Skilling Awaits Sentence in Enron Case
Five years after the collapse of Enron, the energy trading giant, former employees are hoping to receive some measure of justice on Monday, when former top executive Jeffrey Skilling is sentenced in Houston.
In May of this year, Skilling, the former Enron CEO, and company founder Ken Lay were tried together and convicted of conspiracy to commit securities and wire fraud.
In July, Lay died suddenly from heart disease while vacationing in Aspen, Colo. This month a federal judge in Houston wiped away Lay's conviction, ruling that a defendant's death before the appeals process has been exhausted is grounds to vacate a jury's decision.
In September, Andrew Fastow, Enron's former chief financial officer, received just six years in a federal prison after agreeing to plead guilty to two conspiracy charges and offering to testify against Skilling and Lay.
That leaves Skilling as the sole top executive to now face not only the government's wrath, but that of former employees who saw their pensions collapse along with the company.
Robert Mintz, a former federal prosecutor, says Lay's death and Fastow's lighter-than-expected sentence are not good news for Skilling.
"In theory, the death of Ken Lay should have no impact on the sentence that Mr. Skilling receives," Mintz said. "But it's hard to ignore the reality that Jeff Skilling is now standing alone as the figurehead who orchestrated Enron's demise. There will certainly be pressure to make an example of Jeff Skilling and send a message with his sentence."
Under guidelines drawn up by the U.S. Sentencing Commission, the length of a sentence in a white-collar case is driven by the amount of investor loss.
After the Skilling and Lay verdicts were announced in May, U.S. District Judge Sim Lake told the defense teams to consult financial experts to determine how much investor loss could be linked to the two men's crimes.
Prosecutors and the Skilling defense team have reportedly agreed upon a figure of $80 million. That would translate into a 20-year sentence for Skilling under the federal guidelines.
Skilling's lawyers and the government wanted "to avoid a protracted hearing on the subject," said Daniel Petrocelli, Skilling's lead attorney. He adds: "Any sentence is a meaningful sentence. I don't want to talk about or speculate on the length of it."
Skilling also faces fines of up to $18 million, but the amount he could ultimately be ordered to pay could be higher still.
Days before Lay's death, prosecutors filed court papers looking for $44 million from his estate and $80 million from Skilling to create a special fund for Enron employees and investors. Prosecutors now want to hold Skilling responsible for the entire amount.
Skilling's defense team also wants its share of his assets, $60 million of which have been frozen by the federal government.
Petrocelli says his firm is owed $30 million in legal fees. Judge Lake must also decide who gets paid first: Skilling's attorneys or the Justice Department.
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