Former Enron CEO sentenced to 24 years

Daily Record (Rochester, NY), Oct 26, 2006 by Daily Record Staff

Former Enron Chief Executive Officer Jeffrey K. Skilling has been sentenced to 24 years and four months in prison on conspiracy, securities fraud and other charges related to the collapse of Enron Corp.

In addition to the prison sentence, Skilling, 52, was ordered to forfeit approximately $45 million to be applied towards restitution for the victims of the fraud at Enron. He was convicted by a federal jury on May 25 of 12 counts of securities fraud, one count of insider trading, conspiracy and five counts of making false statements to auditors. Skilling's co-defendant at trial, former Enron CEO Kenneth Lay, was also convicted after 56 days of trial and jury deliberations on conspiracy, securities fraud and wire fraud charges.

The convictions stemmed from a wide-ranging scheme that Lay, Skilling and other Enron executives engaged in at various times between 1999 and 2001, to deceive the investing public, the U.S. Securities and Exchange Commission and others about the true performance of Enron's businesses, according to a written statement issued by the U.S. Department of Justice.

The scheme was designed to make it appear that Enron was growing at a healthy and predictable rate, consistent with analysts' published expectations; that Enron did not have significant write- offs or debt and was worthy of investment-grade credit rating; that Enron was comprised of a number of successful business units, and that the company had an appropriate cash flow. It had the effect of artificially inflating Enron's stock price - which increased from about $30 per share in early 1998 to more than $80 per share in January 2001 -and artificially stemming the decline of the stock during the first three quarters of 2001.

The fraud scheme eventually unraveled and Enron filed for bankruptcy in December 2001, making its stock virtually worthless. The company's collapse cost investors billions of dollars, and thousands of workers lost their jobs.

Lay died on July 5, and his conviction was voided by a federal judge earlier this month. The government announced that it is filing a civil forfeiture action to recover property that constitutes proceeds of the fraud proven in the criminal case against Lay. The civil complaint seeks to forfeit Lay's condominium in Houston, property associated with a Lay family investment partnership, and a bank account with more than $22,000 - all proceeds obtained directly or indirectly as a result of various federal crimes, including securities fraud, wire fraud and conspiracy to commit securities fraud.

The investigation into Enron's collapse was conducted by the Enron Task Force, a team of federal prosecutors supervised by the Justice Department's Criminal Division and special agents from the FBI and IRS Criminal Investigation. The task force received assistance from the SEC.