The federal honest services fraud statute proscribes the use of mail or wires to execute a scheme depriving another of the right of honest services. In the private sector, federal courts generally recognize honest services fraud where an employee or agent, using the mail or wires, breaches a fiduciary duty owed to an employer or principal through bribes, kickbacks, or self-dealing. In United States v. Brown, the Fifth Circuit Court of Appeals considered whether four executives at Merrill Lynch (Merrill) conspired to defraud the right of its executives’ honest services from Enron’s executives by facilitating the sale of Enron power barges to Merrill, conditioned upon a secret buy-back agreement which made Merrill’s purchase a loan. The appeals court held that the wrongful conduct of the Enron executives was not sufficiently divorced from Enron’s corporate goal of increasing profits to “constitute a criminal breach of duty” . . . .
