Supreme Court places new limits on statute used to convict Skilling

It also sent back to a lower court the conviction of newspaper magnate Conrad Black for a decision on whether his conviction should be overturned.

The justices were passing judgment on a federal statute used in the prosecution of both men, and many others. It makes it a crime to deprive the public or one’s employer or shareholders of the “intangible right of honest services.’’

Although a favorite of federal prosecutors — it figures in the current trial of former Illinois governor Rod Blagojevich — it has been criticized as being so vague as to make it impossible to know what sorts of actions are illegal. Skilling said it should be struck down as unconstitutional.

But six justices said the law can stand if prosecutors continue to seek honest services fraud convictions only in cases where they could prove defendants accepted bribes or kickbacks.

“Because Skilling’s misconduct entailed no bribe or kickback, he did not conspire to commit honest-services fraud under our confined construction’’ of the law, Justice Ruth Bader Ginsburg wrote for the majority. Other charges against him, though, may still be good, she added.

The honest services cases represent the court’s attempt to look comprehensively at the statute, which was Congress’s effort to give federal prosecutors the tools to go after corruption following another adverse Supreme Court ruling in the 1980s.

The justices took three cases, which raised three separate challenges. Skilling contended that the government needed to prove he was trying to line his own pockets with the fraudulent accounting scheme that brought down Enron in 2001. He said his actions were designed to save the company.

Black argued that he should not have been convicted without the government proving that the unusual pay arrangement he had with Hollinger International cheated the company he once headed.

And Alaska state representative Bruce Weyhrauch said he should not be the subject of federal prosecution because no state law required him to disclose that he was looking for legal work with an oil services firm at the same time the company was lobbying him on a tax bill.

Three members of the court said the majority’s attempt to save the statute was wrong. Justice Antonin Scalia said the language — “scheme or artifice to deprive another of the intangible right of honest services’’ is so vague as to violate the Constitution’s Due Process clause.

The collapse of Enron, once the nation’s seventh-largest corporation, cost 5,000 jobs and $1 billion in employee pension funds. Skilling was convicted on 19 charges after lying about the financial health of Enron; he sold a half-million shares and made a profit of $15 million a few months before Enron fell into bankruptcy. Skilling is serving a 24-year sentence in Colorado.

Ginsburg said a lower court should now consider Skilling’s fate.