Supreme Court Hears Convicted Enron CEO's Appeal

Former Enron CEO Jeffrey Skilling i i

hide captionFormer Enron CEO Jeff Skilling, seen here in 2006, contends he did not receive a fair trial in Houston. Skilling was convicted in 2006 of 19 counts of fraud, conspiracy, insider trading and lying to auditors.

David J. Phillip/AP
Former Enron CEO Jeffrey Skilling

Former Enron CEO Jeff Skilling, seen here in 2006, contends he did not receive a fair trial in Houston. Skilling was convicted in 2006 of 19 counts of fraud, conspiracy, insider trading and lying to auditors.

David J. Phillip/AP

Former Enron CEO Jeffrey Skilling, once a high-flying energy trader credited with making Enron one of the most successful corporations in America, now sits in a federal prison serving out a 24-year prison sentence. His lawyers told the U.S. Supreme Court on Monday that his conviction should be reversed because he did not get a fair trial and because one of the statutes used to convict him is unconstitutional.

Enron's collapse put more than 5,000 people out of work, wiped out more than $2 billion in employee pensions and rendered worthless $60 billion in Enron stock. One-time CEO Skilling was accused of knowing the company was a hollow shell, hiding that fact from shareholders, and at the same time selling his own stock before word got out that the company was crumbling. The government prosecuted Skilling on 18 counts of securities fraud and lying to auditors, and also for conspiracy to deprive the shareholders of his honest services. Skilling's lawyers contend that the honest services law is unconstitutionally vague, and that it tainted the entire trial. They also contend that because the company's collapse was devastating to the Houston economy, and because Enron's leaders were pilloried in the local media, that Skilling could not get a fair trial in Houston where Enron was based.

Skilling's lawyer Sri Srinivasan told the justices on Monday that passions ran so high in Houston that the entire U.S. Attorney's Office, some 150 lawyers strong, recused itself from the prosecution.

When the case came to trial, said Srinivasan, 80 percent of the jury pool expressed anger or negative views of the defendants. The trial judge not only refused to move the trial out of Houston, but spent only five hours conducting jury screening, Srinivasan said. Compare that, he said, to "the Oklahoma City bombing case," which "was transferred from Oklahoma City to Denver," and still the judge spent 18 days on jury selection.

Justice Ruth Bader Ginsburg seemed skeptical of Srinivasan's comparison: "I'm unaware of any case in which we have said a change is mandatory when what's involved is money rather life or limb."

"The Oklahoma City bombing case," she noted, "was a capital case."

Justice Samuel Alito asked if a more lengthy screening of the potential jurors, would have made it possible to find a fair and impartial jury in Houston.

The danger is that in a case like this, Srinivasan responded, is that where only 46 potential jurors are questioned and where passions are running so high, "there is too great a risk" of an unfair trial. There may be 12 jurors who could be unbiased, he said, but the ordinary screening procedure is not adequate.

Justice Stephen Breyer asked, "When does a judge have to do more than is ordinary?"

Srinivasan answered that there has to be "a wave of public passion" with a "pervasive animus directed towards the defendant."

Lawyer Srinivasan then turned to the second part of his argument, the honest services statute, which makes it a crime for corporate officers or government officials to deprive shareholders or citizens of their honest services. Srinivasan said that the law is so "unconstitutionally vague" it is not clear what conduct is illegal.

Chief Justice John Roberts seemed unconvinced: "I don't understand the difficulty," he said, saying Skilling concealed information from shareholders "in a way that harmed them."

Justice Ginsburg pursued the point: "He owned shares and he had information that those shares were inflated," she said. Further, "Skilling then sold those shares at a great profit to himself." The shareholders didn't have that information and were left holding the bag.

Srinivasan dodged the question by stating that the government's definition of honest services is so broad it would "convert almost any lie in the workplace" into a felony — even lying about using a computer for personal purposes.

Representing the government, Deputy Solicitor General Michael Dreeben contended that the jury selection in Skilling's case was perfectly proper. The judge, he said, worked with the lawyers to create a 14-page juror questionnaire "designed to ferret out" problems.

Justice Sonia Sotomayor, the only justice who has been a trial judge, indicated some concerns: "Can you tell me any other high-profile case" where the questioning of potential jurors "lasted only five hours?"

No, acknowledged Dreeben.

Breyer noted that one potential juror had lost $50,000-$60,000 in the Enron collapse, and the judge refused to excuse her for cause. That meant Skilling's lawyers had to use up one of their limited number of automatic challenges to eliminate her from the jury panel.

Remarked Sotomayor, "I would find it strange that we would permit jurors who are victims of the crime to serve as jurors."

Justice Anthony Kennedy weighed in, saying it was hard for him to think that the jury screening "would have been much shorter" even in an ordinary case.

Dreeben replied that the jury was, in fact, fair, and he noted that Skilling had been acquitted of nine insider trading counts, which, he said, would have been the first place the jury would have gone if it were looking to convict.

Chief Justice Roberts interjected: "Oh no, no, they would go to the statute that says honest services, if you think that your community has essentially been fleeced by somebody because of his dishonesty."

Pressed by other justices about what "honest services" means, Dreeben said the case doesn't involve any "subtle or arcane fiduciary duty." It involves the duty "not to lie to shareholders about the financial condition of the firm."

Sotomayor presented a hypothetical: if "I'm a city councilperson" and "I vote for a tax break" that I can benefit from, is that a denial of honest services?

Dreeben replied, in essence: If you don't disclose it, and it is on a business property, it could be.



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