‘Honest services' a key component of U.S. anti-fraud statutes, key issue in Black appeal http://bit.ly/8Uo475

Issue: Whether the “honest services” clause of 18 U.S.C. § 1346 applies in cases where the jury did not find - nor did the district court instruct them that they had to find - that the defendants “reasonably contemplated identifiable economic harm,” and if the defendants’ reversal claim is preserved for review after they objected to the government’s request for a special verdict.

Conrad Black has tried almost everything to get out of jail – legal appeals, public pleas and even a failed attempt at a presidential pardon. Nothing has worked so far, and while five former executives of Hollinger International Inc. were convicted of fraud, Lord Black is the only one still in jail.

Tuesday, he'll get one last chance to make his case. The U.S. Supreme Court will hold a one-hour hearing on whether to reverse the criminal convictions of Lord Black and two other former Hollinger International Inc. executives (the other two aren't participating). Lawyers for Lord Black and the others will have 30 minutes to make their arguments. Prosecutors will have the same amount of time and a ruling is expected by June.

There is a lot riding on the outcome.

The court's ruling will not only determine Lord Black's fate, it will reshape how U.S. justice officials go after white-collar crime and political corruption. And, it will affect dozens of cases currently before the courts.

The central issue in Tuesday's hearing is a legal theory known as “honest services,” a key component of U.S. anti-fraud statutes. Prosecutors have used the theory in many high-profile cases, including those involving former executives at Hollinger, Enron and former Illinois Rod Blagojevich, which may affect his trial in 2010 (Mr. Blagojevich has denied federal charges of corruption). But many observers say the concept is ill defined and has criminalized conduct that would normally be a civil matter. governor

This Court held in McNally v. United States, 483 U.S. 350 (1987), a public corruption case, that the mail fraud statute could not be used to prosecute schemes to deprive the citizenry of the intangible right to good government. Congress responded in 1988 by enacting 18 U.S.C. § 1346, which expands the definition of a "scheme or artifice to defraud" under the mail and wire fraud statutes to encompass schemes that "deprive another of the intangible right of honest services."

Twenty years later, the courts of appeals are hopelessly divided on the application of Section 1346 to purely private conduct. In this case, the Seventh Circuit disagreed with at least five other circuits and held that Section 1346 may be applied in a purely private setting irrespective of whether the defendant's conduct risked any foreseeable economic harm to the putative victim. In the alternative, the Seventh Circuit ruled that the defendants forfeited their objection to the improper instructions by opposing the government's bid to have the jury return a "special verdict," a procedure not contemplated by the criminal rules and universally disfavored by other circuits as prejudicial to a defendant's Sixth Amendment rights.

Docket: 08-876