A federal appeals court Tuesday upheld all of the 19 convictions against former Enron Corp. CEO Jeffrey Skilling. However, the three-judge panel ordered that the former Enron boss be resentenced, which could reduce Skilling’s prison term of 24 years and four months.
The U.S. Court of Appeals for the Fifth Circuit in New Orleans denied a request to overturn Skilling’s 2006 convictions based on defense motions that they were based on an incorrect legal theory and reversible errors (U.S. v. Skilling, 06-20885, U.S. Court of Appeals for the Fifth Circuit).
In the 104-page decision issued by the appeals court, U.S. Circuit Judge Edward Charles Prado wrote that Skilling had “failed to demonstrate that the government’s case rested on an incorrect theory of law or that any reversible errors infected his trial.”
Skilling, who with Enron founder Kenneth Lay transformed Enron into the world’s largest energy trader before it collapsed, was convicted along with Lay in May 2006 following a five-month trial. The jury found Skilling guilty on 19 felony counts: one count of conspiracy (a joint count with Lay), 12 counts of securities fraud, one count of insider trading and five counts of making false statements to auditors and Enron shareholders (see Daily GPI, May 26, 2006). The jury acquitted Skilling on nine counts of insider trading.
Besides the conspiracy count, the Houston jury convicted Lay on three counts of securities fraud and two counts of wire fraud. In addition, Lay was found guilty on three counts of making false statements to banks and one count of bank fraud. Less than two months after he was convicted, Lay died of a heart attack while he and his wife were at their vacation home in Aspen, CO (see Daily GPI, July 6, 2006). His convictions later were extinguished by the court (see Daily GPI, Oct. 18, 2006).
In October 2006 U.S. District Judge Simeon T. Lake III, who had presided over the jury trial, used federal guidelines based on Enron’s monetary losses to sentence Skilling to 292 months in prison, or 24 years and four months (see Daily GPI, Oct. 24, 2006). Skilling began serving his sentence at a medium-security federal prison in Minnesota later that year (see Daily GPI, Dec. 14, 2006).
Skilling’s defense team, which filed an appeal immediately after the jury trial, argued that the convictions were based on incorrect legal theory, faulty jury instructions, a biased jury and prosecutorial misconduct. Among other things, the defense cited accusations of witness intimidation and withheld evidence.
The appeals court denied those arguments. However, the court agreed with the defense team’s argument that Lake had misapplied federal guidelines in enhancing Skilling’s sentence. Part of the enhanced sentence was based on the judge’s interpretation that Skilling’s conduct had endangered a “financial institution” because his actions had damaged the value of Enron’s pension fund. However, the appeals court found that the company’s pension fund was not a financial institution.
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