By Amanda Becker
Monday, August 9, 2010; 10
The Supreme Court's decision earlier this summer to narrow the scope of a federal law often used by prosecutors to target fraud has led to a string of dropped charges and new trials in "honest services" cases that will likely keep area white-collar practices busy.
The court in Skilling v. United States ruled that a provision in a 1988 federal wiretap statute that criminalizes any scheme to "deprive another of the intangible right of honest services" was unconstitutionally vague. Rather than strike down the law, the justices redefined it as applying to cases involving bribes and kickbacks and sent the three honest-services appeals it considered back to lower courts. Now, others convicted of honest-services fraud and those still awaiting trial are asking courts to reconsider their cases.
"You're going to see a flurry of people trying to reopen their cases," said Amy R. Sabrin, a partner in Skadden, Arps, Slate, Meagher & Flom's Washington office.
Less than a month after the ruling, an appeals court in Chicago decided that media mogul Conrad M. Black, whose honest-services appeal was one of the three the justices considered, should be set free on bail pending a new trial. A team of local attorneys at O'Melveny & Myers on July 28 asked a federal court in Houston to do the same for former Enron executive Jeffrey K. Skilling. Charges were dropped in recent weeks against both a Democratic Party chairman and former mayor in New Jersey.
"Given what happened a few days ago, I feel now that there are more cases than I was aware of" that will be affected, said McDermott Will & Emery Partner Abbe D. Lowell, who said he is working to have charges against clients in several honest-services cases dismissed.
Though the initial legal efforts of some of the most high-profile defendants have proved successful, other recent attempts to avoid prosecution under the revised honest-services statute have been stymied. Federal prosecutors on Thursday said they would move forward with a corruption case against a county commissioner in Ohio. The same day, a federal judge in the District ruled that a second corruption case against Kevin Ring, a former associate of convicted ex-lobbying Jack Abramoff, could proceed.
Attorneys say the mixed results will likely continue, given that uncertainty remains about the law's meaning. The Supreme Court, days after its decision in Skilling, ordered an appeals court to review the convictions of former Alabama governor Donald Siegelman and health-care executive Richard Scrushy. Though accusations of bribery and kickbacks existed in those cases -- Siegelman allegedly rewarded Scrushy with a seat on a state health-care board in exchange for a $500,000 contribution to a lottery campaign -- attorneys have argued that no explicit quid pro quo agreement existed between the two parties.
"The justices' opinion made it sound like it's simple, but it's not," Sabrin said. "You're going to see a lot of litigation over the retroactive effect of this ruling in honest-services cases that don't involve bribery or kickbacks, and even in those that involved kickbacks and bribery, [over] exactly what that means."