Honest services fraud
October 13, 2009 03:33 PM Filed in: Supreme
Court of the United States | Criminal Law
Today's Wall Street Journal Law Blog includes an
article about the U.S. Supreme Court's decision to
review three cases involving "honest services fraud"
(click here). According to the article,
"[t]he law makes it a crime to deprive someone
of 'the intangible right of honest services.'
It’s a head scratcher – a vague standard that
can seemingly encompass just about any manner of
supposed sin." One case involves Jeffrey
Skilling, a former Enron executive. The two
other cases involve "Conrad Black, the newspaper
titan convicted of defrauding his company,
Hollinger International," and "Bruce Weyhrauch,
a former Alaska legislator, who allegedly failed
to disclose . . . conflicting business
dealings." The statute at issue is 18 U.S.C. §
1346 (click here).
A New York Times article to which the Law Blog piece links (click here) states, "[i]n its Supreme Court brief in Mr. Black’s case, the government said the honest services law has an important role to play in attacking frauds that do not involve the loss of money or property but something intangible like candor or loyalty." At least one Supreme Court Justice appears to be skeptical of that argument. "The bottom line, Justice Scalia said in February, is that the courts have not been able to define what separates 'the criminal breaches, conflicts and misstatements from the obnoxious but lawful ones.' The honest services law, he said, 'invites abuse by headline-grabbing prosecutors in pursuit of local officials, state legislators and corporate C.E.O.’s who engage in any manner of unappealing or ethically questionable conduct.'”
A New York Times article to which the Law Blog piece links (click here) states, "[i]n its Supreme Court brief in Mr. Black’s case, the government said the honest services law has an important role to play in attacking frauds that do not involve the loss of money or property but something intangible like candor or loyalty." At least one Supreme Court Justice appears to be skeptical of that argument. "The bottom line, Justice Scalia said in February, is that the courts have not been able to define what separates 'the criminal breaches, conflicts and misstatements from the obnoxious but lawful ones.' The honest services law, he said, 'invites abuse by headline-grabbing prosecutors in pursuit of local officials, state legislators and corporate C.E.O.’s who engage in any manner of unappealing or ethically questionable conduct.'”
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