Monday, I linked and quoted Adam Litpak’s NY Times article about the U.S. Supreme Court cases involving the scope of the “honest services” statute, that criminalizes fraud that denies the “honest services” of someone– either corporate executives (Conrad Black in one of the cases) or government officials (an Alaskan legislator in another case. Among the advantages to prosecutors was they did not have to prove as direct a linkage between inducement and official act as they would with bribery.
Tuesday, the U.S. Supreme Court accepted yet another honest services case, this involving Jeffery Skilling and his Enron prosecution. They granted cert on a petition raising two issues– the first issue relates to pretrial publicity, and the second to the scope of honest services prosecution.
Here’s the SCOTUS blogs description of the Skilling case. The blog also has a long piece about whether the three cert grants mean we are about to see a major change in the law:
Many lower court judges have devised ways of limiting the sweep of Section 1346, in order to save it constitutionally.
But the legitimacy of that approach is now questioned, even — or, perhaps, especially — by judges themselves. Circuit Judge Dennis Jacobs, for example, said six years ago that the law “effectively imposes on courts a role they cannot perform. When courts undertake to engage in legislative drafting, the process takes decades and the work is performed by unelected officials without the requisite skills and or expertise; and as the statutory meaning is invented and accreted, prosecutors are unconstrained and people go to jail for inchoate offenses.” Another Circuit Judge, E. Grady Jolly, has written that the courts in interpreting Section 1346 are attempting to perform “a role somewhere between a philosopher king and a legislator” to create definitions of what is meant by a denial of “honest services.”
The Court, of course, can decide any one of the three granted cases by doing exactly what lower courts have done: read the statute in a way so that it, in practice, covers less than what its actual language might support. But if that is the tack the Court takes, it still could be a hard year for this law, and for prosecutors who have been in the habit of deploying the statute in wide-ranging ways.
Additionally, Randall Eliason, a law professor and former federal prosecutor, writes in the National Law Journal that the scope of honest services proseuctions needs to be narrowed. Here’s part of it; it’s all worth reading.
Even in cases in which bribery or gratuities could be established, it will often be easier simply to charge the same conduct as an honest services violation and not worry about the more finicky bribery statute.
This development is troubling for several reasons. Conduct that may constitute corruption often scrapes uncomfortably close to the edge of legitimate fundraising, patronage and other political activities. There are many things some might consider dishonest or sleazy that are not actually criminal.
For these reasons, public corruption crimes must have clear and precisely targeted parameters. Honest services fraud utterly fails on this score. Outside of core corruption such as bribery, the standard provides scant notice to politicians or the public concerning what conduct a prosecutor may decide crosses the line.
Another concern is the criminal penalties involved. Gratuities is a relatively minor felony, punishable by only two years in prison. State conflict of interest or financial disclosure laws, often the subject of honest services charges, also may carry relatively modest penalties.
Honest services fraud, however, is punishable by up to 20 years. An honest services charge can be a gratuities or conflict-of-interest case on steroids, with potential punishment grossly out of proportion to the underlying crime.
Finally, here’s a brief Wall Street Journal law blog post about all this.
…and in other news, the AmLaw Daily reports that attorney Sjoblom is now “formerly” employed by Proskauer Rose. He’s the attorney implicated in the Stanford mess.
Here’s the link. http://amlawdaily.typepad.com/amlawdaily/2009/10/report-sjoblom-out.html
I find it interesting that the honest services statute’s potential 20 year penalty is described as a problem.
I’d describe the 2 year penalty for taking gratuities as a problem. Public corruption should entail a higher penalty than – say – prostitution or possession of marijuana.
meanderline – I had the same thought, “that needs to change.”
I understand the need to craft legislation that can stay ahead of overly creative Wall Streeters, but Congress has done a real disservice by trading vagueness for breadth in the realm of white collar crime. At some point, that’s going to come back and bite them, and this may be the case where that happens.
The “honest services” statutes are completely open-ended in proscribing illegal acts. An NBA referee was convicted not long ago for crooked officiating that produced scores favorable to gamblers. Does anyone here know whether NBA officiating falls under the honest services rubric? Or what about NASCAR races that invariably result in yellow caution lights and a regrouping of the cars near the end of races? What if a college football player was found to be on the take for missing field goals or PATs so as to favor a fixer? Or how ’bout the Westminster dog show? There’s no limit on conduct these statutes might reach.
Ben, it was expanded to mean just about anything under Bush and Cheney and Gonzales in order that it might be applied to Democrats, like Governor Don Siegelman over in Alabama.
meanderline @8:54 & Black bear 11:32 I’m in agreement. In the case of marijuana more than prostitution being a victimless crime. How is it an individuals action in such be viewed more criminal than depriving honest services? Deprivation of honest services no doubt creates a victim? Then there’s this. Obligation to duty. In the DeLaughter issues, didn’t this judge take an oath of office to up hold justice. To, in fact render justice and nothing more. If the high court would use the job description as a guide and question any other action regarding honest services, it might clear things up just a little.
Cars, boats, trains have thousands of parts just like the justice system. And just like the justice system each part must do it’s job. More or less and it just doesn’t work. Do your job!
Having said this I can understand the hard work going into the defense of someone only to have a court hear an honest service charge which in some cases looks like a last ditch effort to an unprovable cause against some defendant. Perhaps 1346 is being reviewed for possible abuse as well.
Thanks to NMC for this very interesting subject. Great post T.F.
IF the Supreme Court decides to trim the scope of the current statute, then this will create a fine opportunity for much better drafted, less vague, more specific, federal (and state) statutes in this vein to nail public corruption to the wall. Government (federal and state) seems to have no problem passing “zero tolerance” laws applicable to the citizenry. Well, how about some “zero tolerance” anti-corruption laws applicable to them. The mood of the citizenry, which is quite fed up with all of the public corruption, is ripe for passage of such laws. The pitchforks are being sharpened as we speak. On the state level, it may take referendums to get such laws passed.
In MS, what we need are some well crafted statutues and an AG willing to enforce them. We apparently have neither, so the feds have had to do that for us using what they currently have at their disposal.
This is gonna open a boxful of Pandoras.
Adam Liptak, btw, not Litpak (which I think is that bundle of photocopies you have to pick up for your English seminar).
The Houston Chronicle today has a critical story about the ENRON prosecutors and how the Skilling case is the third ENRON case being reviewed by the SCOTUS. Link is here.
That’s a pretty stunningly bad record, Natd4. Interesting.