Enron's Skilling gets 24 years

Issues

Former Enron Corp. chief executive Jeff Skilling was sentenced on Monday to more than 24 years in prison for his part in the financial scandal that brought down the company and came to symbolize a dark era in US business.

US District Judge Sim Lake said Skilling would remain free with an electronic monitor on his ankle until he is ordered to report to prison. Skilling, who has said he would appeal his conviction on 19 criminal counts, also was ordered to pay $45 million in restitution to Enron investors. In May, Skilling and Enron founder Ken Lay were found guilty of defrauding investors by using off-the-books deals to hide debt and inflate profits. Enron, once the country's seventh largest company, collapsed into bankruptcy in December 2001 when the deals were disclosed. The resulting scandal rocked Wall Street and prompted reforms in the way companies report their finances. Lay died of a heart attack in July while vacationing in Colorado. Following legal precedent, Judge Lake threw out the Lay convictions on October 17 because Lay died before a final judgment had been entered and before he could appeal.

In comments to the court before sentencing, Skilling said he was remorseful for what happened at Enron, but maintained he had committed no crime. I can't imagine more remorse. I had friends who died, good men,” he said, appearing to choke up momentarily. „All of that being said, your honor, I'm innocent of these charges. I'm innocent of every one of these charges,” he told Judge Lake. As he did in testimony during his trial, Skilling blamed the demise of Enron on a credit and liquidity crunch. „The company did not have enough dry power to deal with it. That, in sum and substance, is what happened in Enron,” he said. He and Lay testified that the crisis of confidence that undid Enron was caused by the actions of a few rogue employees, primarily former chief financial officer Andrew Fastow. Fastow confessed to skimming millions of dollars from the off-the-books deals he set up at Skilling's direction. He pleaded guilty, cooperated with prosecutors and received a six-year prison sentence.

Enron's collapse cost investors billions of dollars and caused thousands of employees to lose their jobs and retirement savings. Prior to sentencing, several former Enron investors and employees made „victim impact statements” in which most of them called for Lake to impose the maximum sentence, which would have been just over 30 years. „The worst mistake Ken Lay ever did was to hire you,” former employee Ann Beliveaux told Skilling. „When things got bad, you jumped ship because you knew the sky was getting ready to fall.” „I had $1.3 million and all I have to show for it is two clocks (for service awards),” said another former employee Charles Prestwood. „People think things like that don't happen in America, but it does. It happened to us,” he said.

Skilling joins other prominent executives whose corner-office careers ended in prison cells. WorldCom founder Bernard Ebbers received a 25-year sentence, former Tyco chairman Dennis Kozlowski got 8 to 25 years, and John and Timothy Rigas of Adelphia received 15 and 20 year sentences, respectively. Prosecutor Sean Berkowitz argued for a long sentence for Skilling, saying that Enron's demise had wide-ranging effects. „The integrity of the marketplace as a whole was shaken by what happened at Enron,” he said. „People lost their trust and their faith in the marketplace. „Enron symbolized more than any other company the era of corporate fraud,” Berkowitz said. But Skilling's attorney Daniel Petrocelli argued, „We don't need to put Mr. Skilling in jail for 25 years to send a message. Everyone on this planet has this message loud and clear.” (reuters.com)

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