It didn't take long for California defense lawyers to take the new honest services precedent out for a spin.
In remanding a conviction against former Enron CEO Jeffrey Skilling, the U.S. Supreme Court held last month that the "honest services" provision of the wire fraud statute is too vague. It should only apply to cases involving bribery or kickbacks, wrote Justice Ruth Bader Ginsburg (pdf).
That prompted lawyers for recently convicted biotech executive Scott Harkonen to cite the case to Northern District of California Judge Marilyn Hall Patel. A jury convicted Harkonen last year on a single wire fraud count, finding that a press release Harkonen wrote falsely described the effectiveness of a drug produced by his company, Intermune. Federal prosecutors say this was intended to illegally inflate the company's sales.
Harkonen has not yet been sentenced, as Patel is considering post-trial defense motions to throw out the verdict. His lawyer, Kasowitz Benson partner Marcus Topel, has long argued that Harkonen didn't misstate any clinical trial data in the press release, and that the government merely disagrees with his analysis of the information. That's not fraud, he argues.
"The government has never shown any 'uniform national standard' of 'sufficient definiteness and specificity' that provides fair notice that it is criminally false to conclude that clinical trial data 'demonstrate' a clinical benefit when the results are as reported here," Topel wrote in papers filed late Wednesday, quoting Ginsburg's newly crafted honest services standard.
"The lack of any precedent for a wire-fraud prosecution in these circumstances renders it even more 'amorphous' and non-'prototypical' than the one overturned in Skilling," he wrote.
In another case, George Garrido was convicted on five counts of fraud for receiving a lucrative consulting gig as part of a scheme to steer municipal trash contracts. Garrido's friend, South Gate treasurer Albert Robles, was also convicted.
But the government didn't allege a bribery theory for Garrido, according to his lawyer, San Francisco defense lawyer Dennis Riordan of Riordan & Horgan.
"On appeal, the government has defended Garrido's convictions on the ground that those convictions rest solely on allegations that Garrido participated in a scheme to deprive South Gate of Robles' honest services by failing to disclose conflicts of interest suffered by Robles," Riordan wrote in a letter to the 9th U.S. Circuit Court of Appeals.
The government has not yet responded in either the Harkonen or Garrido cases.