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Jun 24, 2010 7:47 pm

An irreverent Wall Street Blog
by Bill Singer


In its Opinion dated June 24, 2010, the United States Supreme Court ruled on the appeal of Jeffrey Skilling.  The Court stated that in 2001, Enron Corporation, then the seventh highest revenue-grossing company in America, crashed into bankruptcy. Thereafter, Skilling and two other top Enron executives were indicted for engaging in a scheme to deceive investors about Enron’s true financial performance by manipulating its publicly reported financial results and making false and misleading statements.

As against Skilling, Count 1 of the indictment charged him with, inter alia, conspiracy to commit “honest-services” wire fraud, 18 U. S. C. §§371, 1343, 1346, by depriving Enron and its shareholders of the intangible right of his honest services. Skilling was also charged with over 25 substantive counts of securities fraud, wire fraud, making false representations to Enron’s auditors, and insider trading.

The Supreme Court considered two questions arising from the prosecution of Skilling:

First, did pretrial publicity and community prejudice prevent Skilling from obtaining a fair trial?

Second, did the jury improperly convict Skilling of conspiracy to commit “honest-services” wire fraud, 18 U. S. C.§§371, 1343, 1346.

As to the first basis for appeal, the Fifth Circuit had previously determined that the volume and negative tone of media coverage generated by Enron’s collapse created a presumption of juror prejudice. However, that was a rebuttable presumption and the Circuit concluded that lower District Court had empaneled an impartial jury.

As to the second basis for appeal, the Fifth Circuit was satisfied that the jury had properly convicted Skilling of the alleged honest-services conspiracy.

Answering "no" to both questions, the Fifth Circuit Court of Appeals affirmed Skilling’s convictions.

The Supreme Court concurred with the Fifth Circuit, and found that Skilling’s fair-trial argument failed. The Supreme Court found that Skilling failed to establish that a presumption of juror prejudice arose or that actual bias infected the jury that tried him. Although the Supreme Court has overturned a conviction obtained in a trial atmosphere that was utterly corrupted by press coverage,  the Court would not broaden its prior rulings to stand for the proposition that juror exposure to news accounts of a given crime alone presumptively deprives a defendant of due process. The Court admonished that

Prominence does not necessarily produce prejudice, and juror impartiality, we have reiterated, does not require ignorance.