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February 22, 2010

United States v. Jeffrey Skilling

Next Monday, the Supreme Court hears oral arguments in U.S. v. Skilling (yes, the Enron guy).  This is like the Winter Olympics for white-collar crime, because it challenges the constitutionality of  an important and controversial prosecutorial tool.  The Court is clearly interested in this statute, as it's the subject of not one, but two other cases this term. 

The statute at issue, part of federal mail fraud law, is the so-called  “honest services” statute (18 USC 1346). Congress passed it in 1988 to overrule McNally v. U.S., a 1987 Supreme Court’s decision that the mail fraud statute (18 USC 1341) punished only frauds that deprived the victim of money or property.  Prior to that case, many lower federal courts had accepted prosecutors’ argument that mail fraud included the denial of “honest services.”    

By writing the statute, Congress didn’t really clarify much, however.  1346 only says mail fraud includes the theft of “honest services”--it doesn’t define “honest services.”  Unfortunately, the pre-1987 courts that accepted the “honest services” theory didn’t clearly define it either.

The law of theft has historically evolved from covering only violent takings of property to covering deceptive takings of property to covering deception that has intangible and abstract effects—this last category is of course hard to define.  On the one hand, that shows law has become more flexible and attuned to reality.  On the other, the government may be unfairly expanding its power to punish.

Of the three "honest services" cases this term, Skilling is the big one because a. he's the Enron guy; and b. the other two cases present more specific challenges to the statute. 

Kind of.

Actually, Skilling’s original petition to the Supreme Court also made a more narrowly focused challenge to the statute.  So if the Court uses Skilling to decide the broader question of whether the statute is unconstitutionally vague, it may come in for criticism of being --gasp!-- an “activist” Court—something it was accused of when it invalidated the corporate campaign finance statute in its recent Citizens United v. FEC decision (my thoughts on other matters in that case are here).