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Skilling case latest to test 'honest services'

Daniel Petrocelli, lawyer for former Enron chief executive Jeffrey Skilling, leaves the Supreme Court. Skilling is seeking a new trial.
Daniel Petrocelli, lawyer for former Enron chief executive Jeffrey Skilling, leaves the Supreme Court. Skilling is seeking a new trial. (Associated Press)

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By Robert Barnes
Washington Post Staff Writer
Tuesday, March 2, 2010

Lawyers for former Enron CEO Jeffrey Skilling on Monday gave the Supreme Court a host of reasons it could overturn Skilling's conviction and lengthy prison term, from the "wave of passion" that purportedly poisoned the jury pool in Houston to the vagueness of the charges lodged against him.

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The justices seemed unmoved by arguments that the trial never should have been held in Houston, but did have sharp questions about the speedy process with which the judge selected a jury. And the court continued its skepticism about a federal law making it a crime to deprive the public or one's employer of "honest services," asking whether the law is too vague to signal exactly what constitutes criminal behavior.

"Suppose you have a statute that makes it criminal to do any bad thing, okay?" Justice Antonin Scalia asked Deputy Solicitor General Michael R. Dreeben. It is clear that murder would be covered, Scalia continued, but what other behavior would qualify? The same is true with a law that outlaws the deprivation of "honest services," he said.

The government has been over this ground before. Skilling's is the third case of the term in which the court has examined the law, which is a favorite of federal prosecutors who have gone after corrupt politicians and corporate honchos who have betrayed the trust of stockholders.

Skilling was convicted on 19 charges -- one of which used the honest services law to further a conspiracy charge -- after lying about the financial health of Enron; he sold a half-million shares and made a profit of $15 million a few months before Enron fell into bankruptcy. Skilling, 56, is serving a 24-year sentence at a federal prison in Colorado.

The spectacular collapse of Enron, once the nation's seventh-largest corporation, cost 5,000 jobs and $1 billion in employee pension funds. It prompted several criminal investigations, a round of congressional legislation and devastation in the Houston area, where the company was headquartered.

"The sentiment on the ground in Houston was that Houston citizens, as we pointed out in our brief, in fact referred to what happened in the wake of the collapse of Enron in terms that were similar to the way they referred to a terrorist attack," said Skilling lawyer Sri Srinivasan. "They in fact talked about it in terms of the 9/11 attack."

Srinivasan failed to get much traction with the court on his argument that it was impossible for Skilling to receive a fair trial in Houston. But some of the justices questioned how quickly District Judge Simeon T. Lake III certified a jury in the high-stakes trial and whether he had spent enough time screening for bias.

Srinivasan said Lake took only five hours to find the 12 jurors, spending less than five minutes with each one. By contrast, Srinivasan said, the judge presiding over the trial of Oklahoma City bomber Timothy McVeigh moved the trial to Denver and still took 18 days to select a jury; even the trial of Martha Stewart required a six-day search for jurors.

Justice Sonia Sotomayor, the only justice who has experience picking a jury, noted that in the "truncated" process the judge was willing to let through a woman who said she had lost more than $50,000 in the collapse.

"How can we be satisfied that a fair and impartial jury was picked when the judge doesn't follow up when the witness said, 'I'm a victim of this crime,' " Sotomayor said.

Justice Stephen G. Breyer was also critical of the process, but worried about how the court would come up with a rule that would guide judges.

"Judges have to run their trials. And if we tell the judges that they have got to do more, that will become exaggerated, and they will administer it in a way that will make it hard to select juries," Breyer said. He asked Srinivasan how to "sketch a line" for the court.

Srinivasan had some trouble being specific. He said in cases where a "wave of public passion" permeates the community, judges have to be especially vigilant in inquiring about prejudice and biases and quick to pass on jurors who exhibit them.

Dreeben said Skilling's lawyers had created an "immense distortion" about the tenor of Houston at the time of the trial, several years after the collapse. He accused them of putting together "a highlight reel of every bad headline in every Houston publication and claiming that the entire jurisdiction, all 4.5 million people, virtually, were infected with some sort of pervasive prejudice." (The Washington Post and other media companies filed a brief urging the justices not to rule so broadly that judges would curtail media coverage of important trials.)

Skilling is asking for a new trial. But a decision on whether the honest services law is unconstitutionally vague could have more lasting implications for federal prosecutors.

The court, in essence, has the issue surrounded. In addition to Skilling's constitutional claim, the court has heard a challenge to the law from former newspaper tycoon Conrad M. Black and an Alaska state representative named Bruce Weyhrauch (R).

The court will rule on the cases, including Skilling v. United States, before its adjournment at the end of June.


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