Convicted Enron CEO May Soon Go Free
Apr 10th 2013 7:13PM
Updated Apr 10th 2013 7:20PM
Six years into a 24-year stretch in the Big House, ex-Enron CEO Jeffrey Skilling may be getting an early release -- let out after serving barely 25% of his sentence.
Enron, for those who don't recall, was a Houston-based energy trading company that engaged in all sorts of nasty conduct aimed at distorting energy markets to grab outsized profits from selling electricity to -- among others -- the electricity-starved California markets. Perversely, it was also only a marginally profitable business in the best of times, averaging a net profit margin in the single digits.
To keep its game rolling, Enron used all sorts of "off-balance-sheet" corporate vehicles to hide massive debts the company was racking up. Ultimately, these debts doomed the company to bankruptcy and liquidation back in 2001.
In 2006, five years after Enron's implosion, CEO Skilling was locked up, having been found guilty of 19 counts of fraud, conspiracy, and insider trading.
Skilling and his attorneys, however, have always argued that the CEO was punished unfairly for misdeeds that were primarily his predecessor's doing.
Hey, who left this mess in here?
Skilling, while an important executive at Enron when most of its shenanigans were under way, didn't technically become CEO until 2001, after Ken Lay lost the job. Skilling himself resigned just six months later.
And so Skilling held the top job at Enron for a very brief time. Lay, on the other hand, who founded Enron in 1985 and ran the company far longer, died in prison on July 5, 2006. So by the time Skilling's sentencing rolled around, he was front and center as the biggest target on which the government could still vent its ire for helping to cause what had been, at the time, the biggest corporate bankruptcy in U.S. history. And it did so, sentencing Skilling to a term of 24 years and four months in prison, plus a $45 million fine.
Now, it appears the U.S. government is willing to cut Skilling some slack.
According to news reports, Skilling's attorneys have been negotiating with federal prosecutors to reduce his sentence and let him out of prison early -- an out-of-court settlement that would avoid having to re-litigate the defendant's sentence after a federal appeals court overturned his sentence in 2009.
Details on the negotiations remain confidential, so we don't know that Skilling will necessarily be able to skip out of jail scot-free. If he does, however, the man will have served barely 25% of his 24-year sentence -- six years and change for helping run into the ground a company once valued in excess of $60 billion, destroying the investments of thousands of taxpayers, and wiping out the pensions of thousands of others who had been employed by the company and held its stock in their retirement plans.
Let's put this in context: In January 2012, a young man named Trey Wakefield was convicted of robbing a 7-Eleven in Wichita Falls County, Texas. Like Skilling and Lay, he physically injured no one in the commission of his crime -- although he did carry a gun, and according to news accounts, he did not employ any off-balance-sheet entities in the commission of his crime. Unlike Skilling and Lay, he made off with not $60 billion in loot, but $8.
His sentence: eight years in the Texas Department of Corrections' boot camp. That's two years more than Skilling may serve.
The article Convicted Enron CEO May Soon Go Free originally appeared on Fool.com.Motley Fool contributor Rich Smith never invested in Enron, but he did serve briefly as an assistant prosecutor for the State of Maryland.
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