Lawyers for Enron’s Skilling, government argue in appeal

November 1, 2010

Law & Courts

Attorneys for former Enron President Jeffrey Skilling and the government argued today over whether a U.S. Supreme Court decision that the government used an invalid legal theory during his 2006 trial means that he should be retried on all 19 counts for which he was convicted.

A three-judge panel of the Fifth U.S. Circuit of Appeals heard arguments in a Houston federal courtroom on whether the jury relied on an “honest services” theory presented by prosecutors when it convicted him of 19 counts of conspiracy, insider trading and securities fraud at the end of the five-month trial. Skilling was sentenced to 20 years in prison, four of which he has so far served in a Colorado federal penitentiary.

In June, the Supreme Court found that the government’s use of the “honest services” fraud theory was invalid, and sent the case back to the Fifth Circuit to decide whether Skilling’s conviction should be invalidated completely and retried in a Houston district court.

During Monday’s hearing, Daniel Petrocelli, Skilling’s lead attorney, argued that the government’s use of the honest services theory during the trial testimony and closing arguments was “deeply harmful” to Skilling’s defense. Primarily, he told the judges, the use of the theory in counts of securities fraud “spread throughout the case,” particularly the first count of conspiracy to commit securities fraud. If that count were invalidated, he argued, it meant that the entire conviction must be.

Citing case precedent, Petrocelli argued that Skilling’s defense team had presented “mountains of evidence” that Skilling had not committed honest services fraud, which a rational jury could have relied upon to acquit the former executive of securities fraud. If the defense showed that such evidence existed in the trial record, Petrocelli said, the appeals panel must reverse the conviction and send the case back for retrial.

He said the honest services fraud theory was “an infirm conspiracy theory that has spread throughout the case.” He said the defense had fought to keep the honest services charges out of the trial and “contested it every step of te way.”

Also, Petrocelli argued, the honest services charge meant that Skilling was wrongly charged by the government with having responsiblity for the actions of so-called co-conspirators, many of whom testified against Skilling.

He said that in its briefs, the prosecution had relied heavily on evidence presented in the trial that Skilling had committed securities fraud, but ignored the evidence presented by the defense that he was not guilty of having committed honest services fraud.

Since it was impossible for the lawyers or the court to know on which theory the jury relied on to convict Skilling, he argued,  if the appellate court found such evidence in the record, it meant that the convictions must be overturned since a rational jury could have used that evidence to acquit him.

In the government’s case, Assistant U.S. Attorney Joseph D. Wilson argued that even though the honest services charge had been invalidated, that had been a small part of the prosecution during Skilling’s trial, which he said had been “overwhelmingly” about securities fraud and conspiracy.

“It played minor, incidental role,” Wilson said of the honest services charge, both in the case-in-chief and during closing arguments by both the prosecution and the defense. During those arguments, Wilson said, the defense didn’t refer once to the honest services theory.

He said the government had relied on the securities fraud evidence in its briefs because it was so overwhelming that the jury could only come to one conclusion — that Skilling was guilty. Thus, he said, the government’s use of the honest services theory was a “harmless error” that did not call for reversal.

Judge Edward Prado, one of the three members of the panel, asked both lawyers if the decision on whether all 19 counts would be better decided by the trial judge who heard the evidence during the five-month trial. Both agreed that the appellate panel could remand the case back, but whether it should was another matter since it was really a question of law, not the evidence itself, that was being decided.

Prado also asked the lawyers how the panel’s decision on the first conspiracy count would affect the other 18 counts of the indictment. Both sides agreed that if the appellate court found that the conspiracy count was valid, then the others would not be affected. If not, then there would be some other legal tests to apply to the remaining counts.

The panel took the case on submission. Petrocelli told reporters afterward that he expected it would take weeks or months to render a decision. “We’re not interested in a quick ruling,” he said.

“We think we are entitled to a new trial,” Petrocelli said, calling the government’s use of the honest services charge “a very, very serious error.”

Wilson declined to give a statement to reporters.

UPDATES: On April 6, 2011, the U.S. Fifth Circuit ruled the error in Skilling’s trial ‘harmless’ and affirmed his convictions, the Houston Chronicle reported. Skilling’s case will be sent back to the district court for resentencing. On April 16, 2012, the U.S. Supreme Court rejected Skilling’s appeal of the Fifth Circuit ruling.

On June 21, 2013, U.S. District Judge Simeon Lake cut Skilling’s sentence by 10 years, to 14 years imprisonment, ratifying a new plea agreement between prosecutors and Skilling’s attorneys that would end all litigation in the case.

Copyright © 2010 Ken Fountain. All rights reserved.

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About Ken Fountain

I'm a journalist and writer in Houston, Texas. My areas of specialty include law and courts, local government and energy and environmental issues. You can follow me on Twitter at and email me at kenfountain1 (at) gmail (dot) com.

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One Comment on “Lawyers for Enron’s Skilling, government argue in appeal”

  1. tess Says:

    If the gloves don’t fit, you must acquit! Can Madoff do fustice of 150 yrs in Jail? Let’s put more Madoffs berind bars.


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