Enron's CEO gets 24-year sentence

Skilling is also ordered to pay $45 million to employees and investors for role in firm's collapse

October 24, 2006|By Martin Zimmerman and Lianne Hart | Martin Zimmerman and Lianne Hart,LOS ANGELES TIMES

HOUSTON -- Former Enron Chief Executive Jeffrey K. Skilling was sentenced to more than 24 years in federal prison yesterday for his role in the company's 2001 collapse. His sentence is one of the longest prison terms to arise from the recent era of corporate scandals.

Skilling, who was convicted in May on 19 counts of fraud, conspiracy, insider trading and lying to auditors, could have received 24 to 30 years in prison under federal sentencing guidelines.

"Mr. Skilling and his attorneys argue that the guideline range would be tantamount to life in prison," U.S. District Judge Simeon Lake said before pronouncing sentence. "But as the many victims of his crime have so poignantly explained, his crimes have imposed on them a life sentence of poverty."

In addition to handing down a prison term of 24 years and four months, Lake ordered Skilling to pay about $45 million in restitution to the thousands of investors and employees who lost money when Enron failed. The judge set investor losses from Skilling's actions at $80 million.

Lake imposed the sentence after a two-hour hearing that featured angry testimony from former Enron workers and a ringing expression of innocence from Skilling.

"In terms of remorse your honor, I can't imagine more remorse," Skilling told Lake. "That being said, your honor, I am innocent of these charges. I am innocent of every one of these charges."

Lay's co-defendant, former Enron Chairman Kenneth L. Lay, died of a heart attack July 5. Last month, Lake wiped away Lay's conviction on 10 counts of fraud, conspiracy and lying to banks.

Skilling's pivotal role in what has been called the biggest scandal in the history of American finance made leniency unlikely, experts said. That's especially true given the long sentences handed out to other corporate criminals of the era, such as former WorldCom Inc. CEO Bernard J. Ebbers, who was sent to prison for 25 years.

"This is a very tough time to be a white-collar defendant," said Douglas R. Young, an attorney with Farella Braun + Martel in San Francisco. "In the public's mind, there is something about wanting to punish people who have seemingly been at the top of the game."

Lake denied Skilling's request to be released on bond pending appeal, ordering him to home confinement and requiring him to wear an electronic monitor. Federal prison officials will recommend when and where Skilling should report to prison. Lake suggested the federal prison in Butner, N.C.

With no parole in the federal prison system and only limited time off allowed for good behavior, it's probable that Skilling, 52, will serve the bulk of his sentence, said Stanford law professor Robert Weisberg.

Although Ebbers received a longer sentence than Skilling's, other recent corporate criminals have gotten far less. Andrew S. Fastow, the former Enron chief financial officer who designed the off-the-books partnership that helped destroy the company while making him millions, was sentenced last month to six years in prison. Fastow testified against Skilling and Lay at their trial.

Enron filed for bankruptcy in December 2001, wiping out more than 4,000 jobs, $60 billion in stock market value and billions in retirement savings. Former Enron employees weren't sympathetic to Skilling yesterday.

"It was a good sentence, but if the judge had given him 199 years, I would have stood up and clapped," Diana Peters, 56, who worked for Enron for 11 years as a computer technician, said afterward. " ... When the jail door shuts on him, that will close the door on this for me."

During the hearing, Anne Beliveaux, 64, who worked at Enron for 18 years, said she lost more than half a million dollars in retirement money. "Never in my wildest dreams did I think I'd be facing what I'm facing now, and that is: no retirement," she said. "It was all in Enron stock."

As for Skilling's expressions of remorse, Prosecutor Sean Berkowitz said he had "no doubt Mr. Skilling is sorry about the consequences of what happened, but that's different than looking at his own responsibility for what he did."

Defense attorney Daniel Petrocelli asked the judge to consider Skilling's state of mind in determining his sentence.

"Mr. Skilling set out to harm nobody," said Petrocelli. "There was no intent. He wasn't motivated by greed. He didn't loot the company."

Skilling sat quietly in the packed courtroom during the hearing. As Lake prepared to pronounce his sentence, Skilling stood before the judge with his hands clasped in front of him. He remained expressionless as he heard the sentence, but his wife Rebecca sobbed, put her hands to her face and bent over as the woman sitting to her left rubbed her back.

"I'm obviously disappointed with the sentence," Skilling later told reporters outside the courthouse. "I don't blame the judge. I'll appeal it and I think we'll win."

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