Supreme Court ruling boosts Enron executive Jeffrey Skilling
The US Supreme Court narrowed the definition of 'honest services' fraud, throwing out a portion of Enron CEO Jeffrey Skilling’s conviction. It’s a blow to the Justice Department.
(Page 2 of 2)
Subscribe Today to the Monitor
Skilling was convicted in May 2006 after a four-month jury trial. He was charged with directing a massive scheme to inflate and prop up Enron’s stock price by concealing the company’s increasingly poor financial condition from shareholders, potential investors, auditors, and government regulators.
Prosecutors charged that Skilling had a fiduciary duty to Enron shareholders to act in their best interests. He violated his duty to render honest services, they said, when he took actions that concealed the company’s shaky financial status and thus fraudulently inflated Enron’s stock price.
A few months before Enron collapsed in bankruptcy, Skilling sold his Enron stock, earning millions. Shareholders and employees, unaware of the dire circumstances, later lost millions when the Enron stock price plunged.
In Skilling’s appeal, his lawyer said the executive remained loyal to Enron throughout his work at the company. Skilling denies he lied to investors, and said all his actions were lawful and designed to guide Enron back toward prosperity.
There was no attempt by Skilling to place his personal interest above the corporation’s interest or the interests of its shareholders, his lawyer said.
Court: Skilling did not commit honest-services fraud
The high court said that under its new reading of the honest-services fraud statute Skilling had not committed honest-services fraud. “The government did not, at any time, allege that Skilling solicited or accepted side payments from a third party in exchange for making … misrepresentations,” Ginsburg wrote.
The high court ruling does not invalidate Skilling’s conviction or reduce his 24-year sentence. Rather it sets the stage for what promises to be a vigorous fight in the lower courts over whether the use of the broader version of the statute impermissibly tainted his trial and conviction. The decision also sets the stage for a fight over whether the jury verdict encompasses enough wrongful conduct to sustain a conspiracy conviction absent the honest services allegations.
In a second part of its decision, the high court split 6 to 3 on whether Skilling received a fair trial in the face of harsh pre-trial publicity and the high emotions in Houston following the collapse of Enron.
Justice Sonia Sotomayor said she was “doubtful” that Skilling’s jury was free from the “deep-seated animosity that pervaded the community at large.”