Skilling to get a new sentence

Some good news, but mostly not-so-good news for Jeff Skilling.

An appeals court today upheld former Enron Chief Executive Jeff Skilling's 19 federal felony convictions, but ordered a trial court to resentence him.

The three-judge panel of the 5th U.S. Circuit Court of Appeals in New Orleans sided with the government, ruling that a theory of guilt that backfired in other Enron cases didn't taint Skilling's convictions. But the court said U.S. District Judge Sim Lake improperly boosted part of Skilling's 24-year punishment under federal sentencing guidelines.

Without the specific sentence enhancement deemed improper by the panel, Skilling would face a sentence ranging from more than 15 years to more than 19 -- a reduction anywhere from five years to nearly a decade, said Brian Wice, a Houston attorney and expert in appeals.

Daniel Petrocelli, Skilling's attorney, said today they will continue to fight, whether it starts with a request that the entire 5th Circuit hear the case or an appeal directly to the U.S. Supreme Court.

"There are more battles to fight and we will fight them," he said.

Acting Assistant Attorney General Matthew Friedrich, said the Justice Department is "gratified" by the decision.

"Today's ruling is a victory for all those harmed by Jeff Skilling and his co-conspirators," Friedrich said. "Skilling was an architect of the crimes that caused Enron's collapse, the fallout of which is still being felt today."

Petrocelli said Skilling, who is imprisoned in suburban Denver, was disappointed, but committed to fighting on.

"This is a big setback," Petrocelli said. "He had his hopes pinned on winning this appeal, and we just have to fight in a different venue."

Would that include asking for a pardon? Time's running out on that front, I would imagine.

I don't really have an opinion on this one way or the other. I think Skilling was convicted fair and square, and I don't have much sympathy for him. Loren Steffy has more, while Tom has a contrary view.

01/07/09 | permalink | comments [0]

A pardon for Clemens?

Seems unlikely to me, too.

Two Houstonians -- former Enron executive Jeff Skilling and former Astros pitcher Roger Clemens -- are on a watch list kept by P.S. Ruckman Jr., a political science professor in Illinois who writes a blog on pardons and has written a book on the subject.

Skilling's lawyer, Daniel Petrocelli, said no request is being made on behalf of Skilling, who is in prison and appealing his conviction. No other Enron defendants were on Justice Department request lists as of Wednesday.

But Clemens' lawyer, Rusty Hardin, notes that a clemency request would make no sense, since Clemens is not charged with any crime, although the FBI is investigating whether he lied to Congress about steroid use.

There have been only very rare pre-emptive pardons, like President Gerald Ford's pardon of President Richard Nixon.

"That's an insane invention of people who have too much time on their hands," Hardin said of the question of a pardon for Clemens.

The blog post in question is here. It also mentions former baseball player Willie Aikens and quarterback Michael Vick; like Clemens and Skilling, none of them have an application in. Much ado about nothing, if you ask me, but it's a slow news period, so what the heck.

Speaking of Clemens, Richard Justice writes about the recent decision by Memorial Hermann to remove his name from the sports medicine institute he helped fund. He's critical of Memorial Hermann, but I found these paragraphs the most interesting:

This column isn't a defense of his behavior. He chose a path that might land him in prison and probably will keep him out of the Hall of Fame.

[...]

Few reporters ever get to know the people they cover. We don't usually know if they drink too much or chase women or pull the wings off butterflies when they disappear into the night.

That's the problem with confusing accomplishments on the field into judgments on character, integrity, etc.

So since Justice apparently does understand the distinction between the two, does that mean he'll vote accordingly when Clemens is up for induction? Check back in four years and find out.

01/03/09 | permalink | comments [0]

Pai pays up

Been awhile since there was an Enron-related story that interested me.

A former top Enron executive who sold nearly $300 million in Enron stock before the company cratered has agreed to pay regulators $31.5 million to settle civil allegations of insider trading.

The amount Lou Pai, 60, agreed to pay is the highest Enron-related settlement reached between an individual and the Securities and Exchange Commission, and the agency said it is one of the highest individual settlements in its history.

Other SEC fines gained in numerous Enron settlements since 2002 range from $30,000 to almost $2 million for individuals, though some higher amounts were split between the SEC and the Justice Department.

But Pai's settlement is a fraction of the $270 million or more that shareholders who sued him and other executives say he gained from stock sales.

"I'm just shaking my head. That makes me sick to my stomach," said Diana Peters, one of the thousands of employees left jobless when Enron collapsed in December 2001, months after Pai quit the company.

"He'll just move down the road and it won't even be a drop in the bucket for him," she said. "But if you've got that kind of money, I guess you can afford to buy yourself out of anything."

[...]

Pai, who was chairman and chief executive of Enron's retail energy division, Enron Energy Services, was among the more colorful yet elusive figures at Enron.

He was known to frequent strip clubs as part of enjoying the great wealth he gained from the company's generous bonuses and stock options, a former employee told the Chronicle for a story in 2003. Yet he avoided the spotlight while at Enron, and has done so since he resigned from the company in May 2001.

Yes, the movie "The Smartest Guys In The Room" talked a bit about Pai and his stripperphilia. He himself did not appear in the film, but there is an image of a jet plane taking off as whoever was speaking talked about how Pai cashed out and headed off to Hawaii with one of the girls from (I think) Rick's Cabaret.

The bulk of Pai's stock sales occurred as part of a divorce settlement more than a year before Enron crumbled. Pai has never been charged with crimes, and earlier this year was dropped as a defendant from a massive shareholder lawsuit in Houston.

[...]

The stock sales at the heart of the SEC complaint that Pai settled on Tuesday took place from May 18 to June 7, 2001. The SEC said he sold nearly 573,000 shares at $53.78 based on insider information that a division he once ran had financial troubles unknown to investors.

Specifically, the SEC complaint said Pai knew that Enron Energy Services faced substantial losses in the first quarter of 2001. The complaint notes that Enron's CEO and senior accounting personnel, along with Enron Energy Services management, "secretly revised" division reporting to avoid disclosing those losses. That revision came about by moving the retail division's trading arm into Enron's larger trading franchise, Enron Wholesale Services.

That action received much focus in the 2006 fraud and conspiracy trial of Skilling and Chairman Ken Lay. Skilling testified that the retail trading arm was moved into the larger division to combine like functions for efficiency's sake.

But David Delainey, Pai's successor as the head of Enron Energy Services, testified that the move was intended to hide millions of dollars in losses, the disclosure of which could threaten Enron's stock price and credit rating.

Reading this story reminds me why I was bothered less than folks like Tom were about the criminal cases that were brought against the likes of Ken Lay, Jeff Skilling, and so on. Pai was (eventually) punished through the civil process, but the punishment he received doesn't come close to balancing the scales, in my view. He's still a millionaire many times over - assuming he hasn't blown it all, of course - while so many other people, employees and shareholders, got wiped out. I think the only way the civil justice system could really make these guys pay for their wrongdoings is if it left them in the same shape as the people who were affected by their actions - namely, in a situation where they'd have to work for the rest of their lives because they no longer had any accumulated wealth. Here's a bit I wrote from my review of "The Smartest Guys In The Room":

There's a really poignant scene in which Portland General Electric lineman Al Kaseweter matter-of-factly states that he sold his entire retirement portfolio, which was worth $348,000 at its peak, for $1200.

PGE had been bought by Enron before the crash; like most Enron employees were encouraged to do, Kaseweter put the bulk of his retirement funds into Enron stock. Put Lou Pai in Al Kaseweter's shoes, and I'd agree that justice had been served. Same with Skilling and the rest of that crowd. But that's not how it works, so despite the problems associated with the Enron prosecutions, I think they were necessary.

07/31/08 | permalink | comments [1]

What's wrong with this picture?

Seen on the Chron's Business page yesterday evening:

Continue reading »

11/14/07 | permalink | comments [0]

Enron Broadband convictions tossed

Last year, on their second attempt, federal prosecutors secured convictions against former Enron Broadband Services CFO Kevin Howard. Yesterday, those convictions were dismissed.

A theory used by prosecutors and an instruction to jurors regarding deliberations prompted U.S. District Judge Vanessa Gilmore to issue a ruling Wednesday that erased five convictions of conspiracy, wire fraud and falsifying books against Kevin Howard, former finance chief of Enron's broadband division.

Howard was convicted of those crimes after facing a jury for the second time last year. His co-defendant, former broadband accountant Michael Krautz, was acquitted of the same counts.

Their first trial alongside three other ex-broadband executives ended in 2005 with no convictions, a few acquittals and jurors hung on dozens of other counts.

Howard's attorney, Jim Lavine, said his client was "very humbled and very grateful" at Gilmore's ruling.

"It has been a long road for him and very hard, but he has incredible support from his family and friends," Lavine said. "He has always believed the right thing would happen eventually."

The government retains the right to try Howard a third time. Justice Department spokesman Bryan Sierra said prosecutors were reviewing their options.

The government conceded last November that four of Howard's five convictions should be tossed aside because they likely would not stand up on appeal. But prosecutors argued that the fifth count stood apart from the others and should be upheld.

Howard's lawyers responded that the prosecution's theory tainted all five counts.

Third time's the charm? Color me skeptical. For more, read Tom, who saw this coming.

02/02/07 | permalink | comments [0]