USA: Supreme Court opinions on 'honest services' - Skilling and Black

The Supreme Court gave its opinions yesterday in Skilling v United States and Black v United States: see, respectively, here (pdf) and here (pdf). These are important opinions concerning honest services fraud (as defined in the US Code by Section 1346 of Title 18, Part I, Chapter 63), under which Skilling, Enron's former chief executive, had been found guilty for conspiring to defraud Enron’s shareholders by misrepresenting the company’s fiscal health for his own profit.

The Supreme Court held that Section 1346 was limited to bribes and kickbacks. A wider interpretation, the Court found, would raise constitutional vagueness concerns. As such, the Court found that Skilling did not violate Section 1346 (but it did not overturn his convictions). To quote from the opinion's headnote:

Skilling did not violate §1346, as the Court interprets the statute. The Government charged Skilling with conspiring to defraud Enron’s shareholders by misrepresenting the company’s fiscal health to his own profit, but the Government never alleged that he solicited or accepted side payments from a third party in exchange for making these misrepresentations. Because the indictment alleged three objects of the conspiracy — honest-services wire fraud, money-or-property wire fraud, and securities fraud — Skilling’s conviction is flawed. See Yates v. United States, 354 U. S. 298. This determination, however, does not necessarily require reversal of the conspiracy conviction, for errors of the Yates variety are subject to harmless error analysis. The Court leaves the parties’ dispute about whether the error here was harmless for resolution on remand, along with the question whether reversal of Skilling’s other convictions".

For further background information see Prof. Bainbridge's excellent summary here and the comments of Prof Ribstein here.