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6/25/2010 (Reuters) - A Supreme Court decision siding with two imprisoned former corporate executives is another reminder to a U.S. public angered by financial scandals that prosecuting white-collar criminal cases can be a lot tougher than it looks.
Federal prosecutors, who have suffered setbacks in the past year in probes stemming from the financial crisis, were dealt a blow on Thursday in two cases that many people thought were long over.
The high court said prosecutors had gone too far in using an "honest services" law against convicted former Enron Corp CEO Jeffrey Skilling and ex-media mogul Conrad Black, who both are behind bars for corporate fraud. The law is a favourite tool in public corruption and corporate cases where there are allegations of bribery and kickbacks.
"It's going to have an impact on essentially all phases of commercial and public life because it affects public officials and it impacts executives," said Kelly Kramer, a partner at the law firm Nixon Peabody who focuses on government investigations and white-collar defence.
"It impacts anybody who has any fiduciary responsibilities," Kramer said. "It's a significant limitation on the government's ability to prosecute such cases."
Thursday's ruling came as President Barack Obama's administration has boosted the prosecutorial ranks, partly because of public pressure and expectations that some individuals or corporations should be held accountable for the financial meltdown in which middle-class citizens lost their homes and savings.
During the past two years, the government has prosecuted a host of executives from Wall Street financial advisory firms to small city mortgage lenders and brokers to millionaires charged with avoiding taxes.
LEVERAGE
Thursday's unanimous opinion of the nine high court justices does not mean Skilling or Black will be released from prison.
However, it does give them leverage in trying to shorten their sentences in return for not pressing for what would be a costly and time-consuming rehearing of their cases at the trial court level, according to criminal law experts.
Skilling's appeal was the third Enron case to reach the high court. In 2005, it unanimously overturned former Enron auditor Arthur Anderson LLP's obstruction of justice conviction, saying vague jury instructions allowed jurors to convict without finding criminal intent.
Experts said the court's ruling on Thursday had left the heart of the honest services statute intact.
"This is certainly not a huge surprise," said Andrew Liepold, a law professor at the University of Illinois in Champaign. "The honest services law has been controversial since it was passed 22 years ago."
Full story: ANALYSIS - Where scandal abounds, crime can be hard to define | Reuters
Federal prosecutors, who have suffered setbacks in the past year in probes stemming from the financial crisis, were dealt a blow on Thursday in two cases that many people thought were long over.
The high court said prosecutors had gone too far in using an "honest services" law against convicted former Enron Corp CEO Jeffrey Skilling and ex-media mogul Conrad Black, who both are behind bars for corporate fraud. The law is a favourite tool in public corruption and corporate cases where there are allegations of bribery and kickbacks.
"It's going to have an impact on essentially all phases of commercial and public life because it affects public officials and it impacts executives," said Kelly Kramer, a partner at the law firm Nixon Peabody who focuses on government investigations and white-collar defence.
"It impacts anybody who has any fiduciary responsibilities," Kramer said. "It's a significant limitation on the government's ability to prosecute such cases."
Thursday's ruling came as President Barack Obama's administration has boosted the prosecutorial ranks, partly because of public pressure and expectations that some individuals or corporations should be held accountable for the financial meltdown in which middle-class citizens lost their homes and savings.
During the past two years, the government has prosecuted a host of executives from Wall Street financial advisory firms to small city mortgage lenders and brokers to millionaires charged with avoiding taxes.
LEVERAGE
Thursday's unanimous opinion of the nine high court justices does not mean Skilling or Black will be released from prison.
However, it does give them leverage in trying to shorten their sentences in return for not pressing for what would be a costly and time-consuming rehearing of their cases at the trial court level, according to criminal law experts.
Skilling's appeal was the third Enron case to reach the high court. In 2005, it unanimously overturned former Enron auditor Arthur Anderson LLP's obstruction of justice conviction, saying vague jury instructions allowed jurors to convict without finding criminal intent.
Experts said the court's ruling on Thursday had left the heart of the honest services statute intact.
"This is certainly not a huge surprise," said Andrew Liepold, a law professor at the University of Illinois in Champaign. "The honest services law has been controversial since it was passed 22 years ago."
Full story: ANALYSIS - Where scandal abounds, crime can be hard to define | Reuters
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