HOUSTON, (AP) – After his conviction earlier this year for orchestrating one of the nation’s biggest financial scandals, former Enron Corp. Chief Executive Officer Jeffrey Skilling was to learn Monday how long he would have to spend behind bars.
Before the sentence is handed down, Skilling will have to listen to victims of Enron’s 2001 collapse.
They have been allowed by U.S. Judge Sim Lake to speak at the hearing about how the company’s implosion affected their lives. The collapse wiped out thousands of jobs, more than $60 billion in market value and more than $2 billion in pension plans.
At least 10 people signed up to speak at the sentencing, including an attorney for the employees’ savings and stock plans, who had prepared a 30-minute statement.
“The people who have been harmed by the bankruptcy have very strong feelings about the subject,” said Daniel Petrocelli, Skilling’s attorney. “But that does not shed much light on the reasonableness of the sentence Mr. Skilling should receive.”
Skilling was convicted in May on 19 counts of fraud, conspiracy, insider trading and lying to auditors. He was acquitted on nine counts of insider trading.
His co-defendant, Enron founder Kenneth Lay, died from heart disease on July 5. Lay’s convictions on 10 counts of fraud, conspiracy and lying to banks in two separate cases were wiped out with his death.
Jurors decided Skilling and Lay repeatedly lied about Enron’s financial health when they knew an illusion of success was propped up by accounting maneuvers that hid debt and inflated profits.
Enron’s crash and the subsequent scandals roiled Wall Street, sent investors fleeing, prompted stiffened white collar penalties and upped regulatory scrutiny over publicly traded companies.
Skilling, 52, maintained his innocence before, during and even after his trial, insisting no fraud occurred at Enron other than that committed by a few executives skimming millions in secret side deals, and that bad press and poor market confidence combined to sink the company.
Under federal sentencing guidelines, which Lake has said he will rely on, Skilling faces more than 20 years in prison if investor loss tied to his actions exceeds $80 million. Skilling also faces more than $18 million in fines for his crimes.
Prosecutors and Skilling’s attorneys have agreed on an investor loss figure, but it is in sealed court documents and none of the lawyers would discuss it.
Jack Sylvia, a Boston-based attorney with the firm of Mintz Levin, said Skilling is facing a longer sentence that could send him away for life. Lay’s death and the reduced sentence former Enron chief financial officer Andrew Fastow got last month might be factors in Skilling’s sentence, he said.
“The reality is when dealing with somebody who is middle-aged, a sentence of even 20 years can more often than not be a life sentence,” he said.
Skilling never endeared himself to co-workers, or even the city, the way Lay had with his affable demeanor and charity work.
Since his indictment, Skilling has had two run-ins with the law for public drunkenness.
Skilling has asked that he be allowed to remain free on bail pending his appeals in the case. Lake will rule on that request Monday.
Prosecutors have also asked that Skilling turn over nearly $183 million, which they claim he pocketed while at Enron. The U.S. government had divided that amount between Skilling and Lay. But Lay’s death has left that amount solely on Skilling.
The government contends about $60 million in Skilling’s cash and property that has been frozen since his indictment could be applied to the total amount they are seeking.
Skilling, who was born in Pittsburgh and raised in New Jersey and suburban Chicago, spent 11 years at Enron.
He took over as chief executive from Lay in February 2001 but abruptly quit six months later, citing a desire to spend more time with his family. Prosecutors said he left Enron because he knew the company was on the brink of bankruptcy.