High Court Limits Retrial of Ex-Enron Executive

     (CN) – The U.S. Supreme Court on Thursday threw a speed bump in the government’s plan to retry a former Enron Broadband Services executive on charges of insider trading. The justices ruled 6-3 that the apparent inconsistency between a hung jury on some charges and an acquittal on others does not necessarily pave the path for a retrial.

     However, the high court did not rule out the possibility of a second trial. It narrowly held that a hung jury cannot affect the finality of an acquittal under the Double Jeopardy Clause of the Fifth Amendment.
     In 1997, Enron bought a telecommunications company that it renamed Enron Broadband Services. F. Scott Yeager served as the company’s senior vice president of strategic development from October 1998 until he was fired a few months before Enron collapsed in December 2001.
     One of Yeager’s projects during his time at Enron included developing a fiber-optic telecommunications network known as the Enron Intelligent Network.
     Enron touted the network as a successful, operational undertaking. At the company’s annual equity analyst conference, Enron executives, including Yeager, allegedly made false and misleading statements about the network’s value and performance.
     The price of Enron stock shot up from $54 to $72, at which point Yeager sold more than 100,000 shares. Over the next several months, he unloaded another 600,000 shares, generating more than $54 million in profits – $19 million of which he kept for himself.
     He was indicted in 2004 on 126 counts of five federal offenses, including securities fraud, insider trading and money laundering.
     The government claimed that he and other Enron executives intentionally lied about the network’s prospects in order to inflate the value of Enron’s stock and line their pockets when they sold high.
     After a 13-week trial, the jury acquitted Yeager on the fraud charges but failed to reach a verdict on the insider trading charges.
     The government then refined its indictment against Yeager, honing in on his alleged knowledge of the fraudulent scheme.
     Yeager moved to dismiss all counts in the new indictment, claiming his acquittal on the fraud charges prevented him from being tried twice for the insider trading charges. He argued that his acquittal meant the jury had decided that he did not possess insider information.
     The district court denied the motion, and the 5th Circuit affirmed. The federal appeals court acknowledged that an acquittal would normally preclude a second trial, but it was thrown off by the mistrial on the insider trading counts. If the jury truly believed that Yeager lacked insider knowledge, the 5th Circuit reasoned, it would have acquitted him on those counts. But because it didn’t, there must be cause for a new trial.
     Justice Stevens rejected this approach.
     “To ascribe meaning to a hung count would presume an ability to identify which factor was at play in the jury room,” Stevens wrote. “But that is not reasoned analysis; it is guesswork.”
     He said courts “should scrutinize a jury’s decisions, not its failures to decide.”
     In doing so, courts must decide if the fraud acquittal necessarily determined that Yeager possessed insider information. If so, Yeager is protected from retrial. If not, the government can pursue the new indictment.
     In a dissenting opinion, Justice Scalia scoffed at the majority for extending double-jeopardy protection to issues resolved at earlier stage in the same trial, rather than an earlier proceeding.
     “As a conceptual matter,” Scalia wrote, “it makes no sense to say that events occurring within a single prosecution can cause an accused to be ‘twice put in jeopardy.'”
     He added: “Until today, this Court has consistently held that retrial after a jury has been unable to reach a verdict is part of the original prosecution, and that there can be no second jeopardy where there has been no second prosecution.”
     Justices Thomas and Alito joined the dissent.

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