Thursday, June 24, 2010

Justices Limit Use of "Honest Services" Law Against Fraud

This Sumpreme Court decision potentially impacts the ability for the Courts to find individuals guilty of "Honest Services Fraud". More specifically, the High Court rules that "Honest Services Fraud" is tied specifically to cases of bribery and kickbacks (i.e. corruption cases).

In the case of Jeffrey Skilling, he was convicted of Honest Services Fraud as a result of his falsifying the financial statements at Enron. The government argued that he benefited from this financial statement fraud by receiving bonuses, salary increases, and the sale of stock. He was ultimately convicted.

The High Court now places this conviction in jeopardy because, "the government never argued that he "accepted side payments from a third party in exchange for making the financial statement misrepresentations." In other words, there was no evidence of specific bribes or kickbacks paid to Mr. Skilling that would ultimately fall under the "Honest Services Fraud" statute.

Stay tuned to find out if high-profile convictions are ultimately overturned.

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