Jeff Skilling

skilling.jpgFormer 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]

enron.jpgU.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.

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]

  • 16 Feb 2007 at 3:31 PM
  • Enron

Enron: Now Even Less Criminal Than Ever

freejeffskilling.jpgThe 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]

  • 14 Feb 2007 at 1:29 PM
  • Enron

Jeff Skilling To Serve Just Six Months?

freejeffskilling.jpgWord is starting to spread that Jeff Skilling might not have to serve out the 24 years to which he was sentenced after his trial. Over at the Conglomerate blog, Christine Hurt lifts the following sentence out of the Fifth Circuit’s December 12th order denying Skilling bail: “Our review has disclosed serious frailties in Skilling’s conviction of conspiracy, securities fraud, and insider trading, difficulties brought by a decision of this court handed down after the jury’s verdict, as well as less formidable questions regarding the giving of a jury instruction on deliberate ignorance.”
Hurt says this could all indicate that Skilling might end up serving a lot less time.

So, why was he denied bail? Well, even if the Fifth Circuit thinks that the counts of conspiracy, securities fraud and insider trading are vulnerable on appeal, there are still five counts of false statements to auditors. The time to be served on convictions standing after an appeal would have to be less than the duration of time between December 12, 2006 and the appeal. So, the Fifth Circuit might be saying that much of the conviction may be reversed, but there could still be six months to a year to serve at the end of the day. Well, that’s a lot different than 24 years. Remember that when the Fifth Circuit sua sponte released the Merrill Lynch bankers William Fuhs, Daniel Bayly and Robert Furst from prison pending appeal the bankers had already served one year and had been sentenced to 37- and 30-month sentences.

She goes on to wonder why more wasn’t made of this at the time the order was issued, joking that she’s going to file the entry under “How Did I Miss This?” Well, as much as we hate to toot our own horn, she wouldn’t have missed it if she was reading DealBreaker, which mentioned the “serious frailties” the very next day.

Re-reading the Fifth Circuit’s Denial of Skilling’s Bail Pending Appeal
[The Conglomerate]

The “Free Jeff Skilling” Movement Grows

freejeffskilling.jpgWell. 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.

  • 02 Jan 2007 at 2:05 PM
  • Enron

Puzzles, Mysteries and the Vindication of Jeff Skilling

skilling.jpgOne 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]

Jeff Skilling Reports To Prison, Hugs Mystery Woman


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]

Irresponsible Speculation: Is Skilling A Fake Drunk?

skilling3.jpgOne 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?”