The Struggle to Revive ‘Honest Services’


Earlier this year, the U.S. Supreme Court, in the much-watched case of former Enron executive Jeffrey Skilling, limited the federal “honest services” statute to traditional or “paradigmatic” bribery and kickback schemes. The criminal statute prohibits “a scheme or artifice to deprive another of the intangible right of honest services.” Skilling and others contended that the statute was unconstitutionally vague. The Court’s ruling in their favor was a blow to prosecutors.

In the wake of Skilling, prosecutors are coming up with novel theories to salvage “honest services”-type cases that don’t involve traditional bribery or kickback schemes. Recently, a federal district judge in New York decided that one such theory can proceed in court. We are quite dubious that the judge is headed in the right direction. It seems as if the same vagueness that the Court objected to in Skilling is returning.

The case involved Joseph Queri, a former executive with Dick’s Sporting Goods, and Benjamin Viloski, a former real estate attorney for Dick’s. Prosecutors alleged that Queri and Viloski defrauded Dick’s in connection with the company’s development of new stores in Pennsylvania. According to the government, the defendants controlled companies that ostensibly provided brokerage and consulting services to landowners and real estate developers with an interest in the expansion. Queri and Viloski invoiced the landowners and developers for the bogus services and kept the money themselves. In August 2009, a federal grand jury returned an indictment, which included eleven counts of mail fraud, wire fraud and related conspiracy charges.

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