Atlana criminal defense attorneys are seeing that some of the people charged with fraud by aggressive prosecutors in recent years are beginning to feel the benefits of a clarification of the law; a clarification that narrows the scope of a corporate fraud statute and makes it harder for prosecutors to prove their cases based on this statute.
Because of a United States Supreme Court ruling in June that narrowed the scope of the statute known as theft of “honest services,” one federal prosecutor has filed a motion to dismiss his office’s most prominent criminal case, a seven-year-old corporate-fraud prosecution against two former top executives of Westar Energy, which is the largest electric utility in Kansas.
“The law no longer supported our position,” the prosecutor, Barry Grissom, said. “We were duty bound not to go forward with the prosecution.”
The Westar case is among the first “honest services” prosecutions the government has dropped since the Supreme Court’s ruling.
On June 24, the Supreme Court ruled that a section of the 1988 federal fraud statute making it a crime to deprive others “of the intangible right of honest services” was unconstitutionally vague. The court said that prosecutors must prove that defendants had actually received bribes or kickbacks.
In the two months since the court’s ruling, defense lawyers across the country have filed, or have been preparing, a flurry of pleadings asking judges to vacate convictions or reopen cases against their clients.
For instance, David Zachary Scruggs has asked a federal judge in Mississippi to vacate his conviction relating to a judicial bribery scheme for which he served a 14-month prison term; his father is serving a seven-year sentence for his involvement in the scheme.
Officials in Washington played an active role in determining the fate of the Westar prosecution. The government had particular concerns about the nearly seven-year-old Westar indictments in light of the Supreme Court’s ruling.
In December 2003, the government indicted David C. Wittig and Douglas T. Lake on charges that they had looted Westar by, among other means, using corporate aircraft for personal use and failing to disclose it to securities regulators.
The dropping of the fraud prosecution does not mean that the legal problems of the two former Westar executives are over. Westar says it will pursue civil claims against the two men to recover the expenses it has incurred paying their legal bills.
- Source: New York Times “Fraud Ruling Is Reshaping Federal Cases” August 26, 2010