Wednesday, May 25, 2005

Scrushy Trial Confusion - Not Surprising

Not surprisingly, the jurors deliberating in the trial of former CEO of HealthSouth, Richard Scrushy, are having difficulty reaching a verdict.  According to the Birmingham News here and Wall Street Journal here, the jurors in the case have sent a second note to the judge saying they are having difficulty reaching a consensus and asking for an explanation, this time in "layman's terms." We reported on the jury instructions here, and one can find the 78 pages of jury instructions here.  The problems may be focused on the conspiracy charge.

The trial was several months and there are a good number of counts including conspiracy, securities fraud, wire fraud, mail fraud, false statements, and yes- a first time ever SOX charge.

Everytime I teach the course in white collar crime, I see law students struggle to grasp the meaning of terms within some of these statutes.  For example, the instruction on wire fraud includes the following statement:

"To 'deprive another of the intangible right of honest services' means to violate a duty, or to cause another to violate his duty, to render honest services to HealthSouth, including its shareholders and its Board of Directors. The Government must prove beyond a reasonable doubt that Mr. Scrushy intended to breach a fiduciary duty, and that he foresaw that HealthSouth, including its shareholders and its Board of Directors, might suffer economic harm or risk economic harm as a result of that breach."

The instructions provide the following definition of "honest services":

"'Honest services' means the duty of an officer or employee of a company to act honestly and faithfully in dealings with the company, and to transact business in the best interest of the company, including a duty to disclose any material information on which the company, its shareholders, and Board members are entitled to rely in making business decisions."

One has to admit that these are not particularly easy concepts to understand. So it is not surprising that the jury in this case is asking for an explanation in "layman's terms."  The problem is, I'm not sure that any judge could do better in defining these statutes then what has already been stated.  Perhaps the problem is vagueness, ambiguity, and basic understandability - problems that Congress needs to correct.

And yes, I can't help but wonder  if there might be less criminal charges filed if the law were clearer.  More would understand exactly how to conform their conduct to the law and be on notice of what was legal and what was not.  Perhaps compliance could be enhanced with simplicity. 

(esp)

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