by Michael Connor

A highly anticipated decision by the U.S. Supreme Court on the constitutionality of the federal honest services law, expected within weeks, could have major implications for hundreds of criminal cases involving public officials and business executives convicted or charged with fraud.

US Supreme CourtAs an example of the stakes involved, U.S. Supreme Court Justice John Paul Stevens on Friday gave federal prosecutors a week to respond to former Illinois Gov. Rod Blagojevich’s request to delay the June 3 start of his corruption trial.

Mr. Blagojevich’s lawyers argue that the trial should be delayed until the high court decides on the constitutionality of the honest services law, which forms the basis for a number of charges against Blagojevich and his brother.  The two allegedly used Blagojevich’s power as Governor to fill U.S. Senate vacancies to sell or trade the Senate seat vacated by Barack Obama following his November 2008 election to the White House.

(Update 5/28: The Supreme Court denied Mr. Blagojevich’s request to delay the June 3 start of his trial.)

The honest services law has been an issue in three cases argued before the Supreme Court this term, involving former Enron chief executive Jeffrey K. Skilling, Hollinger International chairman Conrad Black and former Alaska lawmaker Bruce Weyhrauch.

The statute has also figured prominently in convictions of dozens of prominent public officials and business executives, including former Alabama Governor Don E. Siegelman, found guilty of violations related to campaign contributions, and Washington lobbyist Jack Abramoff,  who is now serving a four-year prison term on corruption charges.  Only two weeks ago, a federal judge sentenced former New York State Senate majority leader Joseph Bruno to two years in prison but then suspended the sentence pending a Supreme Court decision.

Defining Honest Service

The high court could uphold the honest services law, strike it down completely or limit its application.  While it is always risky to handicap the court’s decision-making process, many lawyers and legal scholars expect the court to take some action.

During oral arguments before the court last December, a number of justices attacked the honest services law as broad and vague.

Chief Justice John Roberts Jr. declared that the public “has to be able to understand the law, and if it can’t, it is invalid.” Justice Stephen Breyer imagined an employee shirking an honest day’s work in order “to read the Racing Form,” adding that this statute potentially criminalizes “100 million workers in the United States.”

Chapter 18, section 1346 of the U.S. Code, makes it a crime to use the mail or wire services in a scheme “to deprive another of the intangible right of honest services.”   The law was passed by Congress in 1988 in response to a Supreme Court decision the year earlier (McNally v United States) which struck down the honest services theory, ruling that it was an impermissible interpretation of the mail and wire fraud statutes at that time.

The problem, according to attorneys John J. Falvey Jr. and Ryan E. Ferch of the Goodwin Procter law firm, is that neither the 28-word provision nor the legislative history sheds light on what “the intangible right of honest services” means or to whom it is owed.  “Prosecutors love the honest-services statute for the same reasons many courts hate it: It is short, vague and capable of seemingly endless elasticity,” they say.

Adam Hoffinger, of the law firm Morrison & Foerster, has called the law “the most brazen and obvious attempt to criminalize behavior that may be bad, but that would not otherwise be considered criminal.”

Randall D. Eliason, former Chief of the Public Corruption/Government Fraud section of the U.S. Attorney’s office in the District of Columbia, writes that in a typical federal corruption case, honest services fraud will be “easier to charge and prove than bribery or gratuities, will apply to a wider range of conduct, and will carry a greater potential penalty. From the prosecutor’s standpoint, what’s not to like?”

Such vagueness can be dangerous, argues Geraldine Szott Moohr, a professor at the University of Houston Law Center. In a recent column in the Houston Chronicle, she asks: “Is following a supervisor’s order to write an unlawful contract an instance of dishonest services to the firm? Does sending a personal e-mail from an employer’s computer violate the obligation to provide honest services? What about calling in sick to attend a ball game? Given the vagueness of the statute, juries today can readily answer ‘yes’ to these questions — even though the employees may have no idea (or fair notice) that they were embarking on criminal conduct.”

The Supreme Court has received criticism of the law in friend-of-the-court briefs from both sides of the political spectrum, including the U.S. Chamber of Commerce and the more left-leaning National Association of Criminal Defense Lawyers.

In arguing for the federal government on behalf of the law in December, Deputy Solicitor General Michael R. Dreeben said it would “devastate a core area of public corruption” law if the measure were thrown out.  Citizens for Responsibility and Ethics in Washington, a non-profit organization, filed a brief with the court which called the statute “an indispensable prosecutorial tool for fighting public corruption.”

Limiting the Law

In the event the Supreme Court upholds the honest services statute, the drumbeat for reform of the law is likely to continue.

Former federal prosecutor Mr. Eliason said in a 2009 paper that he believes “(t)he best solution is for Congress to restore the proper balance in the law concerning federal corruption by amending the bribery and gratuities statute and providing a precise definition of honest services fraud.” He believes the current situation leaves the standards concerning public corruption “impossibly vague and subject to constant judicial or prosecutorial revision.”  As a result, he writes, “it is past time for Congress to act.”

In Houston, where Enron’s bankruptcy left thousands without jobs and ravaged investment portfolios and retirement plans, victims “understandably want former CEO Mr. Skilling to serve every bit of his 24-year sentence,” says Ms. Szott Moohr of the University of Houston Law Center.  But she adds, “(u)ntil our highest court rights this constitutional wrong, all employees remain vulnerable to arrest and conviction for honest services fraud.”

She believes the Court is “likely to render the honest services statute less vague and pull it back into the constitutional realm, perhaps by limiting offenses to well-defined conduct such as taking bribes or kickbacks.” Alternately, the court could simply declare the law unconstitutional for its ambiguity, inviting Congress to rewrite the statute.  In either case, she concludes, Mr. Skilling could be tried again for traditional property fraud, on evidence that he deceived shareholders in order to defraud them of money or property.

“Either ruling from the Supreme Court would be a good thing not only for this particular felon, but also for every American in the workplace,” she says.