And at the core of Enron's collapse was Skilling's contribution to creating Enron's false facade of prosperity that masked a money-losing business, which I wrote about in my book Value Leadership.
That's what makes his latest legal battle for a new trial particularly ironic. The Associated Press reports that Skilling's high-priced legal talent is heading to the Supreme Court to argue that one law under which he was convicted is unconstitutional. That's the so-called honest services law, which makes it illegal for officials, executives and others to scheme to deprive those they serve and possibly others of "the intangible right to honest services."
'Opportunistic and Arbitrary'?
Opponents of the honest services law argue that it's vague -- which makes it illegal -- while advocates defend it, claiming that it makes sense to apply in many specific situations. Daniel Petrocelli, Skilling's main attorney, wrote in his Supreme Court brief that prosecutors have used the law to pursue "opportunistic and arbitrary prosecutions."
Prosecutors counter that the law makes sense in cases involving bribes, kickbacks or conflicts of interest. They argue that Skilling faked his loyalty to Enron and its shareholders, and intended to deceive them so he could prop up the value of Enron stock before he sold it.
The prosecutors write that Skilling "deprived shareholders of the information they needed to make informed decisions and thereby defrauded them of his honest services." And they argue that Skilling wasn't simply doing this for the fun of it -- he was doing it to make money. They contend that the facade of prosperity he held up in front of Enron to mask its negative cash flow bought him time to cash out of his Enron stock before the company collapsed.
An Annoying Requirement
It would be a mistake to conclude that the Supreme Court would let political considerations enter into its analysis of the fate of honest services. But it's worth remembering that Skilling's boss, the late Kenneth "Kenny Boy" Lay, gave $552,025 to the campaigns of George W. Bush. And Bush appointed two justices to the Supreme Court -- John Roberts and Samuel Alito -- who may now have the power to return the favor to one of Lay's key lieutenants.
If the Supreme Court declares honest services unconstitutional, then the spirit of Enron -- that it's OK for executives to deceive a company's shareholders and employees -- will get an implied endorsement from the very chamber that should ensure it never happens again.
Browse our gallery for more high-profile white-collar criminals.