Supreme Court Hands DOJ a Big Loss, Limiting Use of “Honest Services” Statute


Today the Supreme Court decided the key white-collar crime case of Skilling v. United States, rejecting the Justice Department’s efforts to use the well-known “honest services” statute against former Enron CEO Jeffrey Skilling. The court didn’t reverse Skilling’s conviction but sent the case back to the U.S. Court of Appeals for the 5th Circuit to determine whether the conviction could stand without the “honest services” element.

Skilling had argued that the “honest services” law, much relied upon by federal prosecutors since its 1988 passage in the wake of the Court’s McNally v. United States ruling the previous year, was impermissibly vague. He contended that Congress didn’t specifically define what it meant when it prohibited “a scheme or artifice to deprive another of the intangible right of honest services,” so the statute didn’t give adequate notice of what it prohibited.

However, instead of striking down the law, the Court, in an opinion by Justice Ruth Bader Ginsburg that commanded a 6-3 majority on this issue, chose to limit the reach of the statute to bribery and kickback schemes, which it said were the “core of the pre-McNally case law.” Justice Antonin Scalia, joined by Justices Clarence Thomas and Anthony Kennedy, dissented and said he would have struck down the law entirely.

Since the government conceded that Skilling wasn’t involved in any bribery, the Court rejected the conviction to the extent that it rested upon the “honest services” theory. (The indictment had also charged traditional “money-or-property” wire fraud, as well as securities fraud. Those were not directly at issue before the Court.)

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