Read Skilling v US (2010) and we need a FIRAC (facts, issues, analysis, conclusion) analysis of this syllabus.

SKILLINGv. the UNITED STATES

certiorari to the united states court of appeals for the fifth circuit

No. 08-1394.Argued March 1, 2010Decided June 24, 2010

Founded in 1985, Enron Corporation grew from its headquarters in Houston, Texas, into the seventh highest-revenue-grossing company in America. Petitioner Jeffrey Skilling, a longtime Enron officer, was Enron's chief executive officer from February until August 2001, when he resigned. Less than four months later, Enron crashed into bankruptcy, and its stock plummeted in value. After an investigation uncovered an elaborate conspiracy to prop up Enron's stock prices by overstating the company's financial well-being, the Government prosecuted dozens of Enron employees who participated in the scheme. In time, the Government worked its way up the chain of command, indicting Skilling and two other top Enron executives. These three defendants, the indictment charged, engaged 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. Count 1 of the indictment charged Skilling 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. After a 4-month trial, the jury found Skilling guilty of 19 counts, including the honest-services-fraud conspiracy charge, and not guilty of 9 insider-trading counts.

On appeal, Skilling raised the argument relevant here. He alleged that the jury improperly convicted him of conspiracy to commit honest-services wire fraud. The Court of Appeals rejected Skilling's claim that his conduct did not indicate any conspiracy to commit honest-services fraud.

Held:

Section 1346, which proscribes fraudulent deprivations of "the intangible right of honest services," is properly confined to cover only bribery and kickback schemes. Because Skilling's alleged misconduct entailed no bribe or kickback, it does not fall within the Court's confinement of 1346's prescription.

Analysis:

In a series of decisions beginning in the 1940s, the Courts of Appeals, one after another, interpreted the mail-fraud statute's prohibition of "any scheme or artifice to defraud" to include deprivations not only of money or property but also of intangible rights. See,e.g.,Shushanv.the United States, 117 F.2d 110, which stimulated the development of the "honest-services" doctrine. Unlike traditional fraud, in which the victim's loss of money or property supplied the defendant's gain, with one the mirror image of the other, the honest-services doctrine targeted corruption that lacked similar symmetry. While the offender profited, the betrayed party suffered no deprivation of money or property; instead, a third party, who had not been deceived, provided the enrichment. Even if the scheme occasioned a money or property gain for the betrayed party, courts reasoned, actionable harm lay in the denial of that party's right to the offender's "honest services." Most often these cases involved bribery of public officials, but over time, the courts increasingly recognized that the doctrine applied to a private employee who breached his allegiance to his employer, often by accepting bribes or kickbacks. By 1982, all Courts of Appeals had embraced the honest-services theory of fraud.

In 1987, this Court halted the development of the intangible-rights doctrine inMcNallyv.the United States,483 U. S. 350, 360, which held that the mail-fraud statute was "limited in scope to the protection of property rights." "If Congress desires to go further," the Court stated, "it must speak more clearly."Congress responded the next year by enacting 1346, which provides: "For th[e] chapter [of the U. S. Code that prohibits, inter alia, mail fraud, 1341, and wire fraud, 1343], the term 'scheme or artifice to defraud' includes a scheme or artifice to deprive another of the intangible right of honest services."

The Government urges the Court to go further by reading 1346 to proscribe another category of conduct: undisclosed self-dealing by a public official or private employee. Neither of the Government's arguments in support of this position withstand close inspection. Contrary to the first,McNallyitself did not center on nondisclosure of a conflicting financial interest but rather involved a classic kickback scheme. See 483 U. S., at 352-353, 360. Reading 1346 to proscribe bribes and kickbacksand nothing moresatisfies Congress' undoubted aim to reverseMcNallyon its facts. Nor is the Court persuaded by the Government's argument that the pre-McNallyconflict-of-interest cases constitute core applications of the honest-services doctrine. Although the Courts of Appeals upheld honest-services convictions for some conflict-of-interest schemes, they reached no consensus on which schemes qualified. Given the relative infrequency of those prosecutions and the inter circuit inconsistencies they produced, the Court concludes that a reasonable limiting construction of 1346 must exclude this amorphous category of cases. Further dispelling doubt on this point is the principle that "ambiguity concerning the ambit of criminal statutes should be resolved in favor of lenity."Clevelandv.the United States,531 U. S. 12, 25. The Court, therefore, resists the Government's less constrained construction of 1346 absent Congress' clear instruction otherwise. "If Congress desires to go further," the Court reiterates, "it must speak more clearly than it has."McNally,483 U. S., at 360. Pp.45-47.

Interpreted to encompass only bribery and kickback schemes, 1346 is not unconstitutionally vague. A prohibition on fraudulently depriving another of one's honest services by accepting bribes or kickbacks presents neither a fair-notice nor an arbitrary-prosecution problem. SeeKolender, 461 U. S., at 357. As to fair notice, it has always been clear that bribes and kickbacks constitute honest-services fraud,Williamsv.the United States,341 U. S. 97, 101, and the statute'smen's rearequirement further blunts any notice concern, see,e.g.,Screwsv.the United States,325 U. S. 91, 101-104. As to arbitrary prosecutions, the Court perceives no significant risk that the honest-services statute, as here interpreted, will be stretched out of shape. Its prohibition on bribes and kickbacks draws content not only from the pre-McNallycase law but also from federal statutes proscribing and defining similar crimes. Pp. 48-49.

Skilling did not violate 1346, as the Court interprets the statute. The Government charged Skilling with conspiring to defraud Enron's shareholders by misrepresenting the company's fiscal health to his own profit, but the Government never alleged that he solicited or accepted side payments from a third party in exchange for making these misrepresentations. Because the indictment alleged three objects of the conspiracyhonest-services wire fraud, money-or-property wire fraud, and securities fraudSkilling's conviction is flawed. SeeYatesv.the United States,354 U. S. 298. This determination, however, does not necessarily require reversal of the conspiracy conviction, for errors of theYatesvariety, are subject to harmless-error analysis.The Court leaves the parties' dispute about whether the error here was harmless for resolution on remand, along with the question of whether reversal on the conspiracy count would touch any of Skilling's other convictions.

554 F.3d 529, affirmed in part, vacated in part, and remanded.

Ginsburg, J., delivered the opinion of the Court.