High court’s ruling puts Skilling verdict in doubt

— The Supreme Court on Thursday restricted one of federal prosecutors’ favorite tools for pursuing corrupt politicians and self-dealing corporate chiefs, and cast doubt on the conviction of former Enron chief Jeffrey Skilling.

It also sent back to a lower court the conviction of newspaper magnate Conrad Black for a decision on whether his conviction should be overturned.

The justices were passing judgment on a federal statute used in the prosecution of both men and many others. The justices were unanimous in calling a broad interpretation of the law, which makes it a crime “to deprive another of the intangible right of honest services,” unconstitutionally vague.

Although a favorite of federal prosecutors - it figures in the current trial of former Illinois Gov. Rod Blagojevich - it has been roundly criticized as being so vague as to make it impossible to know what sorts of actions are illegal. Skilling said it should be struck as unconstitutional.

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But six justices said the law can stand if prosecutors continue to seek honest-services fraud convictions only in cases where they could prove 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, Justice Ruth Bader Ginsburg wrote for the majority. Other charges against him, though, may still be good, she added.

She was joined by Chief Justice John Roberts and Justices John Paul Stevens, Stephen Breyer, Samuel Alito and Sonia Sotomayor.

The honest-services cases represent the court’s attempt to look comprehensively at the statute, which was Congress’ effort to give federal prosecutors the tools to go after corruption after another adverse Supreme Court ruling in the 1980s.

The justices took three cases, which raised three separate challenges. Skilling contended that the government needed to prove he was trying to line his own pockets with the fraudulent accounting scheme that brought down Enron in 2001. He said his actions were designed to save the company.

Black argued that he should not have been convicted without the government proving that the unusual pay arrangement he had with Hollinger International cheated the company he once headed.

And Alaska state representative Bruce Weyhrauch said he should not be the subject of federal prosecution because no state law required him to disclose that he was looking for legal work with an oil services firm at the same time the company was lobbying him on a tax bill.

Three members of the court said the majority’s attempt to save the statute was wrong. Justice Antonin Scalia said the language - “scheme or artifice to deprive another of the intangible right of honest services” - is so vague as to violate the Constitution’s due process clause.

He was joined by Justices Anthony Kennedy and Clarence Thomas.

Skilling was convicted on 19 charges - one of which used the honest-services law to further a conspiracy charge - after lying about the financial health of Enron; he sold a half-million shares and made a profit of $15 million a few months before Enron fell into bankruptcy. Skilling is serving a 24-year sentence at a federalprison in Colorado.

Ginsburg said a lower court should now consider Skilling’s fate. “All of his convictions, Skilling contends, hinged on the conspiracy count and, like dominoes, must fall if it falls,” Ginsburg wrote. “The District Court, deciding Skilling’s motion for bail pending appeal, found this argument dubious.”

Three members of the court - Sotomayor, Stevens and Breyer - agreed with how Ginsburg resolved the honest services question.

But they would have granted Skilling a new trial on his claim that pretrial publicity made it impossible for him to receive a fair trial in Houston.

In another significant ruling, the court held that the state of Washington’s open-records law that makes public the names of those who sign referendum petitions generally does not conflict with First Amendment protection of political expression.

The law’s challengers - those who signed a petition hoping to overturn legislation granting domestic partnerships to same-sex couples - said disclosing their names would subject them to harassment.

Thomas was the only dissenter in the 8-1 decision.

Information for this article was contributed by Robert Barnes of The Washington Post; by Jesse J. Holland, Gene Johnson and Rachel La Corte of The Associated Press and by Adam Liptak and Monica Davey of The New York Times.

Front Section, Pages 4 on 06/25/2010

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