High court to revist the good old days of financial fraud

Oct 13th, 2009 by Mark Cohen

Good news for former Enron CEO Jeffrey Skilling, currently serving time in a federal facility in Colorado for multiple fraud convictions: The U.S. Supreme Court has agreed to hear his appeal.

Skilling — convicted of 19 counts of fraud and conspiracy in 2006 — is just a few years into his 24-year sentence. Of course, that’s a few more years more than was served by his former superior, Enron head honcho Ken Lay, who dropped dead before serving a day. Some may recall that Skilling spent a couple of those post-conviction years here in Minnesota at a low-security prison in Waseca. He was transferred last year when the Waseca facility was converted to an all-women prison. (I like to imagine that, as they took him out of there, he kept yelling, ”I’m the smartest guy in the room!”)

In any case, the issue for the Supreme Court is a pretty important one in the field of white-collar crime prosecution, having to do what the government must prove in an “honest services” fraud prosecution. (“The law has been criticized as vague and unfair because the government need not prove, in some instances, that a defendant personally benefited from the alleged fraud,” the AP reports.) The 5th Circuit Court of Appeals previously upheld the convictions.

We like to think we learn our lesson from things like Enron, but guys like Bernie Madoff make Skilling and the rest of the bad boys of Enron look like small-time operators. In retrospect Enron may have been able to save itself, if only it had been smart enough to diversify into mortgage-backed securities. …