Former Enron chief executive Jeff Skilling was sentenced on Monday to more than 24 years in prison for leading a financial fraud that destroyed the company and came to symbolise a dark era for corporate America.
US District Judge Sim Lake, in handing out the harshest sentence yet in the Enron saga, said Skilling’s crimes ”have imposed on hundreds if not thousands of people a lifetime of poverty.”
He allowed Skilling (52) to remain out of jail, but mostly confined to his home with an electronic monitor on his ankle until the US Bureau of Prisons orders him to report, likely within the next 90 days.
Skilling also was ordered to pay $45-million in restitution to Enron investors, who lost billions of dollars when the company collapsed. Thousands of employees lost their jobs and retirement funds.
FBI assistant director Chip Burrus said in a statement Skilling’s punishment sent a message to white collar criminals.
”Corporate crooks should beware. If you decide to use business coffers as your personal piggy bank at the expense of investors and employees, you risk loss of personal freedom,” he said.
Judge Lake’s sentence of 24 years and four months was the lowest it could have been within federal guidelines for the white collar crime.
Skilling, once one of corporate America’s brightest and brashest stars, was subdued but stoic, telling reporters he was ”disappointed” by the verdict but would appeal the 19 criminal counts against him.
”I don’t blame the judge for what he did. I have a constitutional right to appeal, and I think we’ll win,” he said.
Skilling showed little emotion during the hearing, but occasionally looked back at wife, Rebecca, who sobbed in the gallery.
On May 25, 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 (64) 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 judgement 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 honour, I’m innocent of these charges. I’m innocent of every one of these charges.”
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 powder 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 engulfed 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.
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 chairperson Dennis Kozlowski got eight 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 symbolised more than any other company the era of corporate fraud,” Berkowitz said.
But Skilling’s attorney Daniel Petrocelli argued for a sentence of seven to 10 years, saying Skilling had meant no harm.
”Mr Skilling set out to harm nobody. He didn’t loot the company, he didn’t engage in self-dealing … he was not motivated by greed,” he said. – Reuters