Burden of Enron collapse now rests on Skilling

updated 12:58 p.m. ET Oct. 23, 2006

HOUSTON - 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.”

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