Skilling’s Conviction Upheld, Resentencing Ordered (Update1)
By Jef Feeley and Thom Weidlich
Jan. 6 (Bloomberg) -- A U.S. appeals court upheld the conviction of former Enron Corp. Chief Executive Officer Jeffrey Skilling for spearheading the fraud that destroyed the world’s largest energy trader, while finding defects in his sentence.
A three-judge panel of the U.S. Court of Appeals in New Orleans today rejected all Skilling’s arguments to throw out his conspiracy and fraud convictions. The court did order that Skilling be resentenced because the trial judge misinterpreted sentencing guidelines that led to his 24-year prison term.
“The appeals court has directed the trial court to construe sentencing-guideline components in a different light,” said Christopher Bebel, a former U.S. Securities and Exchange Commission lawyer now in private practice in Houston. “But the underlying modifications may not bring about a change in a sentence. The net effect will be relatively minimal.”
A Houston jury found Skilling and ex-Enron Chairman Kenneth Lay guilty in May 2006 of deceiving investors, analysts and employees about Enron’s deteriorating financial condition through the use of fraudulent accounting and off-books partnerships that concealed billions in debt and losses.
The company’s 2001 collapse into bankruptcy wiped out more than 5,000 jobs and $1 billion in employee retirement funds. Investors sued seeking to recover more than $40 billion in losses.
Those suits later were thrown out by the 5th U.S. Circuit Court of Appeals, the same court that upheld Skilling’s convictions today. Lay died before the appeal of his conviction could be heard.
Skilling’s Arguments
Skilling had argued that the trial judge had misinstructed the jury, that the jury was biased, that prosecutors had used an invalid legal theory to convict him and that the government had engaged in unconstitutional misconduct.
“Skilling failed to demonstrate that the government’s case rested on an incorrect theory of law or that any reversible errors infected his trial,” U.S. Circuit Judge Edward Charles Prado said in a 105-page decision released today.
Skilling also argued that the judge had misapplied federal guidelines in enhancing his sentence, partly by saying he had endangered a “financial institution” with his conduct by damaging the value of Enron’s pension fund. The court found the fund was not a financial institution.
“I suspect at the end of the day if that’s the only basis of resentencing it would be a modest reduction,” said Kirby Behre, a partner at Paul Hastings Janofsky & Walker in Washington and co-author of “Federal Sentencing for Business Crimes.” “It might be more than modest, but it’s not going to get him down to 10 or 12 years.”
Laura Sweeney, a spokeswoman for the U.S. Department of Justice, and Skilling’s lawyer Daniel Petrocelli didn’t immediately return calls for comment.
The case is U.S. v. Skilling, 06-20885, U.S. Court of Appeals for the Fifth Circuit (New Orleans).
To contact the reporter on this story: Jef Feeley in Wilmington, Delaware, at jfeeley@bloomberg.net and; Bob Van Voris in New York at +1- rvanvoris@bloomberg.net.
Last Updated: January 6, 2009 14:17 EST |
