Skilling's arguments

The Supreme Court of the United States yesterday heard arguments on an appeal by Jeffrey Skilling, of Enron infamy.

You'll remember, although in the world of business/financial scandals this already seems a long time ago, that in October 2006, Skilling was sentenced to 24 years and 4 months in prison, and fined $45 million, and he began serving that sentence that December.

There are two questions before the court on appeal. First, was it constitutional that this case was tried in Houston, Texas, where the rest of that city's economy had been closely intertwined with Enron's fate, and where the bitterness over its failure was strong? Skilling's lawyers contend that "given the widespread community hostility toward Skilling, the [trial] court should have presumed the jurors to be prejudiced, and therefore changed venue to obtain jurors from a community that was not itself a direct victim of Enron's devastating collapse."

Second, the defense contends that section 1346, which defines "honest services" fraud, is unconstitutionally vague. That is the section of Title 18 of the US Code that criminalizes "a scheme or artifice to deprive another of the intangible right of honest services."

As it applies to old-fashioned bribery this seems easy enough to understand. If I accept payment from my employer (i.e. a corporation and its shareholders) to do my job in a careful and lawful way, then accept a payment from a third party to do the job in a careless or illegal way, then follow through on my promises to that third party, one can see how I have cheated my employer.

But there exists a much more specific anti-bribery statute, against both offering and receiving. And that doesn't appear to apply to Skilling. So what does the honest-services language accomplish? Anything specific? This is what the lawyers and Justices were thrashing out yesterday.