Supreme Court Ruling

In August a Peter Lattman, a reporter for the New York Times wrote an article on the dramatic effects of a resent United States Supreme Court ruling. The ruling limited the amount of issues that prosecutors could go after under the “honest services” statute. Prior to this ruling there were a number of fraudulent acts that could fall under this statute. On June 24, 2010 the United States Supreme Court decided that parts of the section 1988 federal fraud statute was unconstitutional. They set the precedents by ruling on three major cases which includes one against the former chief executive of Enron, Jeffrey K. Skilling and one against Conrad M. Black, the newspaper mogul.  “It ruled that an honest services prosecution required more than an allegation of an undisclosed conflict of interest or self-dealing on the part of a business executive or politician. Instead, the court said that prosecutors must prove that defendants had received bribes or kickbacks,” said Peter Lattman.

After this ruling there were numerous cases that had to be re-examined. One of these cases was in Kansas. Just hours after Barry R. Grissom was sworn in as the United States attorney in Kansas, he had to dismiss just such a case. This case was the most prominent case they had in their books. It was a seven-year-old case against two of Westar Energy’s former top executives for corporate fraud. “The law no longer supported our position, we were duty bound not to go forward with the prosecution.” Grissom said.

Daniel C. Richman, a professor at Columbia Law School said, “In its heyday, the honest services theory allowed prosecutors to pursue sleaziness of all sorts without identifying a victim who lost property or money. Now the Supreme Court decision has thrown a large wrench into the system, and the Justice Department finds itself with the prospect of reversals and abandoned cases.”  This has been happening over and over around the country. One of the main problems with this is that our courts are already over flowing and all of these appeals are just making it worse. It is important that these cases are correctly ruled upon, but there are a lot of them that were the first time and now that these new precedents have been set, everyone is trying to jump on bored for a get-out-of-jail-free card.

I do not believe that these greedy executives should have a chance to get away with the things they have done. Their actions have hurt a lot of people and cost companies millions of dollars. Not only can the company lose money by the person stealing it, but like in the Westar case the company spent a lot of money on their executives legal bills. Westar is planning on going after them in civil claims court to try to recover this money. When one of these companies loses money in this way it effects everyone that is associated with them because it drives up prices and drives down stock prices.

Lattman, Peter. "Fraud Ruling Is Reshaping Federal Cases." New York Times 08 25 2010. n. pag. Web. 31 Oct. 2011. <http://www.nytimes.com/2010/08/26/business/26energy.html?ref=accountingandaccountants>.