Appeals court says Skilling convictions will stick

A U.S. Supreme Court decision does not undo any of the convictions against former Enron CEO Jeffrey Skilling, but his case should still be sent back to a Houston judge for resentencing, an appeals court said on Wednesday.

Last June the Supreme Court ruled that one of the theories behind Skilling’s 2006 jury conviction for conspiracy — the honest-services fraud theory — should not have been used in instructions given to the jury. The high court sent the issue back to the 5th U.S. Circuit Court of Appeals to determine if the use of the theory invalidated any of the charges.

In a ruling filed Wednesday afternoon the 5th Circuit said it found the error “harmless” and affirmed the convictions. See the document below.

Skilling will still be resentenced by U.S. District Judge Sim Lake, however, based on a prior ruling from the appeals court that the Houston judge applied federal sentencing guidelines improperly.

Skilling’s attorney, Daniel Petrocelli, decried the appeals court ruling.

“We disagree with the court’s decision and believe it does not conform with the law,” Petrocelli said in a statement. “We will continue to fight to overturn the wrongful convictions of Mr. Skilling.”

Wayne State law professor and white-collar law specialist Peter Henning said he was surprised by the decision because he at least expected the conspiracy charge to be reversed.

“This has to be a severe disappointment for Skilling, who won at the Supreme Court, only to lose on the remand,” Henning said. “It shows that groundbreaking decisions are not always helpful to the actual defendant in the case.”

Petrocelli can appeal the decision back to the Supreme Court, but the court very rarely takes up such issues, Henning said.

Skilling, now serving time in a suburban Denver prison, was found guilty by a Houston jury in 2006 of 19 counts of conspiracy, securities fraud, insider trading and lying to auditors in connection with the 2001 fall of energy-trading giant Enron.

Prosecutors contended Enron executives used off-balance-sheet partnerships and self-dealing to create the illusion of a thriving and innovative company. Enron collapsed suddenly and declared bankruptcy in 2001.

A three-judge panel of the 5th Circuit previously upheld Skilling’s convictions but ordered that he be resentenced because of an improper calculation by the trial judge.

The resentencing, which would be to a lower term, has been on hold since Skilling’s appealed to the Supreme Court.

One of his appeals argument was that the honest services theory used to back the conspiracy charge – which makes it a crime for a company officer to “deprive another of the intangible right of honest services” – was unconstitutionally vague.

The Supreme Court agreed, saying the theory can only apply to bribery and kickback schemes, which were not among the accusations against Skilling.

Skilling was tried alongside the late Enron chairman Ken Lay. Lay also was found guilty on several counts, but his convictions were voided because he died before sentencing.

Several other Enron executives, including former chief financial officer Andrew Fastow, are still serving time related to their roles in the case. Fastow is scheduled for release in December.

Last week the final defendant, former Enron Broadband executive Rex Shelby, was sentenced to two years of probation on a charge of insider trading.

2011 April 5th Circuit Skilling Ruling