Ken Lay’s death wiped away his convictions. Andrew Fastow got a reduced six-year sentence. That leaves former CEO Jeffrey Skilling as the sole top Enron Corp. executive who could be given at least 20 years in prison when he is sentenced Monday for helping orchestrate the biggest corporate scandal in U.S. history.
In addition to the legal consequences of his actions, the burden of lost jobs, worthless pension plans and ruined lives that resulted from Enron’s 2001 collapse has now shifted solely onto Skilling’s shoulders.
Lay’s death and the lighter than expected sentence handed last month to Fastow, Enron’s former chief financial officer, will work against Skilling when he faces sentencing, former federal prosecutor Robert Mintz said.
Skilling was convicted in May of 19 counts of fraud, conspiracy, insider trading and lying to auditors. Lay, Enron’s founder, was convicted of 10 counts of fraud, conspiracy and lying to banks in two separate cases. His death in July vacated those convictions.
Both men repeatedly lied about Enron’s financial health when they knew an illusion of success was propped up by accounting maneuvers that hid debt and inflated profits.
“In theory, the death of Ken Lay should have no impact on the sentence that Mr. Skilling receives. But it’s hard to ignore the reality that Jeff Skilling is now standing alone as the figurehead who orchestrated Enron’s demise,” Mintz said. “There will certainly be pressure to make an example of Jeff Skilling and send a message with his sentence.”
Skilling has had two brushes with the law since his indictment on Enron charges. Last month, Skilling pleaded no contest and paid a fine to settle his arrest in Dallas for public intoxication. In April 2004, he was involved in a scuffle with patrons of a cigar bar in New York City. He wasn’t arrested, but he and his wife, Rebecca, who was hurt in the incident, were taken to a hospital where a blood test showed Skilling’s blood-alcohol level to be 0.19.
Under federal sentencing guidelines, which U.S. District Judge Sim Lake has said he will rely on, Skilling faces more than 20 years in prison if investor loss tied to his actions exceeds $80 million. Skilling also faces more than $18 million in fines for his crimes.
Prosecutors and Skilling’s attorneys have agreed on an investor loss figure, but it is in sealed court documents and none of the lawyers would discuss it.
“The government and we have agreed on a loss number to avoid a protracted hearing on the subject,” Skilling’s attorney Daniel Petrocelli said. “Any sentence is a meaningful sentence. I don’t want to talk about or speculate on the length of it.”
Kirby Behre, a former federal prosecutor in Washington who wrote the government’s white-collar sentencing guide, said Skilling will probably get more than 20 years in prison but an exact figure is hard to determine without knowing the final calculation of investor loss.
Charles Prestwood, a former pipeline operator for Enron who lost $1.3 million in retirement savings with Enron’s bankruptcy, said if it was up to him, Skilling would get 100 years in prison.
“I think about all the families that man helped destroy and all the hard working people that believed the top executives,” he said. “He knows he broke the law. He knows he’s done us wrong. I’ll always believe until I go to my grave that man knew exactly what he was doing.”
Prestwood said he is not surprised Skilling, who professed his innocence before and after his trial, has asked that his convictions be dismissed.
“He’ll go down to the wire trying to say he is innocent,” he said.
The 68-year-old Prestwood, who has heart problems, said he’s been saving his strength to speak at Skilling’s sentencing.
Lake is allowing Enron’s victims to speak about how the company’s financial implosion hurt them. Ten to 12 people who signed up in advance are expected to speak at the sentencing, as well as some who will talk on Skilling’s behalf. A list of speakers was not available.
The collapse wiped out thousands of jobs, more than $60 billion in market value and more than $2 billion in pension plans.
Rod Jordan, chairman of the Severed Enron Employee Coalition, said it is easier for ex-workers to focus their anger and frustration on Skilling now that Lay is gone. Many, he said, always believed Skilling was guilty while they had doubts about Lay.
“It was more due to their personalities,” he said. “Lay was more of a people oriented person. Skilling was more behind the scenes. He came across as more arrogant and self centered and not the cheery, ’hi-how-are-you’ kind of guy that Lay was.”
Lake has allowed attorneys representing ex-Enron workers who took part in the company’s savings plan and its employee stock ownership plan to speak on their request for restitution from Skilling.
Robin Harrison, one of the attorneys representing about 20,000 such people, put his clients’ losses at an estimated $1.3 billion.
Petrocelli said Enron’s former workers will probably talk about their losses, but that shouldn’t affect the sentence Skilling gets.
“While that is undoubtedly true, it doesn’t assist in the determination of Mr. Skilling’s sentence, at least in our view,” he said. “Mr. Skilling is not criminally responsible for the demise of Enron.”
Prosecutors want Skilling to turn over nearly $183 million, which they allege he pocketed while participating in fraud. The U.S. government had divided that amount between Skilling and Lay. But Lay’s death has left that amount solely on Skilling.
The government contends about $60 million in Skilling’s cash and property that has been frozen since his indictment could be applied to the total amount they are seeking.
Petrocelli has said Skilling owes his legal defense team more than $30 million beyond the $23 million that the Justice Department allowed Skilling to set aside for legal fees before it froze his assets.
Brian Durbin, a small-time Enron investor who spoke at Fastow’s sentencing last month, encouraged people affected by Enron’s collapse to attend Skilling’s sentencing.
“It might help them get a little bit of closure and help the rest of the country see there was a human face to this,” he said. “Greed drove the actions of a few to make really bad decisions. What they did had such a wide reaching impact for so many people.”