Skilling Reconsidered: The Legislative-Judicial Dynamic, Honest Services Fraud, and the Ill-Conceived "Clean Up Government Act"

Article excerpt

Introduction

  I. The Evolution of Honest Services Fraud
     A. Prosecutorial Invention of Honest Services Fraud
     B. The McNally Decision
     C. The Honest Services Statute, 18 U.S.C. [section] 1346
     D. The Skilling Decision
 II. Responses to Skilling's Critics
     A. A Broad Honest Services Fraud Statute is Not a
        Necessary or Appropriate Vehicle for Addressing
        Public and Private Malfeasance
     B. The Court's Decision to Narrow Rather Than Void
        the Honest Services Statute Was a Reasonable
        Response to Overcriminalization
     C. The Skilling Decision Substantially Reduced the Risks
        Inherent in a Vague Criminal Statute
     D. The Court in Skilling Properly Declined to Engage in
        a More Detailed Rewriting of the Honest Services
        Statute
III. The Court's Options in Skilling
 IV. The Congressional Response to Skilling
Conclusion
Appendix

   A real-estate developer seeks expedited environmental review of a
   proposed real estate project. When the matter comes before the
   local government, a local official opposes the developer's request
   for expedited review. At the time this matter is pending, the
   official's spouse is seeking payment for work she had performed for
   the developer's overseas affiliate on an unrelated matter. (1)

INTRODUCTION

Every day, all across the country, local and state governmental entities face a myriad of ethical issues and decisions. These entities set up rules and regulations, and the elected officials in these jurisdictions are accountable to their voters for establishing and maintaining ethical rules and standards. In the news story outlined above, one such official may have overstepped ethical bounds and, if so, violated a state ethics rule that subjects the official to a $5000 regulatory fine. But, if the official used the United States mail in connection with this matter, proposed legislation before Congress would render that official guilty of a federal offense and subject to a possible twenty years in federal prison. (2) If we multiply this story by many thousands, then we may start to feel that there is something seriously wrong with this picture.

The underlying disease is the United States Congress's attempt, over the last forty years, to expand federal power to prosecute an ever-broader array of crimes. (3) In a case arising out of the notorious Enron financial fraud scandal, the United States Supreme Court in United States v. Skilling at last confronted one of the most egregious such crimes--federal "honest services" fraud. (4) In its decision, the Court narrowed the statute's reach in order to avoid holding the statute unconstitutionally vague. (5)

With its decision partially striking down the federal honest services fraud statute in the criminal case against former Enron CEO Jeffrey Skilling, the United States Supreme Court took a modest step to combat the trend towards the proliferation of overly-broad federal criminal statutes. Such laws are often passed--or existing laws expanded by prosecutors--in the midst of financial or political scandal, when the government needs to appear to be "doing something." (6) The government faces pressure to produce criminal charges whenever there is a perceived scandal or crisis, whether it is the recent financial sector melt-down or the Enron-era financial scandals. Many of these laws are passed quickly and with little thought or deliberation, producing the synergistic crises of overcriminalization (7) and over federalization. (8)

This trend has the potential to affect the criminal justice system in basic ways. Most fundamentally, under the U.S. Constitution's Due Process Clause, (9) we all have a right to know what conduct is criminal and what conduct is not. But the rush to criminalization has produced laws that no one--not even members of the U.S. Supreme Court--can understand. As Justice Scalia famously noted about the federal racketeering (RICO) statute, the definition of one of the crime's key elements is about as clear as "life is a fountain. …