The one clear-cut courtroom victory from the Justice Department's Enron Corp. investigation was put into question Tuesday when the Supreme Court agreed to hear the appeal of former company Chief Executive Jeffrey Skilling, who is trying to overturn his 2006 fraud conviction and 24-year prison sentence.
The justices agreed to look at two issues in the Skilling appeal. Both could have broader repercussions in criminal cases, say legal observers. One has to do with the government's contention that Mr. Skilling violated his legal obligation of providing "honest services" to Enron shareholders because he lied to the public about the company's financial condition. Enron collapsed into bankruptcy in December 2001. The second issue involves Mr. Skilling's claim that he wasn't able to get a fair trial in Houston, Enron's headquarters, because of anger in the community over the company's collapse.
Daniel Petrocelli, Mr. Skilling's lead attorney, said Tuesday that the Supreme Court's decision means the defense "will finally get an opportunity for a full, frank and fair hearing" of issues that led to "Jeff's wrongful conviction."
The Justice Department declined to comment.
The Supreme Court has already accepted for review another appeal related to corporate honest services fraud. That case involves the conviction of former Hollinger International Inc. Chairman Conrad Black. Oral arguments in Mr. Black's Supreme Court case are scheduled to take place in December. No date has yet been set for oral arguments in the case of Mr. Skilling, who is currently in federal prison in Colorado.
The question of what constitutes honest-services fraud has been a topic of debate in legal circles. "The lack of clear guidance" on the statute "has been a problem in this area of criminal law for years," says Mark Biros, a former federal prosecutor and now a partner in the Washington office of Proskauer Rose LLP. "It would be helpful to everyone if the Supreme Court steps in and gives more guidance." Mr. Biros says the court might be considering treating the Skilling and Black appeals as "companion" cases. The justices could use the two cases "to write a broader opinion," he says.
The court's agreement to hear Mr. Skilling's arguments regarding the location of his trial surprised Columbia Law School professor John Coffee. "The area of venue is something the Supreme Court hasn't touched for a long, long time," says Mr. Coffee. If the court agrees with Mr. Skilling, whose attorneys vociferously argued for a venue change before the 2006 trial, it could have a wide impact. "Once you say that there might be a constitutional right to get change of venue because of notoriety," then a number of people might make such a claim, he says.
A
side from the possible broader legal repercussions, the court's decision to accept the Skilling appeal provides another moment of drama in the Enron saga. Following the company's 2001 collapse, the Justice Department set up a special task force of prosecutors and investigators to look for crimes at the company. Over the next four years, the Enron Task Force engaged in what has widely been viewed as the biggest federal criminal investigation ever into a single company.The probe resulted in more than a dozen guilty pleas from former Enron officials. However, prosecutors had a decidedly mixed record when they took defendants to court. Convictions of some lower-level officials were thrown out by an appellate court that ruled the government had misapplied the honest-services statute. That decision wasn't appealed to the Supreme Court.
The Supreme Court, however, did in 2005 unanimously overturn the conviction of Arthur Andersen LLP, Enron's outside auditor. The accounting firm, the collapse of which was sparked by the criminal case, was charged with hindering investigators by destroying large amounts of Enron-related documents.
In the 2006 trial, Mr. Skilling and former Enron Chairman Kenneth Lay were convicted of fraud and conspiracy. Mr. Skilling was also convicted of insider trading. Shortly, after the trial, Mr. Lay died of heart-related problems and, as a result, his conviction was vacated.
