Former Enron CEO Skilling sentenced to 24 years, 4 months

Standing before a federal judge and pleading for his life, Jeffrey Skilling looked contrite, hands folded below his waist, his voice at one point halting as he talked about Enron Corp., the failed company he headed and drove to the pinnacle of American business success.

“In terms of remorse, I can’t imagine more remorse,” he told U.S. District Judge Sim Lake.

But Skilling, the one-time visionary at the high-flying energy giant, stuck to his story.

He didn’t commit fraud and conspiracy, he said, didn’t use shady deals and accounting tricks that contributed to the implosion of mighty Enron, once the nation’s 7th-largest company, and wasn’t responsible for the loss of thousands of jobs, more than $60 billion in Enron stock and more than $2 billion in employee pension plans when Enron collapsed.

“I’m innocent of every one of these charges,” Skilling said. “We will continue to pursue my constitutional rights and it’s no dishonor to this court and anyone else in this court. But I feel very strongly about this, and I want my friends, my family to know that.”

Lake, who presided over the four-month trial of former Chief Executive Skilling and Enron founder Kenneth Lay earlier this year, wasn’t swayed.

He sentenced Skilling to 24 years and four months in a federal prison, the toughest sentence given to anyone caught up in the Enron scandal.

Even outside the courthouse, after being fitted with an ankle monitor he must wear until he goes to prison, Skilling was adamant.

“The word ‘Enron’ conjures up some really awful things,” he said. “I don’t fault the judge for what he did. I believe I’ll be vindicated.”

“Wishful thinking and denial of ability to accept defeat is typical of these kinds of people,” said Tamar Frankel, a Boston University School of Law professor and author of a business ethics book published last year.

“I was kind of appalled at his lack of remorse,” Rhett Campbell, a Houston attorney whose firm represented about two dozen energy companies involved in Enron’s filing for bankruptcy protection in December 2001. “I think he got what he deserved.”

Former Enron corporate secretary Paula Rieker got a break, sentenced to two years probation rather than a decade in prison, because of her cooperation with prosecutors. Former Chief Financial Officer Andrew Fastow received sympathy, getting six years in prison instead of 10.

Not Skilling.

“The Enron fraud is as large and as serious as any other fraud in this nation’s history,” Prosecutor Sean Berkowitz told Lake, who denied Skilling’s request for bond and ordered him to home confinement.

Lake told the U.S. Bureau of Prisons to recommend when Skilling should report to prison and suggested the 52-year-old be sent to the federal facility in Butner, N.C., for his role in a case that came to symbolize corporate fraud in America.

“One of the problems Jeff Skilling was facing at his sentencing was the reality that he was the last and highest-ranking defendant to be sentenced in what became known as the largest and most notorious corporate scandals in U.S. history,” said Robert Mintz, a former prosecutor in the Justice Department’s criminal division.

“There was this expectation at some point the guillotine was going to drop in the Enron case,” he said. “And with Ken Lay’s death and with Andrew Fastow choosing to cooperate and getting only six years, he found himself in the crosshairs.”

Lay died from heart disease on July 5 and his convictions on 10 counts of fraud, conspiracy and lying to banks in two separate cases were automatically vacated.

Skilling’s remaining assets, about $60 million, will be liquidated, according to an agreement among lawyers for Enron employees, the company’s savings and stock ownership plans, prosecutors and Skilling’s legal team.

About $45 million will be put in a restitution fund for victims. The remaining $15 million will go to Skilling’s legal fees, said Lynn Sark, attorney for the Enron Corp. Savings Plan and Stock Ownership Plan. The Justice Department allowed Skilling to set aside $23 million for his defense when he was indicted; he still owed his lawyers $30 million at his sentencing.

Skilling’s sentence falls just shy of the sentence imposed on WorldCom CEO Bernard Ebbers, who received 25 years for his role in the $11 billion accounting fraud that toppled the company he built from a tiny telecommunications firm to an industry giant.

Before receiving his sentence from Lake, victims unleashed nearly five years of anger at Skilling, some of them urging Lake to send him to prison for life.

With federal offenders serving no less than 85 percent of their sentences, the 24-plus years for Skilling is nearly a life sentence.

Losing everything

“I had it made,” said Charles Crestwood, who worked for Enron for 33 years and lost $1.3 million. He described his Enron pension as “like gold.”

“Now I don’t have any of that. I sold everything I own. I have a house. I have eight acres of land I’m fixing to put on the market. I’m going to have to sell it to make the ends meet.”

“Mr. Skilling has proven to be a liar, a thief and a drunk, flaunting an attitude above the law,” said 22-year Enron employee Dawn Powers Martin. ‘He has betrayed everyone who has trusted him. Shame on me for believing the management of Enron.”

Skilling said it was difficult for him to sit in the courtroom and listen to people tell him what a bad person he was.

“I understand,” Skilling said. ‘If I’d read the articles in the newspaper, I’d feel the same way. But if they knew me, they would have had a different view.”

“Of course, I feel horrible. That’s not to say I did something wrong. I never lied. I’m innocent.”

Mintz called Lake’s sentence, in line with federal guidelines, very severe.

“It’s hard to miss that message when people who were once counted among the wealthy and powerful in America suddenly find themselves spending the rest of their life behind bars,” he said.

But Frankel, whose book addresses what she fears is the acceptance, justification and perceived legitimacy of business fraud in America, said while the sentence sent a message, it was not enough to change nearly two decades of business culture.

“Clearly the risk has gone up … the cost has gone up,” she said. “They do fear more.”

“But if you read the newspapers, other people are looking for loopholes, going around to find some other ways. That is a mind-set. If one cheats and gets 1,000 percent more, I’ve got to do the same thing. We’ve got to stop that.”

Associated Press Writer Juan A. Lozano contributed to this story.

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