[JURIST] The US Supreme Court [official website, JURIST news archive] on Monday granted certiorari in Black v. United States [docket], appealing the fraud conviction of Canadian-born former media mogul Conrad Black [CBC profile; JURIST news archive]. The Court will determine whether the "honest services" clause of 18 USC § 1346 [text] applies in cases where there is no finding that the defendant or defendants "reasonably contemplated identifiable economic harm" in cases of mail and wire fraud under § 1341 [text]. In 2007, Black was convicted of mail fraud and obstruction of justice and sentenced [JURIST reports] to 78 months in prison. The US Court of Appeals for the Seventh Circuit [official website] initially rejected Black's appeal, holding that § 1346 may be applied in a private setting [opinion, PDF; JURIST report] regardless of whether the defendant's conduct risked any foreseeable economic harm to the victim. Black's lawyers argued [cert. petition, PDF] that:
the government could not remotely meet its burden of proving harmlessness beyond a reasonable doubt given the virtual certainty that the jury relied on a seriously flawed instruction that would have been instructional error in at least five other circuits.Black's lawyers also argued that the circuit courts are deeply divided on whether or not the honest services clause applies to purely private activity since such fraud has usually dealt with public corruption by government actors. The outcome of the Court's review may affect other high-profile corporate fraud cases [Toronto Star report] such as that involving Enron ex-CEO Jeffrey Skilling [JURIST news archive].
Consistent with the language of the information and the case law in several circuits, petitioners sought an instruction that would have precluded the jury from convicting of "honest services" fraud unless it found that the alleged scheme contemplated gain to petitioners at the expense of the purported victim.
Black, former chairman of Hollinger International [NNDB profile], originally faced 17 counts of fraud, obstruction of justice, racketeering and tax evasion. He was accused [indictment, PDF] by the US government of diverting more than $80 million from the company and its shareholders [JURIST report] during Hollinger's $2.1 billion sale of several hundred Canadian newspapers. Last year, Hollinger International agreed to pay $21.3 million [JURIST report] to settle claims by the US Securities and Exchange Commission (SEC) [official website] that it violated securities law by failing to disclose to investors payments and other transactions that benefited the executives to the detriment of the company.