Wednesday, December 13, 2006

 

Ex-Enron CEO Skilling Reports to Prison



Wednesday December 13, 2:20 pm ET

HOUSTON — A federal court ordered former Enron Chief Executive Officer Jeffrey Skilling to immediately go to prison, denying his request to remain free during his appeal.

Judge Patrick Higginbotham of the 5th U.S. Circuit Court of Appeals wrote in his two-page order Tuesday that "Skilling raises no substantial question that is likely to result in the reversal of his convictions on all of the charged counts."

As a result, Higginbotham denied Skilling's request for bail pending his appeal and vacated an earlier order staying his prison report date.

Skilling is now required to report to a low-security federal prison in Waseca, Minnesota, to begin serving his 24-year sentence on 19 counts of conspiracy, fraud and insider trading.

Although Higginbotham's order notes "serious frailties" in Skilling's convictions, it says those problems fail to raise a "substantial question" likely to result in the overturning of all Skilling's convictions, as would be required to grant bail during appeal.

Although Higginbotham's order notes "serious frailties" in Skilling's convictions, it says those problems fail to raise a "substantial question" likely to result in the overturning of all Skilling's convictions, as would be required to grant bail during appeal.

Skilling, was originally scheduled to report to prison at 2 p.m. Tuesday, but the 5th Circuit ruled Monday that he could remain free until it decided on his bail request. Tuesday's decision meant Skilling was again required to report. It was not immediately clear when Skilling was to surrender to begin his sentence.

"We're still looking into why he didn't show up," said Marianne Matus, spokeswoman for the U.S. Marshal Service in Houston. "Logistically, he could turn himself in almost anywhere, since he missed his date to turn himself in."

Skilling, 53, is expected to argue on appeal that his trial should have been moved from Houston to avoid negative publicity and that many witnesses who could have supported his defense were intimidated by the government's refusal to grant them immunity and feared risking prosecution if they testified.

Skilling was convicted in May after a lengthy trial that ended with U.S. District Judge Sim Lake sentencing him to 24 years and four months in prison, the harshest punishment given to any of the disgraced former Enron executives.

Enron founder Kenneth Lay also was convicted of conspiracy, fraud and insider trading charges, but those convictions were vacated after Lay died of heart disease on July 5.

As a result, Skilling is the highest-ranking Enron executive to be punished for the accounting tricks and shady business deals that led to the loss of thousands of jobs, more than $60 billion (euro45.3 billion) in stock and more than $2 billion (euro1.51 billion) in employee pension plans after the company imploded in 2001.

Although federal sentencing guidelines do not allow parole, Skilling will be eligible to trim 54 days a year off his sentence for good behavior while in prison. He also will undergo alcohol and mental-health counseling. A successful completion of that treatment would take a year off his sentence.


______________FOLLOW UP_______________

Former Enron CEO Skilling Reports to Prison to Serve Longest Term in Case WASECA, Minn. (AP) -- Former Enron CEO Jeffrey Skilling reported to federal prison on Wednesday to begin serving his 24-year sentence for fraud and other crimes in the collapse of the former energy giant.

Skilling arrived at the low-security prison a little after 1 p.m. EST in a small silver SUV. The vehicle pulled up to the front gate, and at least four people got out. Skilling hugged a woman who arrived with him, and the entourage walked into the prison. A few minutes later, everyone except Skilling emerged and the SUV drove away.

The indentity of the woman Skilling hugged was not known.

Even if Skilling earns a few years off for good behavior and for participation in an alcohol treatment program at the Federal Correctional Institution in Waseca, Skilling, 53, will be an old man at the end of his 24-year, four-month prison term. That's more than twice as long as the sentence of any other Enron executive.

Skilling and Enron founder Ken Lay were convicted last May on numerous counts of fraud, conspiracy, insider trading and other charges in the collapse of the Houston-based firm, which led to the loss of thousands of jobs, more than $60 billion in company stock and more than $2 billion in employee pension plans.

A federal judge on Tuesday denied Skilling's request to remain free on bond pending his appeal.

Lay died in July of a heart attack before he could be sentenced, prompting a judge to vacate his conviction.

Lay "probably would have faced a similar fate if he'd been able to stand up for sentencing on the same day as Skilling," said Leslie Caldwell, a former federal prosecutor and one-time chief of the Justice Department's Enron Task Force.

Andrew Fastow, the former chief financial officer pegged as the mastermind behind the complicated financial schemes that ultimately doomed Enron, got six years in prison after pleading guilty. Several other executives are serving prison terms of between 18 months and five years.

An important distinction, said former Task Force attorney Sam Buell, is that those below Skilling all pleaded guilty to some offenses, expressed remorse and in some cases went on to cooperate with the prosecution. In several instances, prosecutors recommended leniency in those sentences.

"It's harder for a judge to do that, to exercise that leniency when the judge is dealing with the person at the top who didn't reach any kind of agreement in the case," Buell said.

A better comparison for Skilling's sentence, Caldwell said, are those received by other disgraced CEOs like Bernard Ebbers of Worldcom, serving a 25-year sentence; and Dennis Kozlowski of Tyco International Ltd., who got eight and one-third to 25 years in prison in another fraud case.

"I've always thought since the beginning of the Enron case that none of this ever would have happened without Jeff Skilling," Caldwell said. "I don't think it's inappropriate that he is getting the harshest sentence of anyone."

Skilling's attorney, Daniel Petrocelli, did not return several phone messages from The Associated Press.






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