Enron

Issues

Is the federal statute making it a crime for someone to “deprive another of the intangible right of honest services” unconstitutionally vague?

When an entire community is outraged by the events giving rise to a criminal trial, is it possible to draw a jury that does not share the community’s presumed prejudice? If so, what standard should a court use to determine if the presumption of prejudice has been overcome?

Court below

United States Court of Appeals for the Fifth Circuit

Former Enron Corporation executive Jeffrey K. Skilling was convicted by a federal jury in Houston, Texas of numerous counts of conspiracy, securities fraud and insider trading relating to Enron’s bankruptcy. After the Fifth Circuit upheld Skilling’s conviction, the Supreme Court granted certiorari to resolve two key issues. First, the court will determine the scope and constitutionality of 18 U.S.C. § 1346, which makes it a crime for an employee of a corporation to fraudulently deprive the corporation of that employee’s “intangible honest services.” Second, the Court will determine whether and to what extent the government was required to prove—to the satisfaction of the parties and the district court—that no member of the Houston jury that convicted Skilling was actually prejudiced by the widespread negative media attention the Enron bankruptcy received in the Houston area before and during Skilling’s initial trial. The rulings on these issues may give much needed guidance to the lower courts in dealing with vague statutes, and may affect the scope of Sixth Amendment rights for every criminal defendant.

Questions as Framed for the Court by the Parties

1. Whether the federal "honest services" fraud statute, 18 U.S.C. § 1346, requires the government to prove that the defendant's conduct was intended to achieve "private gain" rather than to advance the employer's interests, and, if not, whether § 1346 is unconstitutionally vague.

2. When a presumption of jury prejudice arises because of the widespread community impact of the defendant's alleged conduct and massive, inflammatory pretrial publicity, whether the government may rebut the presumption of prejudice, and, if so, whether the government must prove beyond a reasonable doubt that no juror was actually prejudiced.

Jeffrey K. Skilling, former President, COO and CEO of the now-defunct Enron Corporation, was convicted by a federal jury in the United States District Court for the Southern District of Texas on numerous counts of conspiracy, securities fraud, making false representations to auditors, and insider trading, all relating to his role in the highly-publicized failure of Enron. See U.S. v. Skilling, 554 F.3d 529, 534 (5th Cir.

Written by

tkurland

Edited by

lhaddad

Additional Resources

· LII Wex: Law about White-Collar Crime

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Yeager v. United States

Issues

Does collateral estoppel prevent a prosecutor from retrying a defendant on charges where the jury in a previous trial failed to reach a unanimous verdict, if that jury acquitted the defendant on other counts that share essential factual elements with the hung charges?

Court below

United States Court of Appeals for the Fifth Circuit

The doctrine of collateral estoppel prevents two parties from re-litigating an issue of fact determined in a prior proceeding. In criminal law, this doctrine is incorporated into the Double Jeopardy Clause of the Fifth Amendment, which prohibits the government from prosecuting an individual twice for substantially the same crime. In 2004, the United States charged three senior executives of Enron Corporation with multiple counts of money laundering, securities fraud, wire fraud, and insider trading. At trial, the jury acquitted the defendants on several charges, but could not agree on a verdict for the rest. The United States then recharged the defendants with several of the crimes on which the jury in the previous trial failed to reach a verdict. The defendants moved to dismiss the charges, arguing that collateral estoppel prevented the government from retrying them. The defendants based their motion on the fact that the jury acquitted the defendants on counts that shared common factual elements with the charges the jury failed to reach a verdict on. The district court denied the defendants’ motion, and the Fifth Circuit upheld the district court’s decision. In this case, the Supreme Court of the United States will decide whether, under the Double Jeopardy Clause, the government may retry defendants acquitted of some charges on factually related counts on which the jury failed to reach a verdict on at a preceding trial.

Questions as Framed for the Court by the Parties

The courts of appeals are deeply divided as to whether, when conducting the Fifth Amendment collateral estoppel analysis set out by this court in Ashe v. Swenson, 397 U.S. 436 (1970), a court should consider the jury’s failure to reach a verdict on some counts. The issue presented here is:

1. Whether, when a jury acquits a defendant on multiple counts but fails to reach a verdict on other counts that share a common element, and, after a complete review of the record, the court of appeals determines that the only rational basis for the acquittals is that an essential element of the hung counts was determined in the defendant’s favor, collateral estoppel bars a retrial on the hung counts.

In November 2004, the government indicted F. Scott Yeager, Joseph Hirko, and Rex Shelby (“defendants”) on numerous counts of conspiracy to commit securities and wire fraud, securities fraud, wire fraud, insider trading, and money laundering. See United States v. Scott Yeager, 521 F.3d 367, 369 (5th Cir.