It looks like we spotted the trend. Unfortunately. Last week we noted that, when faced with an ambiguous statute, some on the Supreme Court are now willing to read new language into the statute, rather than toss it back to Congress to do it right. And we wondered if that might...
Tagged: honest services fraud
We’re still waiting to hear how the Supreme Court decides the trio of cases on “honest services” fraud. In the meantime, we’re wondering if yesterday’s Dolan decision might be a harbinger of what’s to come. In Dolan, the Court was dealing with a vague statute. It left out a crucial statement...
Try this on for size:
For the purposes of this chapter, the term “scheme or artifice to defraud” includes:
(1) a scheme or artifice by a government official whereby the government official’s position is used for the private gain of any person or entity; or
(2) a scheme or artifice by an officer of a corporation, partnership, nonprofit organization or labor union, whereby the officer’s position is used for the private gain of any person or entity and not for the benefit of the officer’s shareholders or members.
If Congress had half a brain, this is what 18 U.S.C. § 1346 would look like. The whole point of the section is to prevent official corruption. A politician or bureaucrat who steers a contract to a buddy, or a corporate CEO who enriches himself instead of his shareholders, or a union boss who mismanages the pension fund — basically anyone who breaches a trust to act on behalf of those he represents.
But instead, Congress wrote this nonsense:
For the purposes of this chapter, the term “scheme or artifice to defraud” includes a scheme or artifice to deprive another of the intangible right of honest services.
For one thing, anyone can commit this crime, not just people who owe a duty to a constituency. Moreover, instead of a straightforward definition, this is hopelessly vague. Nobody knows what “the intangible right of honest services” means. Does it include an employee who’s playing solitaire instead of reviewing a file? Does it include a politician making promises he can’t keep?
And that’s just how federal prosecutors like it. Actual corruption charges, like bribery and extortion, are notoriously difficult to prove. But a mail/wire fraud charge, based on deprivation of “honest services” — that could mean anything, and so anything they can prove could count. Actions that don’t fit any particular category get to be called “fraud.”
Unethical behavior is now criminal. Contractual breaches, especially in the employment arena, also seem to count.
The courts have had a hard time applying this statute, differing widely on what counts and on how to instruct juries. Earlier this term, the Justices on the Supreme Court sounded like they have real problems with the statute. They seem even to wonder whether it’s void for vagueness. Criminal laws have to be specific enough to put you on notice that certain conduct could land you in jail, and a law where nobody even knows what it means certainly could be unconstitutionally vague. The Court hasn’t decided those open cases yet, presumably because they were waiting for one more to be argued.
And that gets us to today’s Supreme Court arguments in the case of Enron’s former CEO, Jeff Skilling.
Enron was the nation’s 7th-largest company in 2001, when it suddenly came to light that …
On Tuesday, the Fifth Circuit ruled on Jeff Skilling’s appeal from his conviction in the Enron case, upholding the conviction, but sending the case back for re-sentencing. Skilling may be able to raise a Brady issue on remand, as well, so the case doesn’t seem to be over. The opinion...