Posts Tagged ‘Conrad Black’
October 14th, 2009 at 12:59 pm
Defining “Honest Services Fraud”

There’s an old legal adage that ignorance of the law is not a defense. On the other hand, since the earliest days of our Republic the U.S. Supreme Court has refused repeated invitations to create crimes using so-called “federal common law.” The reasoning behind the Court’s reluctance goes like this. In a nation of laws – not men – people should have some kind of notice about what is and is not legally permissible. Punishing someone after the fact for an act that was legal (or, if you prefer, not illegal) at the time it was carried out is akin to the types of political prosecutions conducted under the Stuart kings of England. Allowing federal judges to apply broad principles of justice to specific facts alleged by the government to be criminal, even though there is no specific prohibition in print, is hardly an improvement. An example of how important this notice notion is to our civil order can be found in the Ex Post Facto Clause of the U.S. Constitution.

What’s the point? Today the U.S. Supreme Court agreed to hear its third appeal in the last year regarding the meaning (and in one case, perhaps the constitutionality) of the federal crime of “honest services” fraud. The Wall Street Journal’s Law Blog contains a quick synopsis of the appeals involving former Enron executive Jeffrey Skilling, Canadian newspaper mogul Conrad Black, and the class action law firm Milberg. A more extended discussion can be found at the Scotusblog website. Both are well worth the read.

In essence, critics of honest services fraud claim that it has been:

“…invoked to impose criminal penalties upon a staggeringly broad swath of behavior, including misconduct not only by public officials and employees but also by private employees and corporate fiduciaries…Without some coherent limiting principle to define what ‘intangible right of honest services’ is, whence it derives, and how it is violated, this expansive phrase 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.”

And that’s just Justice Antonin Scalia’s view. For those interested in having readily available, clearly stated criminal laws, the Supreme Court’s decisions in these cases will be eagerly anticipated.