- June 24, 2010
- Posted by: Ted Bullen
- Category: Government, Legal, News
Today, the U.S. Supreme Court substantially limited the “Honest Services” law which purports to make it a federal crime to employ a scheme or artifice to defraud another of the intangible right of “honest services.”
This 1988 law has been applied by federal prosecutors in public fraud cases to strengthen the case against corrupt business leaders and government officials. The Supreme Court’s opinion, written by Justice Ruth Bader Ginsberg, stated that if misconduct entailed no bribe or kickback, then the defendant did not conspire to commit honest-services fraud under our confined construction of the law.
A number of white collar criminals will be beneficiaries of this ruling. The ruling, in backhanded way, sanctions abject greed in the marketplace. It makes ethics completely situational, without moral absolutes.
Shareholders must be the arbiters of corporate behavior. While profit taking may be a short-term benefit, there is a huge downside risk. Just ask Enron shareholders. It’s time to act or risk being acted upon.