Court Upholds “Honest Services” Theory In Skilling Enron Case


A federal appeals court has affirmed the prosecution theory that convicted former Enron CEO Jeff Skilling. The Houston Chronicle says that a United States Court of Appeals for the Fifth Circuit panel upheld all 19 of Skilling’s felony convictions yesterday. The panel ordered that Skilling be resentenced, raising the possibility that his 24-year prison term will be cut. Andrew Weissmann, former head of the Justice Department’s Enron Task Force, said the ruling confirmed that “fraud perpetuated from these heights, at this scale, and causing devastation to so many victims, must and will be punished.”

The strongest issue in Skilling’s appeal centered on a prosecution theory that he deprived Enron of his “honest services” by setting corporate goals that were met by fraudulent means amid a widespread conspiracy to publicly portray a troubled company as strong and healthy. “Fatally to Skilling’s argument – no one at Enron sanctioned Skilling’s improper conduct,” said Judge Edward Prado. “That is, Skilling does not allege that the board of directors or any other decisionmaker specifically directed the improper means that he undertook to achieve his goals.” Wayne State University Law School Prof. Peter Henning said the ruling precludes CEOs who didn’t steal from avoiding fraud prosecutions by claiming they acted in their companies’ best interests.


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