Houston Chronicle: Government seeks to restore a conviction

By KRISTEN HAYS

Copyright 2008 Houston ChronicleNEW ORLEANS — Lawyers for the former finance chief of Enron's failed broadband unit want an appeals court to back up a trial judge's decision to wipe his record clean.The outcome of a government appeal in Kevin Howard's case, argued Thursday before a three-judge panel of the 5th U.S. Circuit Court of Appeals, also could be significant for former Enron CEO Jeff Skilling. His appeal in part relies on a similar challenge.It boils down to strategies prosecutors used in Howard's 2006 trial — as well as Skilling's — that since have been successfully challenged on appeal in another Enron case.In Howard's 2006 trial, the government argued that he deprived Enron of his honest services when he spearheaded a deal to sell future revenue in a video-on-demand venture that later failed. Prosecutors used the honest services theory in asking jurors to convict Howard on one count of conspiracy and three of wire fraud.At the government's request, U.S. District Judge Vanessa Gilmore gave jurors an instruction that linked a fifth count, falsifying books and records, to the other four counts.In August 2006, a 5th Circuit panel overturned most convictions against several Merrill Lynch & Co. executives in a separate Enron-related case in which other prosecutors used the honest services theory. The panel ruled that the theory didn't apply because the defendants didn't take bribes, embezzle or otherwise steal money or property.Neither Howard nor Skilling was accused of taking money or property, and both seized on the ruling in their appeals.The ruling prompted prosecutors in Howard's case to concede that his conspiracy and fraud convictions should be thrown out. Gilmore complied, and tossed out the fifth count as well because of the instruction linking it to the tainted counts.Should have objected?Now the government is fighting to restore that fifth conviction.Assistant U.S. attorney Doug Wilson acknowledged in Thursday's arguments that prosecutors asked for the linking instruction. But he said Gilmore shouldn't have agreed to it, and when she did, the defense should have objected.He argued that the evidence supported the conviction, so jurors may have found Howard guilty without the instruction.

If it "had not been given, we wouldn't be here," Wilson said.A skeptical Patrick Higginbotham, one of the judges who heard Thursday's arguments, noted that the prosecution pushed for the instruction and got it, and nearly two years later blames the defense for failing to fight it."That's like saying, 'I hold the other side responsible for not having stopped me,' " Higginbotham said.Howard's appellate lawyer, Lawrence Robbins, said no one knows whether the instruction or the evidence prompted jurors to convict.He said the appeals panel should uphold Gilmore's decision to toss it."The government should not be relieved of a bed it made for itself," Robbins said.After the hearing, Sidney Powell, who represents one of the Merrill defendants now facing a possible retrial, called the government's position "the lamest argument I've ever heard."Higginbotham and the other judges who heard Howard's appeal — Jerry Smith and Eugene Davis — didn't say when they would rule.Howard, who attended the arguments with his wife and father, declined comment.In Skilling's case ...In Skilling's much wider, more complicated case, the honest services theory was used only with the conspiracy count. He was convicted of that as well as 12 counts of securities fraud, one count of insider trading and five counts of false statements to auditors.But the same instruction at issue in Howard's case was given in Skilling's case, linking the securities fraud and insider trading counts to the conspiracy count.Unlike Howard's lawyers, however, Skilling's challenged the linking instruction and lost."Our argument is vastly stronger than Howard's argument because we specifically objected to the instruction and he did not," Daniel Petrocelli, Skilling's lead lawyer, said Thursday.While the instruction wasn't given for five other counts of lying to auditors, Skilling's appeal argues that the flaws taint all of his convictions, so all should be overturned.The government counters that all of Skilling's convictions should stand because as a CEO, he should be held to a different standard than lower-level executives who carry out corporate goals he set.Arguments have not been scheduled in Skilling's appeal.

Howard's convictions came in a retrial. His first trial, alongside four other former broadband executives in 2005, ended with a handful of acquittals and jurors deadlocked on dozens of other counts.He and former Enron accountant Michael Krautz were retried in May 2006 in a courtroom next to Skilling's trial. Skilling was convicted six days before the jury in Howard's case convicted him.Krautz was acquitted.The three other broadband defendants — former unit CEO Joe Hirko, software executive Rex Shelby and strategist Scott Yeager — are appealing to have all or most remaining charges against them thrown out.A 5th Circuit panel heard arguments in their appeals in August and hasn't ruled yet.