SUPREME COURT REDEFINES THE HONEST SERVICES DOCTRINE AND VACATES JEFFREY SKILLING’S CONSPIRACY CONVICTION

In my last post we looked at a section of the Anti-terrorism and Effective Death Penalty Act (AEDPA) which made it illegal to “knowingly provide material support or resources to a foreign terrorist organization.” In that case the Supreme Court upheld the law against a claim that it violated due process by being vague. Today we are going to look at another case in which the Supreme Court last week ruled that a statute violated due process by be being vague.

In Skilling v. United States the Supreme Court vacated the conviction of former Enron executive, Jeffrey Skilling for conspiracy to conspiracy to commit “honest-services” wire fraud.

IN United States v. McNally the Supreme Court limited the crimes of mail fraud and wire fraud to those in which the perpetrator attempted to gain a material reward. Excluded were crimes that deprived the citizenry of good government. To ameliorate the situation Congress passed 18 US 1346 which defined the term “scheme or artifice to defraud” to include a scheme or artifice to deprive another of the intangible right of honest services. But in Skilling the Supreme Court found that the term, “honest services” to be vague. It covers many things and it is unclear exactly what is covered and what is not. Therefore it limited prosecution for honest services fraud to those involving bribes or kickbacks which it claims is the core of an honest services prosecution. The Due Process Clause’s void-for- vagueness doctrine requires that legislation be written

[1] with sufficient definiteness that ordinary people can understand what conduct is prohibited and [2] in a manner that does not encourage arbitrary and discriminatory enforcement.”

Since Skilling was charged with manipulating the stock market to artificially increase the value of Enron stock and there was no allegation that he received a bribe or a kickback, the conviction was vacated.

In dissent, Justice Thomas says that limiting Section 1346 prosecutions to those involving bribes or kickbacks does not fulfill the intent of Congress in passing the section. After all, Section 1346 was passed to fill loopholes caused by McNally and the defendants in McNally did not receive a bribe or kickback. While he agrees the statute does not stand up to the requirements of due process he would invalidate the law and let Congress start over again.