MORE ENRON

Yesterday we looked at a Fifth Circuit case exploring the Double Jeopardy Clause in a matter involving three Enron Corporation officials.

About ten hours after I wrote the post the Supreme Court issued a decision in another case involving an Enron official, F. Steve Yeager, on the Double Jeopardy Clause. Yeager was a vice president of Enron in charge of their broadband division. The company kept issuing positive reports about the division and stock kept going up in price. While the stock was selling well Yeager sold stock he owned in the company making a 19 million dollar profit. The positive reports were misleading since the division was not doing well and as we all know shortly thereafter Enron went into bankruptcy.

Yeager was charged with 126 counts in an indictment. In Count i he was charged with conspiracy to commit wire fraud and security fraud. In Counts 2 through 6 he was charged with various counts of wire fraud and security fraud. The rest of the counts involved insider trading and money laundering the profits from the insider trading.

He was acquitted on the first six counts and the jury hung on the remaining counts. In a superseding indictment the government moved to retry him on some of the insider trading counts. Yeager moved to dismiss the indictment on double jeopardy grounds. The trial court denied his motion and the question before the Supreme Court was whether double jeopardy could be found where the jury hung on the counts to be relitigated.

The traditional case of double jeopardy is where the government attempts to reprosecute an individual for the same crime that the person was found not guilty in a previous trial. But it has also been used where the appellate court finds that there was insufficient evidence to support a conviction. Another use of double jeopardy is what is called issue preclusion. Issue preclusion is where a necessary issue has been answered in favor of the defendant in a previous trial and now the government wants to retry the same issue. For example, Yeager claimed that in order to convict him on the insider trading charges a jury would have to reconsider at least one of the issues that the jury in the first trial must have found in his favor in order to acquit him on the first six counts.

What the Supreme Court ruled was that a jury in a new trial could not be required to go back and reconsider an issue that the previous jury necessarily found in his favor. But the Supreme Court permitted the Fifth Circuit Court of Appeals to reconsider the case and determine if a jury necessarily would have had to consider an issue which will have to be considered by a new jury considering the current indictment. Both Justice Kennedy in a concurring opinion and Justice Alito in a dissenting opinion strongly recommended that the Fifth Circuit carefully consider the issue. But Samuel Buffone, one of Yeager’s lawyers said, “We are confident we will prevail. We are down to a very narrow factual issue the court of appeals has already resolved once in our favor and has an opportunity to revisit if they like.” If the new jury will be forced to reconsider an issue necessarily considered by the previous jury the indictment must be dismissed to prevent Yeager from being placed in double jeopardy.

Obviously we are not through with Enron yet.