Jeffrey Skilling, the brash, tell-it-like-it-is former CEO of Enron Corp. who has consistently maintained that he did nothing wrong during his 11-year tenure at the company, on Thursday pleaded not guilty to more than three dozen criminal counts in a Houston courtroom. After posting a bond of $5 million in cash, Skilling was freed pending a court appearance scheduled for March 11.

The indictment against Skilling, which had been expected for several weeks, was issued late Wednesday, and it superceded a six-count indictment in January of Enron’s former top accountant Richard Causey (see NGI, Jan. 26). Causey, 44, pleaded innocent in January and remains free on a $500,000 bond. Skilling is named in 40 counts of the new 42-count indictment.

Skilling and codefendant Causey are charged in a wide ranging scheme to defraud regulators and investors while they were employed at Enron. Among other things, the indictment alleges that during the California energy crisis of 2000-2001 when Enron made millions, Skilling and Causey manipulated Enron’s profits and put them into a reserve account to prop up business units that were not performing well — to ensure the company hit its earnings’ targets. Skilling also is charged with reaping personal gains through illegal insider trading of Enron’s stock.

Ten of the counts in the indictment specifically accuse Skilling of insider trading that generated $62.6 million from stock sold from April 2000 through September 2001 in blocks ranging from 10,000 to 500,000. Skilling resigned from Enron in August 2001; the company declared bankruptcy in December 2001.

If he is convicted on all of the criminal counts, Skilling faces up to 325 years in prison and more than $80 million in fines. The indictment seeks forfeiture of Skilling’s River Oaks home in Houston, estimated to be worth $4.7 million, and about $50 million in bank accounts. The government also is seeking forfeiture of Causey’s home in The Woodlands north of Houston and three bank accounts, worth about $3 million.

The indictment also mentions Andrew Fastow, the former CFO, who pleaded guilty in January to two criminal fraud counts and is cooperating with federal prosecutors in exchange for a 10-year prison sentence. Also mentioned is former Treasurer Ben Glisan, who pleaded guilty last year and is serving a five-year sentence. Not mentioned in the indictment is former Chairman Kenneth Lay, 61, although investigators apparently continue to probe his involvement, according to sources.

Among other things, the indictment charges Skilling and Causey with the following:

In a coordinated action with the Department of Justice Enron Task Force, the Securities and Exchange Commission (SEC) on Thursday filed similar charges against Skilling and Causey in an amended complaint (No. H-04-0284). The commission is seeking “disgorgement of all ill-gotten gains, civil money penalties, a permanent bar from acting as a director or officer of a publicly held company, and an injunction against future violations of the federal securities laws.”

Stephen M. Cutler, director of the SEC’s division of enforcement, said Thursday that the “thousands and thousands of hours” had been devoted to investigating and deconstructing the complex, multi-faceted and numerous corporate abuses” at Enron.

“Mr. Skilling was quick to take credit for the ‘innovations’ behind Enron’s spectacular rise and its apparent transformation into a ‘new economy’ powerhouse,” said Cutler. “He was also quick to take credit for putting in place the corporate culture that made these ‘innovations’ possible. Of course, many of these so-called ‘innovations’ were, in truth, nothing more than fraudulent business practices.” Cutler added, “Let there be no mistake that today’s enforcement action against Mr. Skilling places accountability exactly where it belongs.”

Wearing a white shirt and jacket, Skilling surrendered to the Federal Bureau of Investigation in Houston before daybreak on Thursday. According to a report in the Wall Street Journal, Skilling did not wear a belt or a tie because he did not want to give investigators the satisfaction of removing them. About 15 minutes later, he was led in handcuffs for a trip to the Houston federal courthouse to appear before Judge Frances Stacy.

Skilling is represented by several high profile attorneys, including Daniel Petrocelli and Bruce Hiler. Hiler is a former SEC attorney; Petrocelli successfully represented the family of Ronald Goldman in 1996 in a wrongful death civil lawsuit against former football great O.J. Simpson.

In a press conference outside the courthouse Thursday morning, Skilling stood silent while his attorneys asserted his innocence.

“Jeff will have to live with the enormity of [Enron’s] failure for the rest of his life,” said Petrocelli. “He has fully cooperated in the investigations. He has answered the hard questions. He spent five days in front of the SEC, before Congress, before subcommittees…the Powers committee. Jeff Skilling has nothing to hide. He did not steal. He did not lie. He did not take anyone’s money.”

Petrocelli said that despite the indictment, “the evidence doesn’t exist, because Jeff Skilling did nothing wrong. When this problem first surfaced a couple of years ago, Mr. Skilling insisted that he take a lie detector test. He did so, and he passed it with flying colors.” A lie detector test would not be admissible in court proceedings, however.

The attorney said that Skilling’s defense team met with federal prosecutors early last week and “we gave them the results of the polygraph test. We told them they were making a grave mistake in pursuing Jeff Skilling. They have decided to turn a blind eye to all of it. They need a scapegoat, and I guess Jeff Skilling is their scapegoat. And now they want to take this man away from his three children, his family and his friends here in Houston and put him in jail for the rest of his life.”

However, Petrocelli said that the “good news is that his case is not going to be decided by the Enron task force or any other prosecutors. It will be decided by 12 decent people with real witnesses, real evidence, real facts. To be sure, Mr. Skilling does not relish the devastating court ordeal that he and his family will have to be put through. But in a way, he is relieved so that he can look forward to the day when his name is cleared.”

Hiler said Skilling’s indictment was not of his client, but of a “once great company because there is no case against Jeff Skilling. Mr. Skilling is innocent, and the polygraph says he’s innocent.”

Skilling earned a masters in business administration from Harvard and went to work for McKinsey & Co., the world’s largest management consulting firm. He joined Enron in 1990 and became president and COO in January 1997. He was named CEO in January 2001 and resigned seven months later.

With Skilling’s arrest, 29 individuals have been indicted by the Enron Task Force, including 21 former Enron executives. Ten defendants have been convicted to date. In addition, the Enron Task Force has retained more than $95 million in proceeds derived from criminal activity, according to the Justice Department.

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