High court agrees to hear Enron appeal case

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By Mark Sherman ASSOCIATED PRESS

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 R. Blagojevich is an "honest services" count; 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."

Honest services charges have been used regularly in public corruption cases stemming from the Jack Abramoff lobbying scandal, including in an ongoing trial of a former Abramoff associate.

Skilling, serving a 24-year prison term, contends he was improperly convicted. He says prosecutors did not show that he personally benefited from his fraudulent actions. Federal courts are split over whether prosecutors must prove a defendant's private gain to convict under the law.

Black, the former chairman and chief executive of the Hollinger International media company, is arguing a different point. He says the $5.5 million that he and other executives received from a Hollinger subsidiary was money that they were owed. They can't be convicted of fraud, Black says, when they did no harm to the company.

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