Law used to indict Blagojevich challenged

HONEST SERVICES: Former Rep. Bruce Weyhrauch among those taking vague fraud statute to task.

September 12, 2009 

CHICAGO -- Among the corruption charges faced by former Illinois Gov. Rod Blagojevich is a statute of just 28 words with enough pop to send big names to prison for corruption, but it's under attack by those who consider it vague and unfair.

Former Illinois Gov. George Ryan, ex-newspaper mogul Conrad Black and one-time Enron CEO Jeffrey Skilling have all been convicted of what's known as honest-services fraud. The law makes it illegal for officials, executives and others to scheme to deprive those they serve and possibly others of "the intangible right to honest services."

"It causes fear. It causes confusion," said Chicago attorney and former federal prosecutor Zachary T. Fardon. "And that's the heart of the problem."

There are two separate cases challenging the law pending before the U.S. Supreme Court. Justice Antonin Scalia recently described the 21-year-old measure as so poorly defined it could be used to prosecute "a mayor for using the prestige of his office to get a table at a restaurant without a reservation."

Congress adopted the statute in 1988 after the Supreme Court held that prosecutors could not merely assume wire fraud and mail fraud statutes -- the workhorse laws in corruption prosecutions -- covered lost honest services. The mail and wire fraud laws require a defendant to obtain money or property from the wrongdoing; merely depriving a victim of honest services wasn't enough to win a guilty verdict.

In the years since, prosecutors have used the honest services law to bolster the more conventional charges of mail and wire fraud. But experts say aggressive federal prosecutors, such as Patrick J. Fitzgerald, the U.S. Attorney in northern Illinois, appear to be using it both more often and as a lead charge in an indictment.

In Blagojevich's case, honest-services fraud holds a prominent place in a 19-count indictment that accuses the impeached governor of depriving Illinois residents of his honest services through a wide-ranging scheme involving kickbacks, campaign money and a host of other misdeeds.

"The statute is very vague, and because it is vague, it is a pet statute of prosecutors," said Chicago attorney and former federal prosecutor Julian Solotorovsky. "They're stretching it to the fullest extent possible."

Among those challenging the law is former Alaska state Rep. Bruce Weyhrauch, who prosecutors say illegally failed to disclose that he was in job negotiations with oil-field service company Veco Corp. at the same time the state Legislature was also considering an oil tax bill heavily lobbied by the company. The case hasn't gone to trial as the high court considers whether the government can charge him with failing to make a disclosure not required by state law.

Weyhrauch faces three other felony counts that don't rely on the "honest services" provision of the federal fraud statutes, including bribery and the lead charge, conspiracy.

Black and two of his three co-defendants were convicted of depriving the Hollinger International media empire of their faithful services as corporate officers. The offense includes pocketing $5.5 million the government said belonged to the company's shareholders.

The executives initially said the money represented fees from companies that bought community newspapers from Hollinger. But Black and his co-defendants now say the money was really management fees the company owed them and which were "recharacterized" to avoid Canadian income tax.

They say that since they were trying to avoid Canadian taxes and not harm Hollinger, they didn't deprive the shareholders of their honest services and the charges should be thrown out.

The high court has yet to decide whether to take up Skilling's appeal, which argued the honest services law is so vague that it is simply unconstitutional.

"The Supreme Court's decisions to hear two appeals challenging the law in the same term could mean the justices have concerns about prosecutors extending the statute's reach," said Lisa Casey, a Notre Dame University law professor who has written about the law and its recent expanded use against corporate executives.

Just prior to accepting Black's case, the Supreme Court refused to hear the appeal of Chicago Mayor Richard M. Daley's patronage chief, Robert Sorich, who was convicted in 2006 in a City Hall hiring fraud scandal. But it was that case that prompted Scalia to say the time has come to clarify confusion over just what the law means.

"Indeed, it seems to me quite irresponsible to let the current chaos prevail," he said.

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