Federal prosecutors plan to resentence former Enron Corp. chief executive officer Jeffrey Skilling, who is serving a 24-year sentence following his conviction for insider trading and securities fraud.
In an April 4 notice to Enron employees, shareholders and other victims in the case, the U.S. Justice Department said it was "considering entering into a sentencing agreement" with Skilling, whose attorneys convinced the U.S. Supreme Court in 2010 that the government overreached by presenting an "honest services" fraud theory to the jury.
Skilling’s attorney, Daniel Petrocelli, a partner at O’Melveny & Myers in Los Angeles, did not return a call for comment.CNBC apparently was first to report the development.
Enron filed for bankruptcy protection in 2001. Its collapse triggered major reforms in corporate governance, including the Sarbanes-Oxley Act of 2002. It also resulted in a closely watched trial against Skilling and Kenneth Lay, Enron’s founder and Skilling’s predecessor as CEO.
Lay, 64, was convicted of fraud and conspiracy but died of a heart attack before sentencing. Skilling, 59, was convicted in 2006 on one count of conspiracy, one count of insider trading, five counts of making false representations to auditors and 12 counts of securities fraud. He was sentenced to 24 years and four months in prison, plus three years of supervised release and $45 million in restitution.
So far, Skilling, housed at a low-security facility in Littleton, Co., has served more than six years. He is scheduled for release in 2028.
In 2009, the U.S. Court of Appeals for the Fifth Circuit affirmed Skilling’s conviction but remanded the case for resentencing, concluding that U.S. District Judge Simeon"Sim" Lake in Houston had incorrectly applied sentencing guidelines.The panel also found indications of possible prosecutorial misconduct.
Skilling appealed the Fifth Circuit’s decision to the U.S. Supreme Court.On June 24, 2010, the high court handed down a new, narrower interpretation of the honest-services fraud statute. Justice Ruth Bader Ginsburg, writing for the majority, found that Congress intended to limit the law to cover bribery and kickback schemes, which weren’t elements of the government’s allegations against Skilling.
"Because the indictment alleged three objects of the conspiracy—honest-services wire fraud, money-or-property wire fraud, and securities fraud—Skilling’s conviction is flawed," Ginsburg wrote.
The court stopped short of reversing Skilling’s conviction, however, instead remanding it for new proceedings on whether the government’s error was harmless and whether a reversal of the conspiracy to commit honest-services wire fraud conviction would affect the rest of Skilling’s case.
Critics of the decision warned at the time that it would significantly limit the federal government’s ability to prosecute corporate fraud. In an interview with The National Law Journal, Petrocelli called the decision "fatal to the government’s case."
The justices rejected Skilling’s other argument that pre-trial publicity prevented him from getting a fair trial, affirming the trial judge’s denial of his request to transfer venues.
On remand, the Fifth Circuit in 2011affirmed Skilling’s conviction, concluding that the government’s error was harmless, but again remanded the case for resentencing. After the U.S. Supreme Court denied review last year, Skilling’s attorneys indicated plans to move for a new trial but have delayed filing a motion for months.
Lake held a private meeting in his chambers on March 12. He set a May 28 deadline for Skilling to file his motion for new trial.
The Justice Department’s notice gave Enron victims until April 17 to notify prosecutors of their views regarding resentencing Skilling.
Should a resentencing agreement be reached, both sides must submit the deal to Lake, who would schedule a hearing. Victims wishing to make statements at such a hearing might not all be able to speak, the notice says.
"Because potential crime victims in this case include thousands of former Enron employees, owners of Enron securities, and other persons who were harmed as a result of the crimes for which the defendant will be sentenced, the Court may determine that allowing each victim to speak at the defendant’s resentencing hearing could unduly prolong and complicate the resentencing of the defendant," the notice says.
"If it appears that multiple victims wish to make the same points, the Court may limit the number of victims who speak in order not to unduly complicate or prolong the resentencing hearing. The Department of Justice cannot predict when in the course of the hearing the Court will permit victims to be heard. Victims who wish to speak should therefore plan on attending and being available when the opportunity to speak arises."
Also in prison in the Enron case was former chief financial officer Andrew Fastow, who testified against his former bosses. Under a plea deal, he was sentenced to six years in prison and was released in 2011.
Contact Amanda Bronstad at firstname.lastname@example.org and Zoe Tillman at email@example.com.