Monday, October 23, 2006

NY times: Ex-Enron Chief Is Sentenced to 24 Years

Published: October 23, 2006 HOUSTON, Oct. 24

Jeffrey K. Skilling, the former chief executive of Enron, was sentenced this afternoon to more than 24 years in prison for his role in the energy giant’s collapse.

Michael Stravato for NYT

Jeffrey K. Skilling, center, and his lawyer left federal court in Houston after Mr. Skilling was sentenced.

David J. Phillip/Associated Press

Jeffrey Skilling, center right, arrived at the federal courthouse today where he was sentenced to 24 years, four months in the harshest sentence yet in the case that came to symbolize corporate fraud in America.

He will be forced to forfeit $45 million, which prosecutors said would effectively wipe out his fortune.

At a hearing here in United States District Court, Judge Simeon T. Lake III said of Mr. Skilling, “His crimes have imposed on hundreds, if not thousands of victims a life sentence of poverty.”

Throughout the hearing, Mr. Skilling reacted impassively. His wife sobbed uncontrollably and hid her face in her hands.

He will be allowed to remain in his home under electronic surveillance until a federal prison is selected to house him, but the judge denied his request to be released on bond pending appeal.

Mr. Skilling was convicted in May of heading a conspiracy to defraud Enron’s investors.

While the sentence of 24 years and four months was the lengthiest yet in the Enron case, it did not surpass the 25-year term that WorldCom’s former chief executive, Bernard J. Ebbers, received for being head of an $11 billion fraud that led to the bankruptcy of the long-distance company.

Mr. Ebbers’s sentence was less than the 30 years to life imprisonment called for in the sentencing guidelines.

Mr. Skilling’s prospects reflect how tough the federal guidelines have become for those convicted of white-collar crimes in the wake of the huge-scale frauds at companies including Enron, WorldCom and Adelphia.

Some legal experts have begun to question the sentences that federal judges are handing down in these cases.

“You can certainly make the case that things have gotten too harsh,” said Samuel W. Buell, a former Enron prosecutor who now teaches law at Washington University in St. Louis. “But the reason why things have gotten so harsh is we went through these years when sentences were too light. Maybe we need a correction in the other direction to get a happy medium.”

Enron was the company that first imploded in the years of corporate scandal, leading to a wave of investigations and calls for tougher regulations and accountability. The sentence to be handed down Monday is likely to underscore that message of deterrence, legal specialists said.

“Enron still stands alone as a brand name of corporate fraud,” said Robert Mintz, a white-collar criminal defense lawyer and former federal prosecutor, “and this judge is not going to hesitate to hand down a lengthy sentence in this case.”

Mr. Skilling faced the judge alone, without Kenneth L. Lay, Enron’s founder and Mr. Skilling’s co-defendant in his criminal trial, who died of heart problems in July. His guilty verdict was vacated last week.

Missing, too, was Andrew S. Fastow, the former chief financial officer who pleaded guilty to fraud and stealing from the company. He was sentenced last month to six years in prison, less than the 10 years he could have received as part of his deal to cooperate with prosecutors.

All of that leaves Mr. Skilling as the only top executive through whom Enron’s ultimate punishment will be remembered, Mr. Mintz said.

For Mr. Skilling, this summer was about coping. After the verdict in May, he spent significant time with his three children, traveling to California with his daughter and to a dude ranch with his youngest son, said friends, family members and his lead lawyer, Daniel Petrocelli. Neighbors in Houston said they saw little of Mr. Skilling, although he occasionally rented videos from a store near his home.

Virtually all Mr. Skilling’s net worth, around $55 million, is frozen by the government. He owes O’Melveny & Myers, the law firm that handled his defense, more than $30 million, Mr. Petrocelli said.

Mr. Skilling seemed to stay out of Houston as much as possible, spending time at a condominium he owns in Dallas, where his daughter had been a student at Southern Methodist University. But Mr. Skilling’s coping also meant drinking again, despite a court order that forbade him to do so after a much-publicized night of drunkenness in April 2004 at a Manhattan cigar bar, when Mr. Skilling scuffled with some other patrons.

His summer travel ended after he was arrested in Dallas last month for public intoxication. He pleaded no contest and paid a fine. That night, he was out with his brother Mark and his daughter at a Mexican restaurant and had some margaritas, which did not mix well with his prescription medicine, Mr. Petrocelli said. He was walking home to the condo when he was stopped by a police officer; he spent a night in jail.

Mr. Skilling has said he took solace in the bottle to cope with depression. Not being allowed to have an occasional drink “is unreasonable, considering the stresses he is under,” Mr. Petrocelli said.

But the incident is one more reason, outside lawyers say, why Judge Lake rejected Mr. Skilling’s request to remain free pending appeal.

Supporters of Mr. Skilling have recently reached out, trying to help him. In August, two friends of the Skilling and Lay families, Beth Stier and Terrie James, sent a letter to supporters, urging them to pass along “a pleasant memory, a thoughtful wish or a fond goodbye” to Mr. Skilling and Mr. Lay’s family, according to a person who reviewed a copy of the letter. The thoughts were to be collected into books to be given to Mr. Lay’s family and to Mr. Skilling before his sentencing. Ms. Stier declined to say if the Lay and Skilling families had received the books.

Since the Dallas incident, Mr. Skilling has primarily spent time with his family in Houston. On Thursday afternoon, Mr. Skilling — wearing jeans, hiking boots and a small waist bag — walked with his brother near Mr. Skilling’s home in the upscale River Oaks neighborhood of Houston.

“Jeff is sorry for the consequences of Enron’s failure, but he doesn’t believe he committed any crimes,” Mr. Petrocelli said. “And our view is that many of the people that pleaded guilty to crimes at Enron were not guilty.”

For some former Enron employees, that message will not make them feel any sympathy for Mr. Skilling.

“All we ever wanted was for him to take responsibility, and he never did that,” said Deborah DeFforge, who worked at Enron for five years and said she lost about $100,000 in retirement savings. “Until he does that, I could never show him any mercy.”


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