Reference no: EM131914737

Problem: Skilling v. United States 130 S.Ct. 2896 (2010)

Justice Ginsburg (I AND II OMITTED-ED.) III We next consider whether Skilling's conspiracy conviction was premised on an improper theory of honest-services wire fraud. The honest-services statute, Section 1346, Skilling maintains, is unconstitutionally vague. . . . A To place Skilling's constitutional challenge in context, we first review the origin and subsequent application of the honestservices doctrine.

1 Enacted in 1872, the original mail-fraud provision, the predecessor of the modern-day mail- and wire-fraud laws, proscribed, without further elaboration, use of the mails to advance "any scheme or artifice to defraud." See McNally v. United States, 483 U.S. 350, 356, 107 S.Ct. 2875, 97 L.Ed.2d 292 (1987). In 1909, Congress amended the statute to prohibit, as it does today, "any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises." Section 1341 (emphasis added); Emphasizing Congress' disjunctive phrasing, the Courts of Appeals, one after the other, interpreted the term "scheme or artifice to defraud" to include deprivations not only of money or property, but also of intangible rights.

2 In 1987, this Court, in McNally v. United States, stopped the development of the intangible-rights doctrine in its tracks. McNally involved a state officer who, in selecting Kentucky's insurance agent, arranged to procure a share of the agent's commissions via kickbacks paid to companies the official partially controlled. The prosecutor did not charge that, "in the absence of the alleged scheme[,] the Commonwealth would have paid a lower premium or secured better insurance." Instead, the prosecutor maintained that the kickback scheme "defraud[ed] the citizens and government of Kentucky of their right to have the Commonwealth's affairs conducted honestly." We held that the scheme did not qualify as mail fraud. "Rather than constru[ing] the statute in a manner that leaves its outer boundaries ambiguous and involves the Federal Government in setting standards of disclosure and good government for local and state officials," we read the statute "as limited in scope to the protection of property rights." "If Congress desires to go further," we stated, "it must speak more clearly."

3 Congress responded swiftly. The following year, it enacted a new statute "specifically to cover one of the ‘intangible rights' that lower courts had protected . . . prior to McNally: ‘the intangible right of honest services.'" In full, the honest-services statute stated: For the purposes of th[e] chapter [of the United States Code that prohibits, inter alia, mail fraud, Section 1341, and wire fraud, Section 1343], the term "scheme or artifice to defraud" includes a scheme or artifice to deprive another of the intangible right of honest services.

AFTERWORD The Supreme Court returned Skilling's case to the federal Fifth Circuit Court of Appeals where, in 2011, the Skilling saga appeared to be nearing its conclusion. The Fifth Circuit upheld Skilling's conviction finding the honest services error was "harmless" in that ample evidence unrelated to the honest services charge supported Skilling's conviction on 19 counts of securities fraud, conspiracy, insider trading and making false representations.60 At this w riting, Skilling is serving his sentence in a Colorado prison, but an agreement was reached to reduce his 24-year sentence by 10 years because of a mistake in interpreting the federal sentencing guidelines. Skilling also agreed to give up about $42 million, all of which will go to Enron fraud victims. The case now seems to be at an end, and Skilling may depart prison as early as 2017.61

Questions

1. Why did the Court conclude that Skilling did not commit honest-services fraud?

2. Why did the Court conclude that the honest services statute was unconstitutional?

3. How did the Court correct the unconstitutional infirmity in the honest-services statute?