Skilling v. United States
Citation: 561 U.S. 358 (2010) Court: Supreme Court of the United States
Facts
Jeffrey Skilling, former CEO of Enron Corporation, was convicted of conspiracy to commit honest services wire fraud under 18 U.S.C. § 1346 based on allegations that he concealed Enron’s true financial condition and his own conflicts of interest from shareholders and the public. The government’s theory did not allege that Skilling received bribes or kickbacks, but rather that he deprived Enron’s shareholders of his honest services by engaging in undisclosed self-dealing and misrepresentation.
Issue
Whether 18 U.S.C. § 1346’s prohibition on “a scheme or artifice to deprive another of the intangible right of honest services” is unconstitutionally vague, and if not, whether it reaches conduct beyond bribery and kickback schemes.
Holding
Section 1346 is not unconstitutionally vague, but to avoid vagueness problems the Court construed it narrowly to cover only bribery and kickback schemes — not undisclosed conflicts of interest or other self-dealing that does not involve a corrupt exchange.
Rule
Honest services fraud under § 1346 requires a bribery or kickback scheme; the statute does not reach schemes premised solely on undisclosed conflicts of interest, failure to disclose material information, or other self-dealing that lacks a corrupt quid pro quo.
Significance
Skilling dramatically narrowed the reach of honest services fraud, which prosecutors had used broadly in white-collar cases to cover a wide range of undisclosed conflicts and corporate misconduct. The decision forced the government to dismiss or replead numerous pending prosecutions and constrained future use of § 1346. The case illustrates the Court’s use of the constitutional avoidance canon to save a statute from vagueness while simultaneously limiting it. It pairs closely with Neder v. United States on the materiality element of fraud and with United States v. Binday on the right-to-control theory, and it represents the Court’s ongoing effort to cabin prosecutorial overreach in the intangible-rights area of fraud law.