Former Enron chief executive-cum-Bubba’s bitch Jeffrey K. Skilling today appealed the criminal convictions (19 charges of fraud, conspiracy, insider trading and misleading auditors) that got him 24 years in prison, and sought a new trial, on the grounds that the government’s case had “profound, inherent weaknesses.” Besides the vague (i.e. golden) argument that there were “serious frailties in the legal theory that federal prosecutors employed to convict Skilling,” the defense team from O’Melveny & Myers also claim that the length of their client’s sentence is unfair (it is four times longer than those of the other Enron execs, six years longer than the average federal sentence for murder). But O’M and M’s pièce de résistance—in our humble opinion—is the argument that it isn’t right to send someone to jail for 24 years just because he/she just happened to draw the shortest straw.
“Someone would have to pay for Enron’s failure,” defense lawyers said. “That someone was Jeff Skilling—the last man standing when the court meted out its punishment.” (“As you well know, Lay dodged that ‘last man standing gets the worst prison sentence’ bullet, but it could’ve just as easily been him. Are you going to penalize our client for not having the foresight to die first? That’s just bad business, gentlemen.”)
The Justice Department will respond with its own filing possibly as early as next month.
Jim Chanos’s take? “Maybe Jeff just misses the scandal limelight. After all, the Enron Boys were a lot more interesting than SIV-lites, “Tier 3″ derivative accounting, and missing assets at money-market funds!” (And also, we imagine but cannot say for sure, because this was all over e-mail: unadulterated maniacal laughter.)
Former Enron Chief Appeals Conviction [Washington Post]
Skilling Appeal [CNBC]
Jeff Skilling
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Posted in:
Enron
You Must Tell Jeff Skilling He’s a Money Laundering Criminal At Least Two Times Before He Will Believe You
By Bess Levin-
Posted in:
Enron
Enron Enablers’ Request That Court That Thinks The Whole Enron Deal Was ‘Totally Blown Out Of Proportion And, To Be Honest, A Bunch Of BS’ Be Taken Into Consideration Denied
By Bess Levin
U.S. District Judge Melinda Harmon has denied the pleas of Merrill Lynch, CSFB and Barclays PLC to delay a $40 billion lawsuit by former Enron shareholders and investors against them; the suit will now go to trial April 9. In their argument for a delay, defense for the banks—accused of playing a key role in the company’s collapse—argued that they should wait for a pending decision from the 5th U.S. Circuit Court of Appeals. In a motion, attorneys offered:
There is nothing sinister about the suggestion that since the Fifth Circuit will be ruling on that appeal, the court and the parties should take the time to apply the Fifth Circuit’s guidance to the class definition, the parties, the claims and the defenses before sending class notice and embarking on a jury trial estimated to last many months.
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While sinister may not be the right word to describe it—we’re a bit more partial to ‘underhanded,’ ‘conniving,’ ‘in line with the nature of unmitigated pricks’ [Ed.'s note: some around here think that last one was too mean, and prefer, 'in line with the schemes of evil genius lawyers']—, the desire to wait on the Fifth circuit would certainly be in the best interest of the banks, as the Fifth is the very same one that said there was trouble with Skilling’s convictions and seems to be very skeptical about the Enron case in general. In other news, we received a tip late last night that Ken Lay was spotted on line at the UWS Gray’s Papya. Anyone got confirmation?
Judge denies motion to delay Enron suit [AP via DealBook]
The criminalization of Enron is really starting to unwind. The Houston Chronicle reported last night that the Justice Department won’t seek to overturn a fifth circuit appeals court decision throwing out most of the 2004 convictions of several Merrill Lynch bankers.
The convictions for fraud and conspiracy of four Merrill executives were thrown out last August when the court ruled that the prosecutors had presented the jury with an improper legal theory. Prosecutors had argued that the conduct of the defendants had deprived Enron of its right to their “honest services.” The appeals court ruled that since the allegations did not involve bribery or theft, and the conduct of the defendants was consistent with Enron’s corporate goals, the defendants could not be convicted on the “honest services” theory.
Since the prosecution of former-Enron CEO Jeff Skilling, who is now serving a 24-year and four month jail sentence, also used the “honest services” theory, there has been some speculation that the court’s decision might be a sign that it could overturn some of his convictions as well. When the fifth circuit court denied Skilling bail in December, it noted that there were “serious frailties” with his conviction on securities fraud and insider trading convictions.
The decision by the government not to appeal the fifth circuit ruling means that Skilling’s appeal before the same court will be able to rely on ruling as controlling law. It may be too early for Skilling to pop the cork on the champagne. But it’s probably not too early to start putting some on ice.
Government won’t challenge appeal court’s decision in Enron-related case [Houston Chronicle]
Well. Okay. That headline may be a bit strong. But Malcolm Gladwell’s New Yorker piece on Enron certainly has definitely brought the issue of Jeff Skilling’s conviction and incredibly harsh sentence back into public discussion. At least if “people writing on the internet” counts as “public discussion.”
Some recent responses:
• Larry Ribstein asks: “So how about this angle — although we still don’t know exactly what Skilling did wrong (if anything), he’ll be rotting in jail for a generation…I’ve already pointed out a zillion times that the criminal laws were wildly inappropriate to deal with this case. Just maybe Gladwell’s found a way to say it that people will finally listen to, even if they don’t really understand it.”
• Houston attorney Tom Kirkendell is even more blunt: “Reading Gladwell’s account along side this earlier post on the case against Jeff Skilling, is there really any meaningful doubt that an enormous injustice has occurred in regard to the conviction and sentencing of Skilling to 24 years in prison?”
• Michael Statsny says there probably isn’t some legislative solution to the problem of a Gladwellian mystery: “Inevitably, disclosure requirements just increase the amount of bureaucratic information produced. What you want is only the pertinent information revealed, but you can’t legislate that, so you get lots of verbiage instead.”
• And there’s more from Point of Law and Conglomerate.
One of the great talents of Malcolm Gladwell is describing something lots of people have been talking about for a long, long time in a way that makes it seem freshly insightful. The latest New Yorker essay is a perfect example of this form. Gladwell argues that what really made Enron’s financial statements inscrutable was not the failure to disclose financial chicanery but overdisclosure. In Gladwell’s words—Enron was not a “puzzle” (ie, a problem of too little information) but a “mystery” (too much information). That’s something a lot of people have been saying about our current disclosure and governance regime but without Malcolm’s nifty trip through World War II Nazi spies. Reading him makes you realize that this is why he is a best-selling author and highly paid journalist for a medium-brow weekly magazine while, say, we are not. We would have to got straight to the point and told you the problem was cumbersome disclosure.
One other point bears noticing about Malcom’s article. First, he flat-out says the prosecutor’s theory of the Enron case was wrong. And he does this after telling the story of the sentencing in a way that is clearly sympathetic to Jeff Skilling and illustrates the arbitrariness of his sentence. Do we smell a Jeff Skilling comeback in the air?
Open Secrets [New Yorker]
Skilling arrived at the low-security prison a little after 1 p.m. EST [today] in a small silver SUV. The vehicle pulled up to the front gate, and at least four people got out. Skilling hugged a woman who arrived with him, and the entourage walked into the prison. A few minutes later, everyone except Skilling emerged and the SUV drove away.
The indentity of the woman Skilling hugged was not known.
No word on whether or not she’s in on his scam.
Skilling Starts Longest Prison Term in Enron Case [AP via NYTimes]
One of the things that has helped us endear us to Jeff Skilling—other than our fanatically contrarian hearts that attach themselves readily to public enemies and our appreciation of the fact that much of what Enron has been vilified for really that different from the practices of much of corporate America—has been the repeated stories of his problems with alcohol. There was that incident in New York City, where he may or may not have gotten into some sort of brawl in a bar. And the more recent arrest for public drunkenness in Texas. How can you not like a guy like that?
But today’s news accounts have got us second-guessing Skilling. And so we are at least considering a charge so serious that it has as far as we know, never been leveled in American history—the charge that Jeff Skilling is a fake drunk. You see, today we learned that Skilling could have as much as a year reduced off his jail term if he enters an alcohol treatment program. So could these very public alcohol-related incidents, all of which occurred after his legal troubles began, have been a plot to create this tunnel to an early escape from the Big House?
We, of course, have no idea about the secrets of Skillings heart, much less his the alcohol content of the blood pumping through it. But would you put that past one of the “smartest guys in the room?”
Yesterday the full DealBreaker crew hit a Manhattan watering hole in honor, among other things, of Jeff Skilling’s last night of freedom. The former Enron honcho was scheduled to report to jail, and we decided to raise a couple of glasses to the end of his freedom. Apparently, we were drunkdrinking without cause–late yesterday a federal appeals court pushed off the day when Skilling has to report to prison.
From the Wall Street Journal:
Late yesterday, Mr. Skilling’s lead criminal defense attorney, Daniel Petrocelli, said he received notice that the Fifth Circuit Court of Appeals had ordered a delay in his client’s scheduled report date to a federal prison in Waseca, Minn., where he was to begin serving a more-than-24-year prison sentence. Mr. Skilling received that sentence as the result of being convicted earlier this year in a Houston federal court on 19 criminal counts, including conspiracy and fraud, arising from Enron’s December 2001 collapse into bankruptcy. Mr. Skilling, who has consistently maintained his innocence, had been planning to fly to Minnesota this morning to report to the prison, Mr. Petrocelli said.
Skilling’s Check-In To Prison Delayed Over Bail Request [Wall Street Journal]
As it turns out, we’re not quite alone in lamenting the quasi-life sentence handed out to Jeff Skilling yesterday. Twenty-four years seems an awfully long time for what Skilling was convicted of to a lot of other folks as well.
• Larry Ribstein says “the lynch mentality that has surrounded Skilling and Lay is appalling” and notes that Skilling got “13 years longer than Al Capone.”
• Ellen Podger asks “If we are so intent on punishing the wrongdoer with heavy prison time, then how can we accept Andrew Fastow being sentenced to 6 years, or Scott Sullivan receiving 1/5 of the sentence received by Bernie Ebbers. It becomes clear that what we are really doing here is punishing individuals who exercise their right to a jury trial. And permitting the government to continue this practice is not proper.”
• Geoffrey Manne says: “…Skilling’s sentence is problematic not only because…it is probably disproportionate to the actual crime (which I take it is the point Dave wants to see the rest of us make about drug prosecutions), but also and primarily because the costs of excessive prosecution are so large.”
• And Christine Hurt explains why defending Jeff Skilling is hardly indefensible.
Wow. That’s a pretty smarty pants group of folks coming in on the DealBreaker tequila soaked Skilling Prison Blues side of things. Which is kind of scary. Usually when this many academic types start to agree with us we start wondering if we’ve got it wrong.
Corrupting the young was one of the charges that got Socrates served hemlock. A day after Jeff Skilling received a 24 year sentence for his role in the destruction of Enron, Peter Cohan asks whether or not Harvard—Skilling was a Harvard Business School graduate—should bear some responsibility for its students misdeeds.
And it’s not just Skilling. As Cohan shows, Harvard had more ties to the Enron scandal than just its most famous convict. It’s a tangled web of personal and institutional connections—which is not exactly surprising. At one time, Enron was considered one of our most successful corporations. Of course, it would have ties to one of most prominent academic institutions.
Fortunately for Harvard, we’re not in the hemlock business anymore. Cohan prescribes some less lethal remedies.
Since so many business and government leaders attend Harvard on their rise to the top, Harvard should examine whether it could be doing more to screen its students for their ethical values and reinforce those values so that its name is not dragged through mud again by its connections to shady ethics at the top.
Enron’s Harvard connections [Blogging Stocks]
The verdict is in! Jeff Skilling got sentenced to 24 years for his role in the Enron collapse. Certainly one of the harshest white collar crime sentences on record but short of the record-breaking number that some had predicted. In our reader poll, 13% picked 21 to 25 years for his sentence. Sixty-three percent of our readers who responded to the poll thought Skilling would get 20 years or less.
So why did our respondents think the sentence would be lighter? We suspect that twenty-four years strikes a lot of people involved in business and finance as extremely harsh for the crimes Skilling was convicted of. In any case, Jeff’s probably had his last margarita for a long time. Don’t worry Jeff, we’ll order one for you at the bar tonight and then give it away to a stranger in your honor. Preferably a good looking stranger with post-modern moral views.
Former Enron CEO Skilling sentenced to 24 years [Associated Press in Seattle Times]
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