Skilling Gets 24 Years in Prison for Enron Fraud

Houston Chronicle ^ | Oct. 23, 2006, 3:56PM | Tom Fowler

[Ready4Freddy]

Former Enron CEO Jeff Skilling was sentenced today to 24 years in prison for his role in the energy company's 2001 collapse in what become one of the nation's biggest corporate scandals.

U.S. District Judge Sim Lake ordered Skilling to home confinement with an ankle bracelet to monitor his movements. He told the U.S. Bureau of Prisons to recommend when Skilling should report to prison and suggested he be sent to the federal facility in Butler, N.C.

"This is not an easy decision,'' Lake said. "Sentencing is the most difficult and least pleasant part of my job Mr. Skilling has a family who loves him.''

He added, however, "His crimes have imposed on hundreds if not thousands, a life sentence of poverty."

Lake's sentence, more precisely 292 months, also ordered Skilling to participate in alcohol and mental health programs. He also approved the forfeiture of $45 million to be distributed to Enron employees.

That money will be distributed via the civil shareholder case going on before U.S. District Judge Melinda Harmon.

Defense attorney Daniel Petrocelli argued for a 10-month reduction, so that the 52-year-old Skilling could serve at a lower-security prison. Lake refused.

Skilling's sentencing marks vindication for some and a capstone to an era of corporate crime for others.

Victims of the company's downfall hope it will provide a satisfying coda to their search for justice and retribution.

"I want him to see life without parole, for all the lies he told us and others," said Charles Prestwood, a former Enron pipeline employee who lost his pension.

To others, the timing of Skilling's sentencing, after most of the other large corporate scandals such as WorldCom and Adelphia have played out, brings a tidy end to an era...

[Thombo2]

Good point.There is no way this massive fraud could have been perpetrated w/out the active collusion of the so called "independant" outside auditors.Bottom line-Andersen chose to ignore the obvious in order to continue to collect fees for consulting services.

[Ready4Freddy]

Here's Fastow's Fed ID if you wanna follow his progress through the system:

1. ANDREW STUART FASTOW 14343-179 44 White M

Fastow gave up ~$30 million in cash and property as part of his plea agreement (and don't labor under the mistaken idea that the Feds weren't aware of property transfers, which can be unwound).

He'll have to do at least 5 years, and there's a good chance that the Feds will appeal his sentence to try to get it back to the previously-agreed-upon 10 years. Hey, ya pays yer money and ya takes yer chances - Fastow's testimony nailed Lay & Skilling (who gives up ~$45 million). The big kahunas chose a trial, and lost, not unusual that they were facing more time.

'..didn't pay their grocery bills..'- lol, the Weingartens sold their grocery chain what?, 26-30 years ago? Some family members do run a REIT (Weingarten Realty Trust), a very successful one by their record over the last >20 years.

[mvpel]

http://www.wcax.com/Global/story.asp?S=4319605

There was outrage Wednesday when a Vermont judge handed out a 60-day jail sentence to a man who raped a little girl many,many times over a four-year span starting when she was seven.

[Inwoodian]

Is there anyone who thinks Mr. Skilling's crimes merited longer incarceration than those commited by Lynn Stewart, The Terrorist Lawyer?

[WLR]

When they locked up Martha Stewart I knew that was a sham..

This guy. He may be a crook. He may be a rich crook but in any case something tells me.

This guy is just the Goat.



W

[Ready4Freddy]

Dunno, different case, different crime, different Fed District. I don't look for equivalence in these things.

[ladyjane]

Actually the Weingarten's scandal was for a bit more than people not paying their grocery bills. Apparently they had (have?)some politicians in their pocket and there was some illegal money changing hands going to lobbyists and political campaigns. And yes, they also were illegally getting LEO's to go after people who didn't pay their grocery bills.

No wonder Leah Weingarten (she apparently never took Fastow's name) was comfortable with the schemes and the sham companies. Even though she was an Enron treasurer and had an MBA in finance she claimed she didn't know about the schemes or sham companies - even the ones that were named after her.

But let's all celebrate some other guy's 26 year sentence.

[meandog]

He'll have to do ~20 years under current Fed guidelines, if his 24 years withstands appeal. His sentence was well within the Fed sentencing guidelines, and far less than what he could have received.

It still seems a bit harsh to me, considering that a drugged-up doper in this state would get just 7 years for armed robbery of a convenience store! True, the sentence for the doper would be in a tougher pen, than old Jeffy...but Skilling:
1. Wasn't alone in his bilking ENRON's pension plan,
2. He and Ken Lay believed the stock was going to right (doesn't excuse him) itself.
3. Has had to pay a hefty fine for crime too.

[Ready4Freddy]

I left Houston somewhat before the Weingartens sold their grocery chain (to Safeway(??), I remember the one on Bellaire Blvd @ Rice becoming a Safeway) in 1980, do you have a link or something for this 'scandal'?

And yes, they also were illegally getting LEO's to go after people who didn't pay their grocery bills.

So... are you saying that Lea Weingarten was involved in the grocery bill 'scandal'? Was she popping caps in a shopper's a$$? Or breaking kneecaps, all while she was in High School or early college, apparently? BTW, she was charged and incarcerated under the name Lea W. Fastow...

No wonder Leah Weingarten (she apparently never took Fastow's name) was comfortable with the schemes and the sham companies.

I doubt that the Feds ever really wanted Lea Fastow - they used the threat of her prosecution to get Andy to play ball. They even dropped the 2 directly-Enron-related charges against her in the negotiations (leaving the Federal tax charge to which she pleaded guilty), no doubt due to, among other things, the difficulty of prosecuting a wife on the basis of a husband's testimony. The Feds already had all the little guys they wanted, before Andy Fastow decided to cooperate. Consider all that happened to Lea Fastow as the dance the Feds engaged in to get what they really wanted - Lay & Skilling, and the only way they were going to get them was through Andy Fastow. You can see her indictment here:

United States v. Lea W. Fastow (PDF) (note the styling of the case)

and her Plea Agreement here:

United States v. Lea W. Fastow (PDF) (again)

Even though she was an Enron treasurer and had an MBA in finance she claimed she didn't know about the schemes or sham companies - even the ones that were named after her.

As an aside, ladyjane, you seem to have a real bee in your bonnet regarding the Weingartens. What's up with that? We were able (I think) to pay our grocery bills, but we usually shopped at Henke & Pilot...

[ladyjane]

I'll look for more information about the scandal. I ran across it quite a few months ago while reading about the Enron scandal.

The bee in my bonnet is about Fastow who by every account was the person running the illegal bookkeeping and the scam companies. Apparently he was the one, along with his wife, who were making the millions. Look at the charges against Skilling. He was found not guilty of all those insider trading charges. He was never even accused of syphoning off money from the company.

Skilling was mainly accused of signing letters to investors and annual reports based on numbers provided by the CFO. Fastow was the CFO and his wife had been a treasurer.

BTW - after Fastow cut his deal his wife refused to accept it and supposedly cut her own deal! LOL

[Ready4Freddy]

Thanks, I'd love to see the details of the grocery bill 'scandal'.

You might have missed the reports of investigation & negotiations re: Lea Fastow when they were transpiring, and perhaps my comments earlier re: the prosecutors using threats of her prosecution to get to Andy Fastow.

The separate Plea Agreements of the Fastows are intertwined, and cross-referenced. They had to be. They're also signed & dated the same day, January 14, 2004.

BTW - after Fastow cut his deal his wife refused to accept it and supposedly cut her own deal! LOL

[livius]

Sickening (about Fastow).

I have translated a lot of docs dealing with the Latin American fallout of this. The odd thing was that it always seemed to me that the Enron folks were acting with complete honesty and with the diligence of a good businessman. But obviously, somebody somewhere along the line wasn't...

[ladyjane]

I started looking for the grocery store scandal story that I had read months ago and ran across this 2003 story about Mrs. Fastow from Business Week Online:

On May 1, federal agents handcuffed her and charged the Houston heiress with helping Andrew orchestrate one of the most notorious white-collar crimes in history. She's accused of wire fraud, money laundering, and filing false income-tax returns.

According to the government, the socialite belonged to a small group of loyalists who executed the complex schemes devised by Andrew Fastow to inflate Enron's performance and enrich themselves. She is accused, essentially, of serving as a stand-in for her husband -- wiring money, cashing checks, and handling financial housekeeping matters that the Enron CFO didn't want his fingerprints on. Lea's story, pieced together for the first time by BusinessWeek from internal corporate documents, government investigations, and more than two dozen interviews with friends and co-workers, is unique. No heiress has ever been charged with such complex financial fraud. She and Andy, who earned more than $60 million from 1997 to 2000, are the only husband-and-wife team implicated in the current round of corporate scandals.

So she get a year and her husband gets a couple of years in a mental health facility. Skilling,who was never charged with anything like that and who was cleared of any insider trading gets 24 years. That sounds fair. /s

[ladyjane]

I never followed this story much from the beginning but the more I read about it now the more puzzling it gets. I do not understand why this guy is getting off.

[Thebaddog]

He got off because of rule #1. When the feds come knocking, cave and give them what they want, or else. Giving lip to a federal prosecutor gets you 24 years, because they can.

[ladyjane]

I think you're right.

The first man to get to the DA's office wins.

[Ready4Freddy]

Right.

As I said, the Feds never wanted Lea Fastow, they wanted Lay & Skilling, the guys that they thought had lied directly to investors. The only way to do that was to get Andy Fastow to cooperate, & the only way to ultimately get that cooperation was to threaten Fastow with Lea's indictment. But the sword cuts both ways - Lea's charges were then reduced to obtain Andy's assistance.

Don't forget that Skilling was convicted on conspiracy to commit securities & wire fraud, along with numerous instances of lying to shareholders and/or analysts. And one should keep in mind that most of the underlying transactions, in and of themselves, were not illegal. It was the failure to disclose the transactions, and lying about them, that led to the securities & wire fraud charges.

Fastow will do almost all the 6 years, I don't know why you keep insisting that he'll do 2 years only.

So she get a year and her husband gets a couple of years in a mental health facility. Skilling,who was never charged with anything like that and who was cleared of any insider trading gets 24 years...

[Rte66]

That probably just scratches the surface. Go back to some earlier financial scandals in the SW and you'll see them involved there, too.

Ground Zero of the banking scandal that brought down so many in our area, as well as other parts of the US, was Continental-Illinois. Guess where both Lea and Andy worked at the time.

They may have been too small-time to get caught, but perhaps they learned their lessons well there. There are all kinds of ant trails from there to "here" and a handful of people also known (well) to Ken Lay and probably to Skilling, too.

Then there was the S&L scandal which brought an entire financial industry to a close. Lea's family was intimately involved there (as were many Houston small fry, too). Most of them are honest as the day is long - I've worked with some and been friends with some, been to seders with some, but a couple of them aren't. Not sure where she fits or where Andy did.

Those trails even go back to the Sharpstown scandal and Watergate - in fact, it was Watergate that invoked the grocery and SEC investigations.

It would be easy to say that anyone in big business in TX/OK might've been touched by all of these (I was) - but when they just keep *happening* to several key players, it seems to be more than a coincidence.

They do have some powerful players on their side (L&A) - a well known subset of one of our most powerful allies.

[Rte66]

Lou Pai was the one you were talking about who cashed out (to the tune of $350+ million) early and walked away. I was not aware that he had moved to Hawaii - when did that come out?

Last I knew he and newest family still lived here in the area, but had moved to that huge CO ranch for a while before getting tired of being the local evil villain and selling it last year.

[khnyny]

I got my info from the documentary "Enron: The Smartest Guys in the Room". I'm assuming it was factual, but the film was released/produced in 2005. I found Pai kind of sleazy, humorous and interesting all at the same time. Not to make light of the tragedy that is Enron, but, someone really should make a major movie out of this story, it has so many great characters and intrigue.