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Former Enron CEO Jeff Skilling may leave prison by 2017

Former Enron executive Jeffrey Skilling, left, and his attorney Daniel Petrocelli leave the federal courthouse for lunch in week ten of his fraud and ...
Former Enron CEO Jeffrey Skilling, left, in 2006 leaving the federal courthouse where he was convicted of 19 counts, including lying to auditors.PAT SULLIVAN / AP

Former Enron CEO Jeffrey Skilling would be out of prison in 2017—more than 10 years early—under a proposed sentencing agreement submitted to a federal judge in Houston on Wednesday.

Under the agreement, which could be finalized within weeks, Skilling would give up all of his remaining rights to appeal, and his 2006 convictions on 19 criminal counts would stand.

He also would give up any claims to the $40 million he was ordered to forfeit. But the deal would allow Skilling, 59, to salvage more of his life, getting out of prison at age 63 instead of age 74.

Even with the reduced sentence, Skilling will have served roughly 10 years—by far the longest sentence of any defendant in the Enron scandal. He is currently housed at a federal prison in Englewood, Colo.

U.S. District Judge Sim Lake, who presided over Skilling's trial and imposed the 24-year sentence, will have the final word on the deal. Lake has been actively involved in the negotiations, holding private conference calls with prosecutors and defense attorneys as recently as Wednesday.

"Today's agreement will put an end to the legal battles surrounding this case," said Peter Carr, Justice Department spokesman. "Mr. Skilling will no longer be permitted to challenge his conviction for one of the most notorious frauds in American history, and victims of his crime will finally receive the more than $40 million in restitution they are owed. This agreement ensures that Mr. Skilling will be appropriately punished for his crimes and that victims will finally receive the restitution they deserve."

Defense attorney Daniel Petrocelli said: "The proposed agreement brings certainty and finality to a long painful process. Although the recommended sentence for Jeff would still be more than double any other Enron defendant, all of whom have long been out of prison, Jeff will at least have the chance to get back a meaningful part of his life."

Skilling, who developed Enron's business model as an "asset-light" energy company, rose to CEO in 2001 only to abruptly resign six months later. Soon after that, the company collapsed in one of the most notorious corporate scandals of all time.

Skilling has maintained his innocence, and in 2009 a federal appeals panel ruled Skilling's sentence was too harsh. However, a resentencing of Skilling has repeatedly been delayed as the appeals process played out.

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The Fifth Circuit Court of Appeals has consistently upheld Skilling's convictions for conspiracy, fraud and insider trading. In 2010, the Supreme Court struck down the legal theory used by prosecutors in Skilling's 2006 trial, but the appeals court ruled the error was "harmless."

Skilling's last-ditch effort was to be a motion for a new trial based on alleged misconduct by Justice Department's elite Enron Task Force that prosecuted the case. Under the proposed deal, that effort would be dropped, sparing the government potential embarrassment.

CNBC broke the story of a potential deal on April 4, after the Justice Department quietly notified victims that negotiations were underway. At the time, a Justice Department official told CNBC, "The department's goal is, and has always been, to ensure that Mr. Skilling be appropriately punished for his crimes, and that victims finally receive the restitution they deserve."

(Read More:Enron's Jeff Skilling Could Get Early Release From Prison)

Victims will be allowed to comment on the proposed agreement. Some may also be allowed to speak in court when Skilling is brought back before Lake to learn his new sentence. It will be Skilling's first public appearance since 2006.