White Collar Crime Prof Blog

What Others Are Saying About the Skilling Decision

Doug Berman, Sentencing Law & Policy here (note that Professor Frank Bowman has a comment on the possible sentence)

Dan Slater, WSJ Blog, Skilling Conviction Upheld, Resentencing Ordered

Tom KIrkendall, Houston Clearthinkers, The Fifth Circuit rules in the Skilling appeal

Juan A. Lozano,Washington Post (AP), U.S. Court Orders Skilling Resentenced

Jef Feeley and Thom Weidlich, Bloomberg.com,  Skilling’s Conviction Upheld, Resentencing Ordered

(esp) (blogging from San Diego)

Skilling - Commentary on the Decision

The Fifth Circuit issued a 106 page opinion in the Skilling case (see here or here) - here are some thoughts on it -

• Many courts have struggled with the scope and definition of the honest services fraud statute.  Since its passage, section 1346 has caused several opinions that have attempted to provide a definition to "honest services" - a term that is undefined in the statute.  The Fifth Circuit, in a prior case - Brown had placed some restraints on prosecutions using this statute.  The Skilling decision narrows these restraints and allows more prosecutorial power in bringing an honest services fraud case. The court states:

"Therefore, it is not a matter of Skilling setting the corporation’s policy himself. Instead, the question is whether anyone who supervised Skilling specifically directed his actions—such as how Fastow sanctioned the scheme in Brown. Skilling never alleged that he engaged in his conduct at the explicit direction of anyone, and therefore he cannot avail himself of the exception from Brown."

Simplistically - will this mean that if you can blame someone else for your conduct (such as a higher-up in the corporation), this will mean the Brown exception applies, but if you are the person at the top you may be out of luck in trying to make this claim?

• The court finds - at best- harmless error in the giving of a deliberate ignorance instruction.
• The court rejects each of the claims regarding improper jury instructions.
• The court also rejects the venue claims of Skilling saying -

"It would not have been imprudent for the court to have granted Skilling’s transfer motion. The issue before us, however, is whether the court committed reversible error. It did not."

• The court rejects Skilling's claims of prosecutorial misconduct, and also rejects the Brady violation claims of the defendant.  But the court does let Skilling know that he can raise some of the Brady issues in the trial court.  So this issue may have a future. The court explicitly states:

"We find the omission of this statement from the 302s troubling. Perhaps even more troubling is that the government never disclosed the page of interview notes containing this statement to the district court. However, because the district court never had the opportunity to consider this page of interview notes, we cannot address this Brady claim for the first time on appeal. The district court did not assess the materiality of this statement or determine whether its suppression violated Brady. Thus, there is nothing for us to review. Skilling must bring this claim to the district court before we can address it."

Basically, this means that this case is far from over.

• The sentencing aspect is the biggest win for Skilling. Although the court states that it was proper to use the SEC testimony, it does reject the "four-level enhancement for substantially jeopardizing the safety and soundness of a 'financial institution.'"  What is  the definition of a "financial institution" is the question here, and the court uses the rule of lenity and sides with the defense. I await Professor Doug Berman's calculations from the Sentencing Blog, as to exactly the amount of time that this could reduce his sentence.

(esp)(blogging from San Diego)

Skilling- Sentencing Reversal and Remand; Conviction Stands

Opinion here - Download 06-20885-CR0.pdf

Commentary to follow.

(esp) (from San Diego)

In the News & Around the Blogosphere

Tom Baxter, AJC.com, Griffin Bell, Carter’s attorney general, dies (for background on Bell see King & Spalding here)

Liz Moyer, Forbes, SEC To Probe Its Oversight Of Madoff

Liz Moyer, Forbes, Why The SEC Missed Madoff

Pamela A. MacLean, National LJ, Defrauded borrowers are crime victims -Ruling could affect alleged Madoff victims.

Sasha Issenberg, Boston.com, Obama Cabinet nominee pulls out -Contract investigation bogs down Richardson; First bump in process for president-elect; Sheryl Gay Stolberg, NYTimes, Richardson Won’t Pursue Cabinet Post

Joe Palazzolo, Legal Times, Law.com, What Will Obama Administration Do With the U.S. Attorneys?

John Pacenti, Daily Business Review, Law.com, Kuehne Case 'Hanging On by a Thread'

(esp)

The Changing of the Guard

Some are leaving DOJ, and certainly in the next few weeks we likely will see a good many more moving to the private side. (see here)  But there will also be a transition occurring from the private side to the public sphere. For one, Sujit M. Raman is moving from Hogan & Hartson to be part of Baltimore's USAttorney's Office. Raman has impressive credentials from his white collar defense work and his co-authored article on deferred prosecution agreements indicates that he is very aware of the recent developments in corporate prosecutions. (see Peter Spivack & Sujit Raman, Regulating the "New Regulators": Current Trends in Deferred Prosecution Agreements, 45 Amer. Crim. L.Rev. 159 (2008).  But I am most intrigued with the ending of this article where he states -

"Events from 2007 suggest that DPAs are very much on the rise, with prosecutors keen to flex their muscles as the New Regulators.  However, increased regulation, whether through internal DOJ guidelines or through congressional oversight, appears to be on the horizon and may well dampen their enthusiasm.  Only time will tell."

(esp)

In the News & Around the Blogosphere

Dexter Filkens, NYTimes, Bribes Corrode Afghans’ Trust in Government 

David Barboza, NYTimes, Chinese Court Convicts 11 in Microsoft Piracy Case

Julie Kay, Nat. L.J., Legal public interest groups hit by Madoff -Groups scramble to make up for shortfalls triggered by scandal

Gary L. Wright, Charlotte Observer, Charlotte trio vying to be U.S. attorney -Ex-prosecutors are among at least 4 seeking the post; Hagan will endorse Shappert's successor to Obama

Diana B. Henriques, NYTimes, Madoff Trustee Seeks Wide Power to Subpoena

Houston Chronicle, ENRON - Former executive finishes sentence (w/ a hat tip to Bill Olis)

P.S. Ruckman, Pardon Power, Watch List: Texans? Or No Texans?

(esp)

In the News & Around the Blogosphere

Eric Torbenson, Dallas Morning News,  U.S. Attorney Roper quits to join white-collar practice

Carrie Johnson, Washington Post, End of the Year Brings A Burst of Settlements With Justice Department

Ben Conery, Washington Times, Blagojevich prosecutor short on time

John Steele, Legal Ethics Forum, Top Ten Legal Ethics Stories of 2008

(esp)

More on Pardons & Commutations

More on Pardons & Commutations -

Charlie Savage NYTimes, has an article titled On Fast Track for Clemency, via the Oval Office and there are wonderful follow-ups from P.S. Ruckman Jr., Pardon Power, ABC News: Pardon Breakdown and The Times: On Pardons and Access .   Some observations -

• The process has its issues and those who are less fortunate and don't have a connection may not have as good a chance of securing a pardon or commutation.
• Politics and/or influence may have played a factor and this needs to be scrutinized.
• The press is monitoring every pardon issued.

It's this last point that interests me.  We see newspapers cutting staffs and suffering from the economy and also the effect of the Internet.  Investigative reporters have served an important role in society and in uncovering many corruption and white collar crimes.  So, too, they serve an important role in keeping the government in check. Will this continue and what happens if we lose the power of the press?

(esp)

Addendum, Mary Flood, Houston Chronicle, Pardon watch on as transition nears -But it's doubtful any Houstonians will make the cut

What's Coming in 2009

The New Year delivers a variety of interesting cases and issues in the white collar crime field, and many unresolved issues from last year. What can we expect to see (in no particular order):   

• confirmation hearing on Eric Holder
• a new Attorney General with new policies and procedures
• Madoff - investigation, prosecution (perhaps a plea), sentencing?
• Blagojevich - will he be indicted and will it hold up?
• Jeff Skilling - a judicial opinion
• a re-evaluation of the merits of corporate criminal liability
• an SEC with increased regulatory power
• fraud as a new criminal law emphasis
• more judges sentencing outside the confines of the sentencing guidelines

Obviously, there will be plenty more.  But I am confident that white collar crime will have a key focus in the upcoming year.  So stay tuned to this blog.  Your readership is appreciated and I wish everyone a happy, healthy, and peaceful new year.

(esp)