High court will hear appeal of Enron's Skilling

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By Mark Sherman ASSOCIATED PRESS

WASHINGTON (AP) -- The Supreme Court said Tuesday it will take up former Enron CEO Jeff Skilling's appeal of his convictions for his role in the collapse of the energy giant, accepting another high-profile challenge to a favorite tool of prosecutors in white-collar and public corruption cases.

Skilling's appeal stems from his convictions in 2006 on 19 counts of conspiracy, securities fraud, insider trading and lying to auditors involving the 2001 collapse of Enron.

The justices already are entertaining similar claims from former newspaper magnate Conrad Black and a former Alaska lawmaker ensnared in a public corruption scandal.

At issue in all three cases is prosecutors' use of the federal "honest services" fraud statute, a 28-word law that critics call vague and unfair. Among the federal charges against former Illinois Gov. Rod Blagojevich is an "honest services" count, while his predecessor, former Gov. George Ryan was convicted of it.

The law makes it a crime to deprive shareholders or the public of "the intangible right to honest services."

Skilling, serving a 24-year prison term, says he was improperly convicted under the law. He says prosecutors did not show that he personally benefited from his allegedly fraudulent actions.

He also is claiming that he did not receive a fair trial in Houston following Enron's collapse, describing "blistering daily attacks" in the media. "Skilling was pronounced guilty throughout Houston long before trial," his lawyer, Daniel Petrocelli, said in his court filing.

A ruling in his favor on the fair trial claim probably would result in a new trial. The effect of the ruling on honest services is unclear since Skilling was convicted on other charges as well, including securities fraud.

"We are so relieved," Petrocelli told The Associated Press Tuesday "We've been waiting almost three years now since Jeff was convicted. You know, the stain of the Enron story has been hard to overcome. And the Supreme Court has decided it's going to give us a full, frank and fair hearing."

Petrocelli said Skilling's legal team spoke with the former Enron CEO Tuesday. "He's in tears, as many of us are. We cannot wait to go before the Supreme Court and argue our case," he said.

No date has been set for the argument, but it will be held early in 2010.

In January, the 5th U.S. Circuit Court of Appeals in New Orleans upheld the convictions, but ordered Skilling's prison term reduced.

Skilling is the highest-ranking executive to be punished for the accounting tricks and shady business deals that led to the loss of thousands of jobs, more than $60 billion in Enron stock value and more than $2 billion in employee pension plans after the company imploded in 2001.

Company founder Kenneth Lay also was convicted of conspiracy, fraud and other charges, but his convictions were vacated after he died less than two months later of heart disease.

In 2005, the Supreme Court overturned the conviction of Arthur Andersen LLP, Enron's auditor, on charges of destroying Enron-related documents.

In June, the justices sided with former Enron executive F. Scott Yeager in a ruling that makes it unlikely he can be tried a second time on charges related to the company's collapse.

The case is Skilling v. U.S., 08-1394.

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Associated Press writer Michael Graczyk in Houston contributed to this report.