The reason? The United States Supreme Court issued a ruling in June that narrowed the scope of the statute known as theft of “honest services,” leaving him with little choice but to drop the charges, Mr. Grissom said in a short statement.
“The law no longer supported our position,” he said. “We were duty bound not to go forward with the prosecution.”
The decision to dismiss the Westar case — among the first “honest services” prosecutions the government has dropped since the Supreme Court’s ruling — underscores the challenges the government now faces in such cases.
Over the last two decades, the Justice Department has aggressively used the honest services law to bring fraud charges against an array of defendants, like local politicians accused of graft and corporate executives charged with looting their companies.
On June 24, the Supreme Court ruled that a section of the 1988 federal fraud statute making it a crime to deprive others “of the intangible right of honest services” was unconstitutionally vague. The court, ruling on three cases — including those against Jeffrey K. Skilling, the former chief executive of Enron, and the newspaper mogul Conrad M. Black — narrowed the scope of the law.
It ruled that an honest services prosecution required more than an allegation of an undisclosed conflict of interest or self-dealing on the part of a business executive or politician. Instead, the court said that prosecutors must prove that defendants had received bribes or kickbacks.
“In its heyday, the honest services theory allowed prosecutors to pursue sleaziness of all sorts without identifying a victim who lost property or money,” said Daniel C. Richman, a professor at Columbia Law School. “Now the Supreme Court decision has thrown a large wrench into the system, and the Justice Department finds itself with the prospect of reversals and abandoned cases.”
In the two months since the court’s ruling, defense lawyers across the country have filed, or have been preparing, a flurry of pleadings asking judges to vacate convictions or reopen cases against their clients.
A Justice Department spokeswoman said the agency did not keep statistics on how many motions or appeals had sought relief in such cases since the ruling. But anecdotal evidence suggests that the agency is now faced with defending a raft of earlier charging decisions.
Some requests have succeeded. Last month, a federal appeals court in Chicago released Mr. Black on bail while he awaited a ruling on whether his conviction would be reversed. Also last month, a federal judge in New Jersey vacated the fraud conviction of Joseph A. Ferriero, former chairman of the Democratic Party in Bergen County, after his lawyers argued that his indictment was legally flawed.
But in other prosecutions, judges have rejected defense lawyers’ pleas to drop cases against their clients. This month, a federal judge in Washington refused to dismiss a case against Kevin A. Ring, a former lobbyist facing a second trial on corruption charges after his first ended in a hung jury last October. In July, a federal judge in Michigan allowed a bribery case against a school superintendent to go to trial, rejecting a request by his defense lawyers to dismiss the case.
Other cases hang in the balance. Lawyers for Mr. Skilling have asked a federal appeals court to release him from prison. Lawyers for Joseph L. Bruno, a Republican and former majority leader of the New York State Senate found guilty of fraud last year, are preparing an appeal of his verdict while the Justice Department decides how to proceed.
Last week, lawyers for David Zachary Scruggs asked a federal judge in Mississippi to vacate his conviction relating to a judicial bribery schemeinvolving him and his former law partner and father, the well-known trial lawyer Richard F. Scruggs. (The younger Mr. Scruggs served a 14-month prison term; his father is serving a seven-year sentence.)
A spokeswoman at the Justice Department declined to discuss the agency’s position on honest services prosecutions. But legal experts say the narrowed scope of the law will not prevent the government from prosecuting financial crimes. Federal prosecutors still have an array of tools to pursue corporate and political corruption, including wire fraud and mail fraud statutes as well as sections of the Sarbanes-Oxley Act of 2002.
“The honest services statute is just one arrow in the government’s quiver,” said David Z. Seide, a lawyer at Curtis, Mallet-Prevost, Colt & Mosle in Washington. “But we’re already seeing the Skilling decision have a real-world effect, and the Justice Department has been and will be more cautious in bringing these cases.”
Senior Justice Department officials in Washington played an active role in determining the fate of the Westar prosecution, according to two people with direct knowledge of the case who spoke on the condition of anonymity because they were not authorized to speak about it.
The government had particular concerns about the nearly seven-year-old Westar indictments in light of the Supreme Court’s ruling, these people said.
The case against two former Westar executives, David C. Wittig and Douglas T. Lake, was set to go to trial for a third time on Sept. 20. The two men were New York investment bankers who had moved to Kansas to take senior posts at Westar, based in Topeka.
In December 2003, the government indicted the two on charges that they had looted the company by, among other means, using corporate aircraft for personal use and failing to disclose it to securities regulators.
After a mistrial in 2004, a jury convicted Mr. Wittig and Mr. Lake in September 2005. A judge sentenced Mr. Wittig to 18 years in prison and Mr. Lake to 15 years. The two appealed, and a federal appeals court judge in Denver threw out their convictions in January 2007 on the grounds that prosecutors had failed to prove their case.
The dismissal allowed for a retrial on the narrow grounds of conspiracy and circumventing internal controls, and the federal prosecutors in Kansas decided to try them a third time.
Last month, a team of seven lawyers representing Mr. Wittig and Mr. Lake met with federal prosecutors in Washington. Lanny A. Breuer, head of the Justice Department’s criminal division, took part in the 90-minute meeting at which the effect of the Supreme Court’s ruling on the case was discussed at length, according to two people in attendance who spoke on the condition of anonymity because they were not authorized to discuss the meeting.
The legal travails of the two former Westar executives are not over, however. The company says it will pursue civil claims against the two men in an arbitration proceeding seeking to recover the expenses it has incurred paying their legal bills.