The Supreme Court's decision earlier this summer to narrow the scope of a federal law often used by prosecutors to target fraud has led to a string of dropped charges and new trials in "honest services" cases that will likely keep area white-collar practices busy.
The court in Skilling v. United States ruled that a provision in a 1988 federal wiretap statute that criminalizes any scheme to "deprive another of the intangible right of honest services" was unconstitutionally vague. Rather than strike down the law, the justices redefined it as applying to cases involving bribes and kickbacks and sent the three honest-services appeals it considered back to lower courts. Now, others convicted of honest-services fraud and those still awaiting trial are asking courts to reconsider their cases.
"You're going to see a flurry of people trying to reopen their cases," said Amy R. Sabrin, a partner in Skadden, Arps, Slate, Meagher & Flom's Washington office.
We know that Kevin Ring didn't find any relief in Skilling. The only other defendant we're aware of who has tried to find solace in Skilling is Mark Zachares. An anonymous reader provided the text of a Roll Call article about the Zachares case in the comments of this post:
Zachares’ defense attorney, Ed MacMahon, raised questions last week over the validity of his client’s plea agreement and sought permission to submit a brief to the court on the issue.
“We couldn’t sentence Mr. Zachares for something that after Skilling wouldn’t be a crime,” MacMahon said.
Huvelle noted that Zachares could select from a range of options, including vacating his plea or amending the agreement.
“There are ways to redo something like this simply,” Huvelle said.
The judge raised the possibility that Zachares could even enter a plea related to his financial disclosure forms if he failed to accurately report gifts or other items....
In an apparent reference to other outstanding plea agreements, Huvelle also twice encouraged (federal prosecutor Richard) Pilger to be “creative” and suggested the government should avoid using the same tactic in each of the honest service cases to avoid a domino effect should a higher court reject any District Court ruling.
Our reading of this article suggests that Judge Huvelle is not prepared to toss out Zachares' plea. Not only did Judge Huvelle suggest several alternatives to vacating the plea, she also encouraged the DoJ to employ several different tactics in dealing with HSF plea agreements to make sure that at least some survive the appeals process.
The ACR Blog believes that the popular perception of Skilling's impact is a bit flawed. Last year, we described two distinct varieties of HSF: (1) The Bribery Theory; and (2) The Failure-to-Disclose a Conflict of Interest Theory. In Skilling, the Supreme Court found the Failure-to-Disclose a Conflict of Interest Theory to be unconstitutionally vague. In contrast, the Supreme Court specifically said that HSF cases could be based upon bribery and kickback schemes. All Abramoff-related HSF cases involve bribery and kickback schemes. Ms. Becker is correct that the Supreme Court "narrow[ed] the scope" of HSF, but this primarily means that cases can no longer be built on the Failure-to-Disclose theory of HSF. The impact on bribery/kickback HSF isn't so great.
This isn't to say that Skilling can't touch bribery and kickback HSF. Defense lawyers are now questioning what bribery means in a "bribery scheme". Last week's denial of Kevin Ring's Motion for Judgment of Acquitally was the first on-topic substantive decision of the contours of post-Skilling HSF. Judge Huvelle accepted the DoJ's position on what constitutes HSF bribery. Her decision against Mr. Ring and her comments in Mr. Zachares' case suggest that Abramoff scandal defendants will have an uphill battle in escaping justice based on Skilling. While the Supreme Court found Failure-to-Disclose HSF unconstitutional, bribery/kickback HSF, up until this point, has remained unchanged.
COMING SOON: A review of plea documents of a few individuals convicted of HSF to determine if we can infer a corrupt agreement to exchange things of value for official acts.