56 Pages Posted: 5 Jan 2011 Last revised: 19 Apr 2011
Date Written: January 3, 2011
For over two decades federal prosecutors wielded a weapon of mass discretion in their fight against corruption: the honest-services fraud statute. Although prosecutors welcomed the statute's ambiguous text, judges, defendants, and scholars struggled to answer a number of difficult constitutional questions arising from the honest-services fraud theory. In 2010, the Supreme Court used Skilling v. United States - a case that chronicles the events that led to the epic collapse of former energy giant Enron - to defuse the Government’s “weapon of mass discretion” by limiting honest-services fraud to schemes involving bribery or kickbacks, thereby excluding more subtle forms of dishonesty, such as undisclosed self-dealing, from falling within the statute's reach.
This Comment discusses the case’s impact on the fallen Enron CEO’s fight for freedom, in addition to its impact on two other petitioners who successfully challenged the honest-services fraud statute in 2010. I also examine the rights of the defendants whose convictions or plea agreements were premised on an application of the statute now declared unconstitutional, as well as analyze the decision’s impact on pending and future cases of honest-services fraud.
Finally, I explain why Congress will likely supersede Skilling by amending § 1346 to expressly criminalize schemes involving an individual’s failure to disclose their self-dealing; analyze the proposed “Honest Services Restoration Act” (HSRA), which was drafted to accomplish this goal; and conclude that, although not perfect, the proposed language contained in the HSRA adequately addresses the major constitutional concerns surrounding the use of honest-services fraud to prosecute undisclosed self-dealing.
Keywords: Skilling v. United States, honest services fraud, Enron, Department of Justice, Supreme Court, Constitution, legislation, Congress, prosecutors
Suggested Citation: Suggested Citation
Wagoner, Nicholas J., Honest-Services Fraud: The Supreme Court Defuses the Government's Weapon of Mass Discretion in Skilling v. United States (January 3, 2011). South Texas Law Review, Vol. 51, No. 4, p. 1087, 2010. Available at SSRN: https://ssrn.com/abstract=1734551