'Enron' sentencing.

Bortaz

Banned
'Enron' sentencing.

Skilling was sentenced for his part in the Enron scandal. So, who got off easier, him, or Lay?

Jeffrey Skilling is sentenced to 24 years, 4 months in prison for role in Enron collapse

(AP) Former Enron CEO Jeffrey Skilling, the most vilified figure from the financial scandal of the decade, was sentenced Monday to 24 years, four months in the harshest sentence yet from the energy trading giant's collapse.

U.S. District Judge Sim Lake ordered Skilling, 52, to home confinement, wearing an ankle monitor, and told the U.S. Bureau of Prisons to recommend when Skilling should report to prison. Lake recommended no date, but suggested Skilling be sent to the federal facility in Butner, N.C., for his role in a case that came to symbolize corporate fraud in America.

Skilling, insisting he was innocent yet remorseful in a two-hour hearing, was the last top former official to be punished for the accounting tricks and shady business deals that led to the loss of thousands of jobs, more than $60 billion in Enron stock and more than $2 billion in employee pension plans when Enron collapsed.

Lake denied Skilling's request for bond.

Skilling's term is the longest received by any Enron defendant; former chief financial officer Andrew Fastow was given a six-year term after cooperating with prosecutors and helping them secure Skilling's conviction. It falls just shy of the sentence imposed on WorldCom CEO Bernard Ebbers, who received 25 years for his role in the $11 billion accounting fraud that toppled the company he built from a tiny telecommunications firm to an industry giant.

Skilling stood with his hands clasped below his waist, with attorney Daniel Petrocelli at his side. He gave no visible reaction to the sentence. After court adjourned, Skilling hugged Petrocelli.

Skilling's arrogance, belligerence and lack of contriteness under questioning made him a lightning rod for the rage generated by the collapse of Enron in 2001.

"Your honor, I am innocent of these charges," Skilling told Lake. "I'm innocent of every one of these charges.

"We will continue to pursue my constitutional rights and it's no dishonor to this court and anyone else in this court. But I feel very strongly about this, and I want my friends, my family to know that."

Skilling also disputed reports that he had no remorse for his role in the fraud that led to Enron's collapse in 2001, which wiped out thousands of jobs, more than $60 billion in market value and more than $2 billion in pension plans.

"I can tell you that's just the furthest thing from the truth," he said. "It's been very hard on me, but probably, more important, incredibly hard on my family, incredibly hard on employees of Enron Corp., incredibly hard on my friends and incredibly hard on the community.

"And I want my friends, my family to know this."

Skilling's second wife, former Enron corporate secretary Rebecca Carter, was in the courtroom.

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.

On Monday, Lake set investor loss tied to his actions at $80 million, which he will rely on to set the sentence under new, tougher federal guidelines. With that figure, Skilling faced between 24.3 years to 30.4 years in prison.

Skilling also faces more than $18 million in fines for his crimes.

Victims unleashed nearly five years of anger on Skilling and begged Lake to send Skilling to prison for life.

"Mr. Skilling has proven to be a liar, a thief and a drunk, flaunting an attitude above the law," said 22-year Enron employee Dawn Powers Martin. "He has betrayed everyone who has trusted him. Shame on me for believing the management of Enron."

Two chose not to vilify Skilling, however.

"I can't state strongly enough, during 20 years, have I seen or heard anything that he was leading a massive conspiracy to mislead Enron shareholders and employees," said one of them, Sherri Sera, a former administrative assistant. She said she too had lost thousands in Enron stock and benefits but took blame for her own failure to diversify.

Skilling's 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 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.

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.

During his trial, Skilling listed his remaining assets as including a $5 million mansion in Houston, a $350,000 condo in Dallas, a Mercedes Benz, two Land Rovers and nearly $50 million in stock and bonds frozen by the government.

Skilling also still owes Petrocelli and his team about $30 million beyond the $23 million already paid in legal fees.

Skilling, who was born in Pittsburgh and raised in New Jersey and suburban Chicago, spent 11 years at Enron. He has three children _ aged 22, 20 and 16 _ from his first marriage. He and Carter have no children.

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.
 

DurfBarian

Diabloii.Net Member
Lay, because the charges against him have been dropped following his death so no money can be taken from his obscenely inflated estate.

Here's to Skilling dying of old age in prison.
 

ADSL

Diabloii.Net Member
I didnt bother to read the entire quote, but is he expected to serve all 24 years?
If so i really like your laws.
The other day we had a guy sentenced to 8 years in prison for stabbing someone to death. He got 8 years because he was charged with violence with death as a result, if he had been charged with murder first degree the max sentence anyone can get in Denmark is 16 years. more likely he will get 10-12 years.
 

AeroJonesy

Diabloii.Net Member
Lay, because the charges against him have been dropped following his death so no money can be taken from his obscenely inflated estate.

Here's to Skilling dying of old age in prison.
Lay's criminal charges were dismissed. The civil claims can still proceed against his estate. That's where all the money is anyway, especially in punitive damages.



 

Dondrei

Diabloii.Net Member
I'd make some sort of mordacious comment about how short the sentence for rape is by comparison, but that's kind of silly really given that a rape sentence is shorter than just about anything. I wouldn't be surprised if people have been put away longer for jaywalking.
 

Gertlex

Banned
Skilling also still owes Petrocelli and his team about $30 million beyond the $23 million already paid in legal fees.
I'd diss lawyers, but I'd be a hypocrite... Grandpa was a better lawyer than these guys though:smiley:
 

Dutchman

Diabloii.Net Member
With no conviction against lay on the books it will be much more difficult for civil suits to succeed against his estate. Lay dying was the best thing that could happen to his family from a financial perspective.

Okay, time to voice what will undoubtedly be an unpopular opinion. 24 years for a financial crime is just plain absurd. This sentence is nothing more than vindictiveness. The man did not even steal, he either a) was grossly incompetent or b ) hid stuff to try and allow Enron to dig out of a serious hole. His worst crime was continuing to recieve his own compensation during this whole period. This makes him an asshole, not a criminal.

You want to punish someone for a financial crime? Make the punishment financial. Strip ever last penny the man has and leave him broke. Let him flip burgers or beg from his friends. That would be an appropriate punishment. Jail time is absurd, let alone 24 years. The message here is that screwing around as a top executive in a large company is worse than killing someone? Outside of premeditated murder what is an average sentence for murder or manslaughter, 15 years? This guy cost people money, either as a side effect of trying to salvage a bad situation or through neglect, and that is somehow worse than ending the life of a human being? This is somehow worse than one of these people who intentionally bilks investors, stealing from little old ladies, etc, etc, who routinely get 3 years, if any jail at all. 24 years? It makes bitter people feel all warm and fuzzy, at leasy to my logic, it makes no sense whatsoever.

Yes, he is responsible to some degree, we don't know how much in truth, for people losing a lot of money, but you know who else is responsbile? The investors themselves. Whether employees, outsiders, doesn't matter.

Do any research at all on investing and one 4 letter word will pop up pretty frequently; RISK. What is universally accepted as the riskiest investment? Securities, in other words stock. I've read the stories about employees who had their entire retirement fund in company stock, and regard them as unlucky fools. Any 63 year old who has even 20% of his portfolio in equity is foolish, no matter how much his employer is making it extra lucrative to do so. 100% in company stock, thats plain greed.

Take a look at the pension or investment paperwork your employer gave you along with your pension documentation and I gaurantee you it will include a lesson on risk. It will talk about which investments are safer and how someone should diversify their portfolio to make sure they aren't destroyed if the worst happens. Anyone who "lost everything" chose to ignore this #1 rule of investing because the money being made on the stock side of things was so high at the time. They got greedy, plain and simple, and they are as responsible for thier misfortune as any Enron executive. They did not contribute to the collapse, but they allowed greed to set themselves up to be ruined. Had they followed even the basic tenets of investing, they would either still be financially viable, even if hurt to some degree, or they would young enough to recover. 100% of your retirement plan in company stock? You better be under 30 or you are an idiot, a greedy idiot.

It isn't that I don't feel bad for people who lost money, I genuinely do, but the concept that the "victims" are all innocent and the executives are the devil, worthy of punishments equal to or greater than society's murderers, rapists, and violent criminals is just plain dumb. That is anger talking, not logic. What many people fail to understand is that while the accounting being done at Enron was silly, it was perfectly legal. 24 years for being unethical? Better lock up 80% of this continents population. How's 24 years sound?

/rant

Dutch
 

Talga Vasternich

Diabloii.Net Member
Dutchman said:
You want to punish someone for a financial crime? Make the punishment financial. Strip ever last penny the man has and leave him broke. Let him flip burgers or beg from his friends. That would be an appropriate punishment. Jail time is absurd, let alone 24 years.
I agree that 24 years is too high, but he ruined a whole lot of lives and careers.

Dutchman said:
Do any research at all on investing and one 4 letter word will pop up pretty frequently; RISK. What is universally accepted as the riskiest investment? Securities, in other words stock. I've read the stories about employees who had their entire retirement fund in company stock, and regard them as unlucky fools. Any 63 year old who has even 20% of his portfolio in equity is foolish, no matter how much his employer is making it extra lucrative to do so. 100% in company stock, thats plain greed.
It isn't that I don't feel bad for people who lost money, I genuinely do, but the concept that the "victims" are all innocent and the executives are the devil, worthy of punishments equal to or greater than society's murderers, rapists, and violent criminals is just plain dumb. That is anger talking, not logic. What many people fail to understand is that while the accounting being done at Enron was silly, it was perfectly legal. 24 years for being unethical? Better lock up 80% of this continents population. How's 24 years sound?
Funding the Enron pension fund with 100% Enron stock is more than "unethical", it's negligent... and it is criminal.
Lying about the prospects of the company stock... saying it is strong when you know for a fact that it's crumbling (and you are selling as fast as you can) is illegal. RISK, as you put it, is one thing... this is completely different. Not allowing employees to sell Enron stock from the company-run 401k plan when they had a good idea it was going down and would never recover is also illegal.
That people got greedy is one thing (one that I agree with), but officers of any company have a duty to the shareholders. This duty was knowingly and willingly tossed aside by Enron executives for their personal gain (also illegal).
Don't forget the illegal practice of selling energy to satellite companies (fictional companies "owned" by Enron execs., mind you) and selling it back to inflate sales figures.
These are just off the top of my head, and there are a lot more illegal/criminal activities that went on in the Enron collapse. Combine all these illegal activities, charge them in criminal court with these and see what it adds up to, in terms of years that they could possibly be in prison and you'll see that 24 years (while I agree is excessive) is just a drop in the bucket compared to what they were facing.

/anti-rant
 

Dutchman

Diabloii.Net Member
I freely admit I know more about Lay's situation than Skilling's. If Skilling was offloading his stock thats news to me, and reeks quite a bit. Lay I know was actually buying stock, and lost tens of millions more as a result of those purchases. Doesn't strike me as someone who knew the end was near.

All of this stuff is, sad to say, pretty standard business. Had they hidden their off BS woes, then been successful in fixing the problem, and it had come out years later what had happened, investors would have hailed them as gods for protecting the stock value. This all just stinks to high heaven of self interest and revenge, rather than justice, which is why it bothers me.

Dutch
 

Dutchman

Diabloii.Net Member
I wholeheartedly disagree. Maybe I'm just optimistic about the business world, but I don't think the actions taken by Enron were "standard business."
To clarify, I meant that manipulating results to keep investors happy is standard business. The extent to which Enron took it is unusual, if not particularly suprising. There are those however, who still insist that had Enron been left alone, they would have sorted themselves out and remained viable, the media attention surrounding the situation is what killed them, not the situation itself. I'm not sure I agree, but I'm sure it didn't help.

Dutch



 
Lay is Lucifer's ***** right now. Skilling has to wait for it. Skilling has the worst punishment. But at least Bubba will get him all ready for Lucifer.
 

AeroJonesy

Diabloii.Net Member
There are those however, who still insist that had Enron been left alone, they would have sorted themselves out and remained viable, the media attention surrounding the situation is what killed them, not the situation itself. I'm not sure I agree, but I'm sure it didn't help.
They finished digging their grave long before it went public. Quarter billion dollar unsecured loans, fake companies to hide assets, it all amounted to trouble.

I don't know that much about the case, but I think what ended up sinking Enron was an unsecured $240 billion dollar loan to one of its fake subsidiaries that required the payment to the bank of Enron stock should the price drop below a certain level.



 

Dutchman

Diabloii.Net Member
fake companies to hide assets
Just want to be perfectly clear, at the time, and possibly even today (I don't know), off balance sheet financing was perfectly acceptable with Generally Accepted Accounting Principles. They were not technically doing anything wrong by having tons of debt that didn't show in their financial statements.

Hell, their accounting firm was showing them how to set this stuff up.

Dutch



 

AeroJonesy

Diabloii.Net Member
Just want to be perfectly clear, at the time, and possibly even today (I don't know), off balance sheet financing was perfectly acceptable with Generally Accepted Accounting Principles. They were not technically doing anything wrong by having tons of debt that didn't show in their financial statements.

Hell, their accounting firm was showing them how to set this stuff up.

Dutch
There's a difference between not showing your debt and fraudulently certifying that you have independent investment when you really don't.



 

Dondrei

Diabloii.Net Member
Okay, time to voice what will undoubtedly be an unpopular opinion. 24 years for a financial crime is just plain absurd. This sentence is nothing more than vindictiveness.
I agree, in fact I tend to think that any jail time for white collar crime is a bit silly. And crimes with a high profile or political context get disproportionately high penalties attached - often the crimes you never hear about are the most sickening, and they get much less because the justice system has limited funds and has to prioritise.

I don't know about your arguments about risk however. I'm no expert on this case but if there was genuine fraud then that of course is a big deal. I do agree with you about the commonality of "creative accounting". My wife was briefly studying to be an accountant and the very first lesson she got was that there are always lots of different ways to present the state of the accounts, and it's a large part of the accountant's job to tell the right people the right things. A dangerous line to walk.

And you're also quite correct about shareholders; when it works, the CEOs are gods. There can be something of a culture of unaccountability because of this, and also because the lines are not clear; a little bit of skulduggery is practically mandatory. It's a big problem and Enron is an example of what can happen if everyone is less than scrupulous.

Dutchman said:
You want to punish someone for a financial crime? Make the punishment financial. Strip ever last penny the man has and leave him broke. Let him flip burgers or beg from his friends. That would be an appropriate punishment. Jail time is absurd, let alone 24 years.
This is possibly my opinion also, on the other hand it has often been pointed out to me that making a rich person broke is no easy task, hell look at all those rich crooks who declare bankruptcy and then get around in brand new limos and thousand-dollar suits. There are just way too many loopholes to hide money in.



 

Bortaz

Banned
I believe he was charged with a federal crime. There is no parole for federal crimes. If I'm right about this, he'll serve the entire 24 years.
 

llad12

Diabloii.Net Member
Before heading off to prison, Skilling and all the other crooks at Enron should be put into stocks at a public square for a day and all the people they ripped off should have the chance to throw rotten tomatoes at them.

It won't bring back their money, but they might feel better ... momentarily. :laugh:
 
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