mighty Houston-based energy giant. The company collapsed into bankruptcy in 2001 under the weight of years of illicit business deals and accounting tricks. Skilling is serving a sentence of more than 24 years at a minimum security prison outside Denver.

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