Ex-Enron chief could benefit as Supreme Court ruling weakens anti-corruption law

A Supreme Court ruling Thursday dealt a severe blow to legislation meant to fight public corruption and also could affect the recent convictions of former Enron chief Jeffrey Skilling and former newspaper magnate Conrad Black.

In ruling on “honest-services fraud,” the justices said Skilling and Black were wrongly convicted on that charge. All nine justices agreed that such fraud was too vague to constitute a crime unless a bribe or kickback was involved. But both men were convicted on other charges, and the Supreme Court sent their cases back to lower courts for further proceedings .

Former Gov. Rod Blagojevich currently is being tried on multiple charges of corruption, including depriving the public of honest services.

Over the last two decades, the law against honest-services fraud has been used routinely in cases in which public officials or corporate executives have been accused of secretly scheming to benefit themselves at the expense of the public or their stockholders.

Justice Ruth Bader Ginsburg, speaking for the court, said the law “criminalizes only schemes to defraud that involve bribes or kickbacks.” It does not cover, for example, the case of public official who fails to disclose a possible conflict of interest.

In the cases of Skilling and Black, “we express no opinion on the question of whether the error” in their trials “was ultimately harmless but leave that matter for consideration on remand,” Ginsburg said.

Although the majority of justices agreed to narrow the law to cover only schemes where a public official or corporate executive enriched himself or herself at the expense of the public or the shareholders, Justices Antonin Scalia, Anthony M. Kennedy and Clarence Thomas would have gone further and struck down the law entirely, even when bribes or kickbacks were involved.

A former lead prosecutor in Chicago on the Conrad Black case argued that the ruling had “very little impact” in the cases of Black and Skilling. Chicago attorney Eric Sussman said, “Both were convicted of multiple offenses and, under the Supreme Court’s ruling, if any of those other offenses is supported by the evidence, their convictions will stand.”

The decision may have a wider effect in cases of alleged public corruption. Until Thursday, the Justice Department had maintained that an official could be convicted of honest-services fraud for undisclosed schemes that could harm the public interest.

In a case from Alaska involving a former state legislator, Bruce Weyhrauch was charged with fraud for having contacted a firm about a possible job for after he left the Legislature. He did not get the job, but he voted on a bill that was favorable to the firm. A federal appeals court ruled he could be convicted of a crime based on this undisclosed conflict of interest. However, the Supreme Court reversed that decision Thursday in a third of the three rulings limiting the scope of honest-services fraud.

david.savage@latimes.com