The Guidelines Now Tougher, Skilling to Face Sentence Today
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By ALEXEI BARRIONUEVO
THE NEW YORK TIMES
October 23, 2006
HOUSTON — For Jeffrey K. Skilling, it was a last summer of freedom before the bars close behind him.
Mr. Skilling, 52, a former Enron chief executive, will stand in federal court here on Monday and receive a sentence that many expect will keep him in prison for the rest of his life. Most legal experts are betting that United States District Judge Simeon T. Lake III will give Mr. Skilling a sentence of at least 25 years for his role in heading a conspiracy to defraud Enron investors. Should it exceed that, it would be the longest sentence ever handed down for a white-collar criminal.
Until now, the record has been held by Bernard J. Ebbers, the former chief executive of WorldCom, who was sentenced to 25 years for being head of an $11 billion fraud that led to the bankruptcy of his long-distance telephone company. Mr. Ebbers’s sentence was less than the 30 years to life imprisonment called for in the sentencing guidelines.
Mr. Skilling’s prospects reflect how tough the federal guidelines have become for those convicted of white-collar crimes in the wake of the huge-scale frauds at companies including Enron, WorldCom and Adelphia.
Some legal experts have begun to question the sentences that federal judges are handing down in these cases.
“You can certainly make the case that things have gotten too harsh,” said Samuel W. Buell, a former Enron prosecutor who now teaches law at Washington University in St. Louis. “But the reason why things have gotten so harsh is we went through these years when sentences were too light. Maybe we need a correction in the other direction to get a happy medium.”
Enron was the company that first imploded in the years of corporate scandal, leading to a wave of investigations and calls for tougher regulations and accountability. The sentence to be handed down Monday is likely to underscore that message of deterrence, legal specialists said.
“Enron still stands alone as a brand name of corporate fraud,” said Robert Mintz, a white-collar criminal defense lawyer and former federal prosecutor, “and this judge is not going to hesitate to hand down a lengthy sentence in this case.”
Mr. Skilling will be facing the judge alone, without Kenneth L. Lay, Enron’s founder and Mr. Skilling’s co-defendant in his criminal trial, who died of heart problems in July. His guilty verdict was vacated last week.
Missing, too, will be Andrew S. Fastow, the former chief financial officer who pleaded guilty to fraud and stealing from the company. He was sentenced last month to 6 years in prison, less than the 10 years he could have received as part of his deal to cooperate with prosecutors.
All of that leaves Mr. Skilling as the only top executive through whom Enron’s ultimate punishment will be remembered, Mr. Mintz said.
Judge Lake is likely to be careful not to impose a sentence that could be regarded as overly harsh and invite scrutiny from an appeals court, said Joel M. Androphy, a Houston criminal defense lawyer.
For Mr. Skilling, this summer was about coping. After the verdict in May, he spent significant time with his three children, traveling to California with his daughter and to a dude ranch with his youngest son, said friends, family members and his lead lawyer, Daniel Petrocelli. Neighbors in Houston said they saw little of Mr. Skilling, although he occasionally rented videos from a store near his home.
Virtually all Mr. Skilling’s net worth, around $55 million, is frozen by the government. He owes O’Melveny & Myers, the law firm that handled his defense, more than $30 million, Mr. Petrocelli said.
Mr. Skilling seemed to stay out of Houston as much as possible, spending time at a condominium he owns in Dallas, where his daughter had been a student at Southern Methodist University. But Mr. Skilling’s coping also meant drinking again, despite a court order that forbade him to do so after a much-publicized night of drunkenness in April 2004 at a Manhattan cigar bar, when Mr. Skilling scuffled with some other patrons.
His summer travel ended after he was arrested in Dallas last month for public intoxication. He pleaded no contest and paid a fine. That night, he was out with his brother Mark and his daughter at a Mexican restaurant and had some margaritas, which did not mix well with his prescription medicine, Mr. Petrocelli said. He was walking home to the condo when he was stopped by a police officer; he spent a night in jail.
Mr. Skilling has said he took solace in the bottle to cope with depression. Not being allowed to have an occasional drink “is unreasonable, considering the stresses he is under,” Mr. Petrocelli said.
But the incident is one more reason, outside lawyers say, why Judge Lake is likely to reject Mr. Skilling’s request to remain free pending appeal, and instead order United States marshals to take him to jail after sentencing on Monday.
Supporters of Mr. Skilling have recently reached out, trying to help him. In August, two friends of the Skilling and Lay families, Beth Stier and Terrie James, sent a letter to supporters, urging them to pass along “a pleasant memory, a thoughtful wish or a fond goodbye” to Mr. Skilling and Mr. Lay’s family, according to a person who reviewed a copy of the letter. The thoughts were to be collected into books to be given to Mr. Lay’s family and to Mr. Skilling before his sentencing. Ms. Stier declined yesterday to say if the Lay and Skilling families had received the books.
Since the Dallas incident, Mr. Skilling has primarily spent time with his family in Houston. On Thursday afternoon, Mr. Skilling — wearing jeans, hiking boots and a small waist bag — walked with his brother near Mr. Skilling’s home in the upscale River Oaks neighborhood of Houston.
“He has a clear head,” Mr. Petrocelli said Friday. “He is very stoic about everything. He is prepared for all eventualities on Monday.”
Mr. Petrocelli said he spent the weekend huddling with Mr. Skilling, discussing in part what his client will say to Judge Lake. With an appeal pending, an expression of guilt or remorse is not part of the planned remarks, the lawyer said.
“Jeff is sorry for the consequences of Enron’s failure, but he doesn’t believe he committed any crimes,” Mr. Petrocelli said. “And our view is that many of the people that pleaded guilty to crimes at Enron were not guilty.”
For some former Enron employees, that message will not make them feel any sympathy for Mr. Skilling.
“All we ever wanted was for him to take responsibility, and he never did that,” said Deborah DeFforge, who worked at Enron for five years and said she lost about $100,000 in retirement savings. “Until he does that, I could never show him any mercy.”
Judge Lake came under fire last year from a federal appeals court for sentencing Jamie Olis, a midlevel executive at the energy company Dynegy, to 24 years in prison for accounting fraud. The sentence, handed down in 2004, was within new federal guidelines that impose harsher penalties depending on the investor loss amount; in Dynegy’s case, that was put at $105 million.
Last year, the Supreme Court gave more latitude to federal judges to consider sentencing guidelines as only advisory, paving the way for the judge to reduce the loss consideration to $79 million and drop Mr. Olis’s sentence to six years.
The total loss related to the Enron fraud, which prosecutors and defense lawyers have agreed on, is under court seal. Losses totaling hundreds of millions of dollars would greatly magnify Mr. Skilling’s sentence under the guidelines, which were made significantly tougher in 2001.
His lawyers are arguing that he should be sentenced under the 2000 guidelines because the 2001 guidelines did not take effect until Nov. 1, 2001 — three months after Mr. Skilling resigned his chief executive post and left the company. The jury in the Enron case, however, convicted Mr. Skilling of being part of a conspiracy the government defined as extending through December 2001. Under the 2000 guidelines, Mr. Skilling could receive a prison term closer to 12 or 13 years, sentencing experts said. |
