Wednesday, August 2, 2006
Discussed here and here are posts on the recent Fifth Circuit decision in the Enron Barge/Merrill Lynch case. The question to now ask is whether the government should move for an en banc hearing on this case.
For one the three judge panel is a split decision and thus the larger group may find merit to the one decision that upholds the convictions against three individuals on the conspiracy and wire fraud (Hon. Reavley). Clearly, there are other circuits that the government can turn to as support for there being wide latitude when interpreting section 1346.
But on the negative side, is it worth the risk to appeal here? The main decision finds that the statute itself is not vague, but that the government merely needed a better basis for the prosecution. The decision specifically states, "We hold only that the alleged conduct is not a federal crime under the honest-services theory of fraud specifically." The underlining by the court is particularly telling. The court is saying it is not good enough here, but the statute may be OK. Do prosecutors across the U.S. want to lose the statute completely by risking an appeal with this case. One judge dissenting here finds the statute vague. The Rybicki decision also had a split when it came to the vagueness issue. If the case goes up on appeal, the vagueness issue is likely to be re-examined. Is this the right case for a re-examination of 1346? As noted by Circuit Judge DeMoss, "[y]ears of review of the application of sec. 1346 to varied facts persuade me that the constitutionality of section 1346 may well be in serious doubt."