Enron victims concerned by former CEO’s possible early prison release

An attorney who represented victims in the Enron scandal said his former clients were concerned by news that former CEO Jeff Skilling is working with the Justice Department on a deal for early release.

“It’s stunning that somebody who robs a bank of a couple thousand dollars could end up spending more time (in prison) than someone like Jeff Skilling, who a lot of people believe should be in the corporate hall of shame,” said Andrew Stoltmann, a Chicago-based securities attorney who represented 10 victims of the Enron scandal. “If Skilling ends up serving less than a decade, I think that undoes a lot of the deterrent impact that Judge [Sim Lake's] original sentence had and that’s unfortunate.”

An announcement on the Justice Department website says Skilling’s 24-year sentence may be shortened through a settlement agreement. A reduction in his sentence has long been expected because court rulings said it was too harsh. Skilling, who has served six years in prison, was convicted in 2006 of conspiracy, fraud and insider trading for his role in the energy giant’s epic collapse.

“The Department of Justice is considering entering into a sentencing agreement with the defendant in this matter,” the notice reads. “Such a sentencing agreement could restrict the parties and the Court from recommending, arguing for, or imposing certain sentences or conditions of confinement. It could also restrict the parties from challenging certain issues on appeal, including the sentence ultimately imposed by the Court at a future sentencing hearing.”

Former Enron CEO Jeff Skilling (AP file photo/David J. Phillip)

Judge Sim Lake held a private conference call with attorneys from both sides last month about the potential deal. Skilling has been waiting to be re-sentenced after a federal appeals panel ruled in 2009 that his sentencing was too harsh.

“Because of the complexity of the case and its age, I think it’s probable both parties felt that it was best to come up with a negotiated compromise,” said Houston lawyer Philip Hilder, a former federal prosecutor. “A full-blown sentencing hearing would require a lot of resources and would be time-consuming and difficult because of the age of the case.”
Hilder represented Sherron Watkins, a former Enron vice president who tried to warn other top executives about flaws in the company’s accounting.

Prosecutors did not have to pursue negotiations, but they may have made the decision to try to head off any prolonged court effort by Skilling, said Bill Mateja, former senior counsel to the U.S. Attorney General.

“They didn’t have to necessarily do it this route and to the extent that there was some sort of an agreement the agreement in my mind would contemplate that Skilling would give up certain appeals and there would be some sort of finality,” Mateja said.

Still, any change to the sentence would likely not slash his jail time significantly, he said.

“I don’t suspect that that sentence is going to let Skilling out of jail anytime soon,” Mateja said. “I would suspect that there’s going to be some reduction but certainly he’s going to spend a significant time in prison.”

Since being convicted, Skilling has fought the charges, claiming his innocence. He filed a motion for a new trial in May 2012, claiming “newly discovered evidence” could prove his innocence.

Skilling’s sentencing has been in limbo because of the 5th U.S. Circuit Court of Appeals’ 2009 ruling that Lake applied federal sentencing guidelines improperly in Skilling’s case, and a 2010 U.S. Supreme Court ruling that evidence did not support a component of Skilling’s conviction based on allegations that he deprived the company of “honest services.”

Legal experts have speculated in Houston Chronicle reports that Skilling might see his sentence reduced to around 15 years, which still would leave him far from release.

But it’s possible a bargained sentencing might reduce his term further.