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Former Enron CEO gets 24-year sentence

Jeffrey Skilling is ordered to pay $45 million. He talks of remorse but says, `I am innocent.'

October 24, 2006|Martin Zimmerman and Lianne Hart | Times Staff Writers

HOUSTON — Former Enron Corp. Chief Executive Jeffrey K. Skilling was sentenced to more than 24 years in federal prison Monday for his role in the company's 2001 collapse, one of the longest prison terms to arise from the recent era of corporate scandals.

Skilling, who was convicted in May on 19 counts of fraud, conspiracy, insider trading and lying to auditors, had faced 24 to 30 years in prison under federal sentencing guidelines.

"Mr. Skilling and his attorneys argue that the guideline range would be tantamount to life in prison," U.S. District Judge Sim Lake said before pronouncing the sentence. "But as the many victims of his crime have so poignantly explained, his crimes have imposed on them a life sentence of poverty."

In addition to handing down a prison term of 24 years and four months, Lake ordered Skilling to pay about $45 million in restitution to the thousands of investors and employees who lost money when Enron failed. The judge set investor losses from Skilling's actions at $80 million.

Lake imposed the sentence after a two-hour hearing that featured angry testimony from former Enron workers and a ringing expression of innocence from Skilling.

"In terms of remorse, your honor, I can't imagine more remorse," Skilling told Lake. "That being said, your, your honor, I am innocent of these charges. I am innocent of every one of these charges."

Skilling's codefendant, former Enron Chairman Kenneth L. Lay, died of a heart attack July 5. Last month, Lake wiped away Lay's conviction on 10 counts of fraud, conspiracy and lying to banks, ruling that his death denied him the chance to appeal the verdict.

Skilling's pivotal role in what has been called the biggest scandal in the history of American finance made leniency unlikely, experts said. That's especially true given the long sentences handed out to other corporate criminals of the era, such as former WorldCom Inc. CEO Bernard J. Ebbers, who was sent to prison for 25 years.

"This is a very tough time to be a white-collar defendant," said Douglas R. Young, an attorney with Farella Braun & Martel in San Francisco. "In the public's mind, there is something about wanting to punish people who have seemingly been at the top of the game."

Lake denied Skilling's request to be released on bond pending appeal, ordering him to home confinement. Federal prison officials will recommend when and where Skilling should report to prison. Lake suggested the federal prison in Butner, N.C.

With no parole in the federal prison system and only limited time off allowed for good behavior, it is probable that Skilling, 52, will serve the bulk of his sentence, said Stanford law professor Robert Weisberg.

That doesn't sit well with Washington defense attorney Barry Boss.

"We've lost complete perspective when it comes time to sentence white-collar defendants," said Boss, who formerly co-chaired the U.S. Sentencing Commission's Practitioners Advisory Group.

"For somebody of Skilling's age with no prior record, to impose what is essentially a life sentence doesn't serve any recognized objective of the criminal justice system."

Although Ebbers received a longer sentence than Skilling, other recent corporate criminals have gotten less. Andrew S. Fastow, the former Enron chief financial officer who designed the off-the-books partnership that helped destroy the company while making him millions, was sentenced last month to six years in prison. Fastow testified against Skilling and Lay at their trial.

Former Enron employees weren't sympathetic.

"It was a good sentence, but if the judge had given him 199 years, I would have stood up and clapped," Diana Peters, 56, who worked for Enron for 11 years as a computer technician, said afterward. "I'll feel better once he's locked in jail. When the jail door shuts on him, that will close the door on this for me."

During the hearing, Anne Beliveaux, 64, who worked at Enron for 18 years, said she lost more than half a million dollars in retirement funds.

"Never in my wildest dreams did I think I'd be facing what I'm facing now, and that is: no retirement," she said. "It was all in Enron stock."

Skilling's former assistant, Sherri Sera, defended her former boss, saying the man portrayed in the media wasn't the caring, philanthropic person she knew.

Sera said she lost money when Enron collapsed, but she blamed it on "shortsighted investment decisions I made. I don't blame Jeff Skilling.... It was my choice to put all my eggs in one basket."

As for Skilling's expressions of remorse, prosecutor Sean Berkowitz said he had "no doubt Mr. Skilling is sorry about the consequences of what happened, but that's different than looking at his own responsibility for what he did."

Defense attorney Daniel M. Petrocelli asked the judge to consider Skilling's state of mind in determining his sentence.

"Mr. Skilling set out to harm nobody," said Petrocelli, who is based in Los Angeles. "There was no intent. He wasn't motivated by greed. He didn't loot the company."

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