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Skilling Lied About Stock Sale, U.S. Says

January 05, 2006|From Bloomberg News

Prosecutors said former Enron Corp. Chief Executive Jeffrey K. Skilling lied when he told regulators that he sold his company stock because he was "scared" after the Sept. 11, 2001, terror attacks.

Skilling, whose trial for insider trading and fraud is set for this month, told investigators from the Securities and Exchange Commission that he sold 500,000 Enron shares because of 9/11. In fact, federal prosecutors said, Skilling tried to sell 200,000 Enron shares Sept. 6 -- five days before the attacks -- citing a conversation that day between Skilling and his stockbroker.

"Skilling's SEC testimony on the subject is contradicted by his own words captured on a telephone call reported by Skilling's broker," the prosecutors said in a filing made Tuesday in federal court in Houston. The filing was a response to Skilling's request to exclude the SEC testimony from his trial.

Skilling and former Enron Chairman and CEO Kenneth L. Lay are set to go on trial Jan. 30 on charges of fraud and insider trading related to the collapse of Enron, the Houston-based energy trader that went bankrupt in December 2001. The government said it planned to use the SEC interview in opening statements and its main case and to impeach Skilling's credibility should he take the stand.

In August 2001, Skilling resigned as CEO after six months at the helm of the Houston-based energy trading company. He netted $15.6 million when he sold his Enron shares on Sept. 17, 2001, the first day Enron shares traded after the 9/11 attacks closed stock markets.

He was unable to sell on Sept. 6 because his brokerage company, Charles Schwab & Co., didn't have a letter on file proving Skilling was no longer a company officer, the government said. Without that letter, the trade would have to be disclosed.

Shares of Enron closed at $30.49 on Sept. 6 and $30.67 on Sept. 17.

"This whole thing is a cheap shot, trying to prejudice people against him right before the trial," Skilling lawyer Daniel Petrocelli said Wednesday. "Jeff never attempted to mislead them about his call to his broker on Sept. 6. The call was tape-recorded, and Jeff knew it was."

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