Jeff Skilling's Motion To The Fifth Circuit Court of Appeals For Release Pending Retrial

Case: 06-20885 Document: 00511188299 Page: 1 Date Filed: 07/28/2010
06-20885
UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT
UNITED STATES OF AMERICA,

Plaintiff-Appellee,
v.
JEFFREY K. SKILLING,
Defendant-Appellant.
JEFFREY K. SKILLING’S MOTION FOR RELEASE

ON BAIL PENDING FURTHER PROCEEDINGS ON
REMAND FROM THE U.S. SUPREME COURT
On Appeal From The United States District Court

For The Southern District Of Texas, Houston Division
Crim. No. H-04-25 (Lake, J.)
O’MELVENY & MYERS LLP O’MELVENY & MYERS LLP

WALTER DELLINGER DANIEL M. PETROCELLI
JONATHAN D. HACKER M. RANDALL OPPENHEIMER
SRI SRINIVASAN MATTHEW T. KLINE
1625 Eye Street, N.W. DAVID J. MARROSO
Washington, D.C. 20006 1999 Avenue of the Stars, 7th Floor
Los Angeles, California 90067
RONALD G. WOODS Telephone: (310) 553-6700
5300 Memorial, Suite 1000 Facsimile: (310) 246-6779
Houston, Texas 77007
ATTORNEYS FOR DEFENDANT-APPELLANT JEFFREY K. SKILLING

INTRODUCTION
Jeffrey Skilling should immediately be released on bail pending this Court’s
ruling on his case on remand from the U.S. Supreme Court. The question
presented on remand is whether the government can carry its heavy burden of
excluding beyond a reasonable doubt any possibility that, for the 19 counts of
conviction, the jury relied on the legally flawed “honest services” theory the
government urged the jury to accept. To state the question is to answer it. Given
the standards governing applications for bail pending appeal, and given the courts’
previous rulings on this issue, the government has no meritorious basis for
opposing bail pending resolution of this remand proceeding.
 The district court six consecutive times found that Skilling is not a flight
risk and is not a danger to the community—and thus he satisfies the first
of two criteria for seeking bail. The district court made these rulings
before and after Skilling was tried, convicted, and sentenced to 24 years
in prison, and the district court’s assessments have always been borne out
by Skilling’s conduct. Despite his virtual life sentence, Skilling reported
to federal prison in December 2006 without incident and has served the
44 months since with dignity and a good prison record.
 It is equally clear that Skilling satisfies the second part of the bail test—
whether he has presented a “substantial question” on appeal that impacts

his incarceration. U.S. v. Valera-Elizondo, 761 F.2d 1020, 1024 (5th Cir.
1985). After the Supreme Court’s unanimous invalidation of the honest-
services fraud theory the government vigorously pursued against Skilling
at trial, the burden is now on the government to prove beyond a
reasonable doubt that the jury did not rely on the theory to convict him.
There is at least a “substantial question” whether the government will be
able to carry that burden, given the record it made at trial when it
believed—erroneously—that mere “fiduciary breaches” and poor
business decisions sufficed to establish honest-services fraud. Judge
Higginbotham ruled in December 2006, on Skilling’s previous bail
application, that if the “honest services” theory underlying Skilling’s
conviction were held to be invalid, then 14 of Skilling’s 19 counts of
conviction would suffer from “serious frailties.” Order, U.S. v. Skilling,
No. 06-20885 (5th Cir. Dec. 12, 2006). The Supreme Court’s unanimous
ruling that the honest-services theory pursued against Skilling was
invalid cements this conclusion—and on these 14 counts, there can be no
serious doubt that Skilling has raised a “substantial question” for
purposes of showing an entitlement to bail.
 As to the five remaining counts of false statements to auditors (“FSA”)
on which Skilling was convicted—and on which Judge Higginbotham
2
concluded that Skilling had not presented a substantial question—two
important facts have changed. First, Skilling has had the opportunity to
make a full and complete record on appeal and in his concurrently filed
remand briefing why these five counts were equally tainted by the
“honest services” error and must be reversed. The government cannot
meet its burden to overcome this showing. Second, even assuming these
five counts of conviction are not infirm, Skilling has served the requisite
sentence on these counts and thus is entitled to immediate release.
Last week, the Seventh Circuit granted Conrad Black the same relief in
similar circumstances. Black’s case was a companion “honest services” case to
Skilling’s case before the Supreme Court. When the Supreme Court found that
Skilling and Black’s convictions were flawed and remanded Black’s case to the
Seventh Circuit to address the government’s harmless-error arguments, Black
moved to be released from prison on bail pending further appellate proceedings.
See Exs. A, B. The court of appeals granted this request despite arguments from
the government—like those here—that none of Black’s counts of conviction was
tainted by the flawed honest-services charge; that Black’s separate conviction for
obstruction of justice had nothing to do with his honest-services conviction; and
that Black had not served his sentence on the obstruction count. See Ex. C. The
3
Seventh Circuit panel, led by Judge Posner, rejected these arguments, see Ex. D,
and this Court should do the same here.
ARGUMENT
SKILLING MEETS ALL THE REQUIREMENTS FOR BEING

GRANTED BAIL AND SHOULD BE RELEASED IMMEDIATELY
Congress has directed that “a person who has been found guilty of an
offense and sentenced to a term of imprisonment, and who has filed an appeal,”
should be released on bail if a judicial officer finds:
 (A) “that the person is not likely to flee or pose a danger to the safety of any
other person or the community if released”; and
 (B) “that the appeal is not for the purpose of delay and raises a substantial
question of law or fact likely to result in (i) reversal, (ii) an order for a new
trial, (iii) a sentence that does not include a term of imprisonment, or (iv) a
reduced sentence to a term of imprisonment less than the total of the time
already served plus the expected duration of the appeal process.”
18 U.S.C. § 3143(b)(1); see also U.S. v. Clark, 917 F.2d 177, 179 (5th Cir. 1990).
Section 3143(b) applies to Skilling’s request for release on remand from the
Supreme Court pending further proceedings, e.g., U.S. v. Beckley, 136 F. App’x
555, 556-57 (4th Cir. 2005); Ex. D, and Skilling easily satisfies the two-part test
set for the above.
A. Skilling Does Not Pose A Flight Risk Or A Danger To Others

The district court had six occasions to determine whether Skilling was a
flight risk: when he was indicted in 2004; in three instances before trial (in March
4
and April 2004 and May 2005); when he was convicted in May 2006; and when it
sentenced Skilling in October 2006 to over 24 years in prison. R:297, 326-28, 743,
6361, 37222, 42182-83. In each instance, the district court found that Skilling was
neither likely to flee nor a danger to others. See id. The district court made these
findings even though the government argued that once he was convicted and
sentenced, Skilling posed a more significant flight risk. See U.S. Resp. to
Skilling’s Mot. for Bail Pending Appeal at 4-6 (Oct. 18, 2006) (sealed); see also
R:41339-49. As expected by the district court, Skilling never fled, and he timely
self-reported to prison at FCI Waseca in Minnesota on December 13, 2006,
without incident. He exhibited good behavior there and was transferred to FCI
Englewood in Colorado, where he similarly has been a model inmate.
The last time Skilling sought bail in this Court—before he filed his direct
appeal—the government conceded that it could not dispute the district court’s
ruling in October 2006 that Skilling was not a flight risk. See U.S. Resp. to
Appellant’s Mot. for Bail Pending Appeal at 4 (5th Cir. Nov. 27, 2006). The
government has now changed position, according to its counsel, even though it
made no contention before the Seventh Circuit in Black that the defendant there
posed a risk of flight. Cf. Ex. C.
The government has no reasonable basis to challenge this element. Skilling
is a non-violent offender, and these are his first alleged offenses. He has never
5
attempted to flee, never missed a court appearance, and timely reported to prison
when ordered. He has served his time without incident, with a record that makes
him eligible for early release. A decision to skip bail would be all the more
irrational now that Skilling has won a landmark victory in the Supreme Court,
completed close to four years of his sentence, and has every intention of continuing
to pursue his legal rights to clear his good name—as he has been doing for some
nine years (e.g., testifying before Congress and government agencies when asked,
testifying at his own trial, and continuing to work on his case).
If the government has any legitimate flight-risk concerns, those concerns
easily can be met by standard conditions of release, as the court of appeals asked
the district court to do in Black. See Ex. D. Continued incarceration is a grossly
disproportionate response to any putative flight risk—even assuming such a risk of
flight exists at all. See also Ex. E (Order, U.S. v. Wright, 09-3467 (3rd Cir. July
23, 2010) (granting bail order in honest-services case)).
B. The Impact Of The Supreme Court’s Decision On Skilling’s

Convictions Presents Substantial Questions That Will Compel
Complete Reversal Or, At Minimum, A Sentence Shorter Than
The Time Will Have Already Served
1. In its June 24 decision, the Supreme Court remanded Skilling’s case to
the Fifth Circuit so that it may decide how the legal infirmity in his Count 1
conspiracy conviction affects all of Skilling’s convictions. As detailed in his
contemporaneously filed merits brief, the government’s honest-services theory
6
infected his entire case—requiring a reversal and new trial on all counts, entitling
Skilling to immediate release on bail under 18 U.S.C. sections 3143(b)(1)(B)(i)
and/or (ii). Indeed, Skilling’s convictions are currently presumptively invalid, and
the government bears the burden of proving harmless error beyond a reasonable
doubt as to each count.
The burden of this bail submission, moreover, is not to establish that the
government will fail to prove harmlessness. Rather, the questions here are whether
Skilling’s application is “not for the purpose of delay” and whether his remand
arguments “raise[] a substantial question of law or fact likely” to impact his
incarceration. Clark, 917 F.2d at 179.
Skilling’s bail application is not for the purpose of delay, and the
government cannot seriously dispute that the Skilling’s merits submission raises no
“substantial questions” concerning the government’s harmless-error arguments.
Judge Higginbotham has already concluded that 14 of Skilling’s 19 counts of
conviction are likely rendered infirm by the tainted honest-services conspiracy
count, see Order, U.S. v. Skilling, No. 06-20885 (5th Cir. Dec. 12, 2006), and
Skilling’s remand papers elaborate the reasons why the government cannot show
harmless error as to these 14 counts, see Jeffrey K. Skilling’s Opening Br. On
Remand From The U.S. Supreme Ct. at 12-54 (July 28, 2010).
7
Skilling’s remand brief also shows why the remaining five counts cannot
stand in light of the Supreme Court’s decision. See id. at 54-58. Given the
emergency filing in late 2006 (as well as Skilling’s inability to gain access to key
closing argument slides, which the government used to illustrate the honest-
services theory, including with respect to these five FSA counts), Skilling’s
arguments as to these five counts were not fully addressed then. Now that the
arguments have been fully developed on these five counts, Skilling clearly has
raised a “substantial question” whether the government can show that the legally
erroneous honest-services theory did not infect the FSA counts. See id.
Skilling is thus entitled to bail under sections 3143(b)(1)(B)(i) or (ii)—his
“appeal is not for the purpose of delay and raises a substantial question of law or
fact likely to result in (i) reversal, (ii) an order for a new trial….”
2. Even if the Court determines in ruling on this motion that Skilling’s five
FSA counts might remain unaffected, Skilling has already served enough time in
prison as to be released on bail under 18 U.S.C. § 3143(b)(1)(B)(iii) or (iv)—his
“appeal is not for the purpose of delay and raises a substantial question of law or
fact likely to result in … (iii) a sentence that does not include a term of
imprisonment, or (iv) a reduced sentence to a term of imprisonment less than the
total of the time already served plus the expected duration of the appeal process.”
8
The district court sentenced Skilling to 52 months imprisonment on the five
FSA counts with the sentence to run concurrently with one another and
consecutively to the other counts of convictions. R:42204. Skilling reported to
prison on December 13, 2006, some 44 months ago. On September 22, 2010—just
five days after Skilling and the government agree he will file his reply brief on
remand in this case—Skilling will have served all the time he is required to serve
on these five counts. When the time Skilling will have served by that date is
combined with the amount of good-time credit he has accrued under the statute,
Skilling will have served all 52 months. See 18 U.S.C. § 3624(b)(1); Barber v.
Thomas, No. 09-5201, Slip Op. at 5 (S. Ct. June 7, 2010).1
Therefore, even if this Court were to conclude that the five FSA counts were
not likely to be reversed, Skilling would still be entitled to bail pending appeal at
this time. Judge Higginbotham denied bail in 2006 because “any resulting
sentence [on those five counts] will likely exceed the expected duration of his
appeal.” Order, U.S. v. Skilling, No. 06-20885 (5th Cir. Dec. 12, 2006). That is no
1
At the end of Skilling’s third year of incarceration (December 13, 2009), he
had served 1,095 days in prison and accumulated 162 days of good-time credit (54
days per year). At that point, “[b]ecause the difference between the time remaining
in his sentence and the amount of accumulated credit (i.e., [465 - 162]) is less than
a year ([303] days),” [2010] is the last year he will spend in prison.” Barber, Slip
Op. at 18. “Further, [2010] will be a partial year of [303] days (the other [62] days
of the year being offset by the remainder of the accumulated credit).” Under the
Barber ratio used to calculate good time in the final, partial year—1.148y =
[303]—Skilling will have to serve 264 days in 2010. See id. September 22, 2010
is the 264th day of 2010.
9
longer true. At present, Skilling’s extant and remaining sentence on the five FSA
counts is “less than the total of the time already served plus the expected duration
of the appeal process.” 18 U.S.C. § 3143(b)(1)(iv).
Conrad Black’s successful application for bail captured the reason why the
interests at stake unambiguously favor release pending resolution of the remand:
“Society’s interests in seeing Mr. Black complete his sentence will not be
frustrated in the least if, after being released on bail, he does not prevail on
remand. But the additional time he spends in prison between now and then can
never be returned to him.” Ex. A at 20. The same is true for Jeffrey Skilling.
There is every reason to release him, and no reason not to. We respectfully urge
that Skilling be released on bail pending resolution of the remand proceeding.2
2
Not only can Skilling establish that he will have served his sentence on the
five counts at issue before his appeal is decided (something Black could not do), he
has additional arguments for release. These additional arguments are not necessary
to grant him bail, but as was the case in Black, are other sufficient reasons to do so:
 Skilling has been a model prisoner, and because his sentence on these five
counts would run on September 22, 2010, he would have been entitled as far
back as September 2009, to be transferred from federal prison to a halfway
house to serve the remainder of his sentence. See 18 U.S.C. § 3624(c)(1).
Even without halfway-house placement, Skilling would have been allowed
to finish the remainder of his term in home confinement beginning in late
April 2010. See id. § 3624(c)(2).
 According to a specific ruling made by the district court, Skilling was
entitled to reduce his sentence by up to one year if he completed a drug-and-
alcohol counseling program. See R:42177; 28 CFR § 550.58.
 On Skilling’s appeal, this Court reversed the district court’s imposition of a
four-point “financial institution” enhancement. See U.S. v. Skilling, 554
10
CONCLUSION
For the foregoing reasons, this motion for bail should be granted. As in
Black, the case should be remanded to the district court for the limited purpose of
immediately determining the conditions of release. See Ex. D.
Dated: July 28, 2010
Respectfully submitted,
By: /s/ Daniel M. Petrocelli

Houston, Texas 77007 Attorneys for Defendant-Appellant
Jeffrey Skilling
F.3d 529, 595 (2009). Without considering any other facts, Skilling’s
adjusted offense level under the Guidelines would decrease from 40 to 36,
and the corresponding sentencing range would decrease by 35.6%. If the
Court were to apply a proportionate reduction to the 52-month sentence on
the FSA counts, Skilling’s sentence would be 33.8 months—10 months
fewer than the 43-plus months he has already served.
 The financial-institution-enhancement ground would be only one ground,
among many—including all new loss calculations under the Guidelines—for
Skilling to seek a lower sentence on the five FSA counts. Cf. Ex. B at 9.
11
CERTIFICATE OF CONFERENCE
Pursuant to Fifth Circuit Rule 27.4, counsel for Defendant-Appellant Jeffrey
Skilling has conferred with counsel for the United States regarding this motion.
The government opposes the relief Skilling seeks.
Dated: July 28, 2010
Respectfully submitted,
By: : /s/ Matthew T. Kline

Houston, Texas 77007 Attorneys for Defendant-Appellant
Jeffrey Skilling
06-20885
UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT
UNITED STATES OF AMERICA,

Plaintiff-Appellee,
v.
JEFFREY K. SKILLING,
Defendant-Appellant.
[PROPOSED] ORDER ON JEFFREY K. SKILLING’S MOTION FOR

RELEASE ON BAIL PENDING FURTHER PROCEEDINGS ON
REMAND FROM THE U.S. SUPREME COURT
On Appeal From The United States District Court

For The Southern District Of Texas, Houston Division
Crim. No. H-04-25 (Lake, J.)
Before ________________________:
Having considered the above-captioned motion, the Court hereby orders that
Jeffrey Skilling’s motion is GRANTED and he shall be released on bail pending
the disposition of his appeal in this Court. This matter shall be REMANDED to
the district court for the limited purpose of permitting the district court to
determine the conditions of release.
SO ORDERED.
CERTIFICATE OF SERVICE
This is to verify that true and correct copies of the following document
(Jeffrey K. Skilling’s Motion For Release On Bail Pending Further Proceedings On
Remand From The U.S. Supreme Court) has been filed electronically and served
by both Federal Express and electronic mail on this 28th day of July, 2010 on
counsel listed below.
/s/ Matthew T. Kline

Matthew T. Kline
J. Douglas Wilson
U.S. Attorney’s Office
450 Golden Gate Avenue, 11th Floor
San Francisco, CA 94102
Facsimile: (415) 435-7234
Counsel for Appellee

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Case: 06-20885 Document: 00511188299 Page: 1 Date Filed: 07/28/2010

UNITED STATES COURT OF APPEALS

UNITED STATES OF AMERICA,

JEFFREY K. SKILLING’S MOTION FOR RELEASE

On Appeal From The United States District Court

O’MELVENY & MYERS LLP O’MELVENY & MYERS LLP

ATTORNEYS FOR DEFENDANT-APPELLANT JEFFREY K. SKILLING

Jeffrey Skilling should immediately be released on bail pending this Court’s

opposing bail pending resolution of this remand proceeding.

by Skilling’s conduct. Despite his virtual life sentence, Skilling reported

44 months since with dignity and a good prison record.

whether he has presented a “substantial question” on appeal that impacts

1985). After the Supreme Court’s unanimous invalidation of the honest-

services fraud theory the government vigorously pursued against Skilling

at trial, the burden is now on the government to prove beyond a

There is at least a “substantial question” whether the government will be

believed—erroneously—that mere “fiduciary breaches” and poor

business decisions sufficed to establish honest-services fraud. Judge

Higginbotham ruled in December 2006, on Skilling’s previous bail

application, that if the “honest services” theory underlying Skilling’s

conviction were held to be invalid, then 14 of Skilling’s 19 counts of

conviction would suffer from “serious frailties.” Order, U.S. v. Skilling,

ruling that the honest-services theory pursued against Skilling was

invalid cements this conclusion—and on these 14 counts, there can be no

serious doubt that Skilling has raised a “substantial question” for

purposes of showing an entitlement to bail.

 As to the five remaining counts of false statements to auditors (“FSA”)

on which Skilling was convicted—and on which Judge Higginbotham

concluded that Skilling had not presented a substantial question—two

“honest services” error and must be reversed. The government cannot

sentence on these counts and thus is entitled to immediate release.

similar circumstances. Black’s case was a companion “honest services” case to

Seventh Circuit to address the government’s harmless-error arguments, Black

moved to be released from prison on bail pending further appellate proceedings.

the government—like those here—that none of Black’s counts of conviction was

obstruction of justice had nothing to do with his honest-services conviction; and

and this Court should do the same here.

SKILLING MEETS ALL THE REQUIREMENTS FOR BEING

should be released on bail if a judicial officer finds:

set for the above.

A. Skilling Does Not Pose A Flight Risk Or A Danger To Others

self-reported to prison at FCI Waseca in Minnesota on December 13, 2006,

Englewood in Colorado, where he similarly has been a model inmate.

posed a risk of flight. Cf. Ex. C.

The government has no reasonable basis to challenge this element. Skilling

testifying at his own trial, and continuing to work on his case).

If the government has any legitimate flight-risk concerns, those concerns

the district court to do in Black. See Ex. D. Continued incarceration is a grossly

disproportionate response to any putative flight risk—even assuming such a risk of

23, 2010) (granting bail order in honest-services case)).

B. The Impact Of The Supreme Court’s Decision On Skilling’s

conspiracy conviction affects all of Skilling’s convictions. As detailed in his

contemporaneously filed merits brief, the government’s honest-services theory

Skilling to immediate release on bail under 18 U.S.C. sections 3143(b)(1)(B)(i)

doubt as to each count.

arguments “raise[] a substantial question of law or fact likely” to impact his

incarceration. Clark, 917 F.2d at 179.

“substantial questions” concerning the government’s harmless-error arguments.

Judge Higginbotham has already concluded that 14 of Skilling’s 19 counts of

conviction are likely rendered infirm by the tainted honest-services conspiracy

harmless error as to these 14 counts, see Jeffrey K. Skilling’s Opening Br. On

Skilling is thus entitled to bail under sections 3143(b)(1)(B)(i) or (ii)—his

prison as to be released on bail under 18 U.S.C. § 3143(b)(1)(B)(iii) or (iv)—his