Alerts

Supreme Court Confines “Honest Services” Statute in Case Involving SRZ Client

June 24, 2010

Today, in a case involving Schulte Roth & Zabel (“SRZ”) client Mark Kipnis, the former general counsel of one-time media giant Hollinger International, Inc. (“Hollinger”), the U.S. Supreme Court found that honest services fraud “properly confined, criminalizes only schemes to defraud that involve bribes or kickbacks.”

Federal prosecutors have increasingly sought to apply honest services fraud, 18 U.S.C. § 1346, a form of mail and wire fraud, to the conduct of corporate directors and officers for depriving their employers of their “honest services.” Said SRZ Partner Michael E. Swartz, who has defended Mr. Kipnis for nearly seven years, “This decision stops dead in its tracks the disturbing trend of federal prosecutors to charge corporate actors with deprivations of honest services based on mere breaches of state law fiduciary duties of loyalty.”