Justices to Review Conviction of Former Enron CEO

By Robert Barnes
Washington Post Staff Writer
Wednesday, October 14, 2009

The Supreme Court said Tuesday that it will review former Enron chief executive Jeffrey K. Skilling's conviction to see if he received a fair trial in the hothouse atmosphere of Houston following the collapse in 2001 of the nation's seventh largest company.

It will also consider whether federal prosecutors properly applied the "honest services" statute that led to Skilling's conviction and 24-year prison sentence. In granting the case, the justices put aside a request from the federal government that they at least delay a decision on Skilling until after the court had dealt with two other cases that challenge the honest services law.

The justices will hear those two cases in December, and Skilling's case sometime after the first of the year. One of the cases involves the conviction of another corporate giant, media magnate Conrad Black.

Skilling was president of Enron and briefly its chief executive before the company, the nation's largest energy trader, sought bankruptcy protection in late 2001. In 2004, he was indicted in the collapse along with Kenneth L. Lay, the company's longtime chairman.

Thousands of Houstonians lost their jobs and life savings when Enron went under, and Skilling's petition to the court said the company officers were vilified.

"The devastating impact" of Enron's collapse resulted in "blistering daily attacks on the executives -- principally Skilling and Lay -- deemed responsible for Enron's demise," said Skilling's petition, adding that the men were compared to "al Qaeda, Hitler, Satan, child molesters, rapists, embezzlers, and terrorists and encouraged to 'go to jail' and 'to hell.' "

But the district judge presiding over the trial said the coverage did not unfairly prejudice the jury ultimately seated to hear the case. Skilling was convicted in May 2006 of conspiracy, securities fraud, insider trading and lying to auditors. He was cleared of some other charges.

A federal appeals court upheld the judge's decision to have the trial in Houston, as well as Skilling's convictions. It did send the case back for resentencing. (Lay was also convicted but died months later of heart disease.)

The court is as likely to be interested in the question that Skilling's case raises about the honest services statute, which gives wide leeway for federal prosecutors to go after actions of public and private officials who deprive constituents or their employers of the "intangible right of honest services."

The statute has become a favorite tool in pursuing both public corruption cases as well as those involving corporate greed. In Skilling's case, Solicitor General Elena Kagan said that the law was properly applied, but also that Skilling would have been convicted without it.

But the law has engendered a backlash from those who say it is used too freely. One of those critics is Justice Antonin Scalia, who criticized his colleagues earlier this year for not accepting a different case involving the statute.

He said the law "invites abuse by headline-grabbing prosecutors in pursuit of local officials, state legislators and corporate CEOs who engage in any manner of unappealing or ethically questionable conduct."

Since then, the court has accepted the petition of Black, who was accused of defrauding his company, Hollinger International, and a former Alaska legislator accused of drumming up business from a company that had dealings with the state, even though no state law appears to have been violated.

The federal appeals courts have interpreted the law to cover widely divergent levels of conduct.

The Skilling case asks whether the law requires proof of personal gain. Black's case raises the issue of whether there must be proof that the defendant knew there would be economic harm to his company. And the Alaska case deals with whether a public official has violated his duty under state law.

The cases are Black v. U.S., Weyhrauch v. U.S. and Skilling v. U.S.

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