Oct. 16 (Bloomberg) -- College coaches who cheat at recruiting, congressmen on the take, executives who lie to stockholders. There is a crime for that, for all of that.

It’s a 21-year-old statute that calls it fraud to “deprive another of the intangible right of honest services.”

But, just when we really could use such a flexible law to go after more white-collar scoundrels, the U.S. Supreme Court is considering striking it down.

The review means that even as the economy still reels from the after-effects of white-collar deceit, the government’s ability to pursue miscreants might be headed for a cutback.

Prosecutors find the law a handy tool because it can cover so many kinds of deceit. It is especially useful for public corruption cases when they can show that elected officials were depriving voters of their honest services by taking bribes or expensive trips paid for by those seeking a favor.

They used it against former Representative William Jefferson of Louisiana, convicted last month on corruption charges. Disgraced lobbyist Jack Abramoff, admitted to it when he pleaded guilty in 2006, and so did former Representatives Randy “Duke” Cunningham of California and Bob Ney of Ohio.

That isn’t its only use. Back in the 1990s, prosecutors won fraud convictions against three assistant basketball coaches at Baylor University who fudged records when rounding up college credits for a recruit.

Adjusters Kickbacks

In a case in New York, two personal injury lawyers were indicted in 1998 for paying insurance claims adjusters a cut of their clients’ settlements. They were convicted of defrauding the insurers out of the honest services of the adjusters, who kept the payments secret because they violated company policy.

See how useful the law is? And how malleable?

Now, in separate appeals, white-collar convicts Jeffrey Skilling, Conrad Black and former Alaska lawmaker Bruce Weyhrauch have persuaded the justices to take a long, hard look at the statute. Its wide and unpredictable reach, which prosecutors cherish, is precisely the problem, they say.

Almost any kind of dishonesty could land you in a federal penitentiary, they argue. Supreme Court Justice Antonin Scalia has railed against the law for that reason.

Appeals courts around the country have tried to nail down the laws’ limits and have come up with conflicting answers.

Making It Up

“How can the public be expected to know what the statute means when the judges and prosecutors themselves do not know, or must make it up as they go along?,” appeals court Judge Dennis Jacobs in 2003, dissenting in the case of the personal injury lawyers.

Others whose convictions include at least one count of honest services fraud are watching closely. Former Alabama Governor Don Siegelman and former HealthSouth Chief Executive Officer Richard Scrushy are among them.

In Skilling’s case, his lawyers say an executive can’t be said to have deprived anyone of honest services if he didn’t personally benefit from his actions. What if he only meant to help the company?

Has a state legislator committed honest-services fraud if he broke no state law? Weyhrauch, the Alaska lawmaker, thinks not.

As for Black, the former chairman of Hollinger Inc. contends prosecutors offered no evidence that he thought his actions would hurt his company. Is that necessary to convict under the statute? An appeals court said no.

If the justices agree the law is too broad to be constitutional, they could either set it aside or decide where to draw its boundaries.

Skilling’s Dilemma

It is doubtful any ruling on this issue would help Skilling much, as only one of his 19 counts even mention honest services. His better chance to get out of jail would be by convincing the court that the Houston jury pool was too infected by bias to afford him a fair trial in the wake of Enron’s collapse.

The debate over honest services has almost come full circle. Congress passed the provision as part of a crackdown on public corruption in 1988, specifically to undo a Supreme Court decision that struck down another law.

The Supreme Court had ruled the previous year that the law against mail fraud “protects property rights, but does not refer to the intangible right of the citizenry to good government.”

The 1988 statute “will restore the power of prosecutors to attack white-collar crime involving bribes and kickbacks,” then-Senator Joseph Biden said when introducing the measure.

The question now is whether the Supreme Court will keep that power intact.

(Ann Woolner is a Bloomberg News columnist. The opinions expressed are her own.)

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To contact the writer of this column: Ann Woolner in Atlanta at awoolner@bloomberg.net.

Last Updated: October 15, 2009 21:00 EDT