The Supreme Court Cases

Recognizing that the honest-services fraud statute can get out of hand, the US Supreme Court has agreed to hear three cases challenging that statute.

  • United States v. Conrad Black - Black, a newspaper executive, was convicted of defrauding his media company, Hollinger International. It's a crime for officials of private companies to put their own interests ahead of those of their employers. The case asks if there must be proof the defendant knew his actions would cause economic harm to the company
  • Weyhrauch v. United States - Can a public official be charged with honest services fraud when he didn't violate his duty under his state's law, but may have been involved in a conflict of interest. Weyhrauch, a former Alaska legislator failed to disclose to the legislature that he was soliciting work from a certain company. As in the Black case, his conduct may have been dishonest, but it didn't violate a state criminal law
  • Skilling v. United States - Jeffrey Skilling, the former CEO of Enron was sentenced to 24 years in prison for depriving Enron of his honest services by conspiring to lie to investors about the company's financial health. Skilling challenged the statute, claiming it's vague and unfair and questions whether the honest services statute requires proof of personal gain

All three were convicted of honest services fraud in 2006 or 2007.

Notable Honest-Services Fraud Cases

Some of the most notable figures who have been charged with or convicted of honest services fraud are:

  • Jack Abramoff, Washington, D.C. lobbyist sentenced in September to four years in prison for corrupting politicians with golf junkets, expensive meals, luxury seats at sporting events and other gifts
  • Wayne R. Bryant, former Democratic New Jersey state senator, was convicted of multiple corruption charges, including honest services fraud, for using his power and influence to obtain a job at a state School of Osteopathic Medicine in exchange for bringing millions of dollars in extra funding to the school
  • Randy "Duke'' Cunningham, former Republican US representative, was sentenced in 2006 to eight years in prison in corruption charges involving his acceptance of more than $2.4-million in homes, yachts, antiques, Persian rugs and other items from defense contractors

    Clarification by the Supreme Court on honest-services fraud will impact existing and future cases. Hopefully, it will set limitations as to what can be prosecuted in this seemingly "catch-all" law.

    Sources
    1William L. Anderson, The Ultimate Prosecutorial Weapon: Honest Services Fraud, LewRockwell.com, August 12, 2009, http://www.lewrockwell.com/anderson/anderson262.html, accessed Nov. 11, 2009.
    2 Adam Liptak, A Question of When Dishonesty Becomes Criminal, The New York Times, Oct. 12, 2009, http://www.nytimes.com/2009/10/13/us/13bar.html, accessed Nov. 11, 2009.
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    Questions for Your Attorney

    • It seems that honest services fraud law could apply to even "minor" violations; what's the most insignificant instance that resulted in a prosecution?
    • Do public officials have more reason to expect to be held accountable under the law than those in the private sector?
    • If someone is prosecuted for private honest services fraud, could there be related civil lawsuits, say by the shareholders of a company, and would the outcome of a case under the honest services fraud law affect the civil lawsuit?
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      Tagged as: Business Law, honest services fraud, white collar crime lawyer