Cuffed and on display, Skilling pleads innocent

Surrendering early in the morning, the former Enron CEO faces the glare of his former employees in court.

Former Enron Corp. chief executive Jeffrey Skilling was led in handcuffs into federal court in Houston on Thursday and charged with a wide-ranging scheme of fraud and earnings manipulation that led to the energy giant's spectacular collapse in December 2001.

Skilling, the top-ranking executive arrested in the scandal that reverberated from Wall Street to Washington, was indicted on 35 counts of conspiracy, securities fraud, wire fraud and insider trading. The charges carry a maximum sentence of 325 years in prison and more than $80-million in fines.

"I plead not guilty to all counts," Skilling told U.S. Magistrate Judge Frances Stacy, who set bail at $5-million. Skilling posted bail with a cashier's check and left the courthouse at mid morning. Another court appearance was set for March 11.

Diana Peters was one of about a dozen former Enron employees who attended Skilling's 9 a.m. court appearance, which was mobbed with reporters.

"He looked a little stunned and put out by the whole thing," said Peters, a computer technician. Skilling passed her as he left court. "I was very tempted to stand in front of him and say, "Jeff, you owe so many people an apology."'

Once the nation's seventh-largest corporation, Enron laid off more than 4,500 employees and cost investors $68-billion in market value when it filed for Chapter 11 bankruptcy protection more than two years ago.

The indictment mentions Skilling's boss, former Enron chairman Kenneth Lay, only by title and only in passing. Although prosecutors have said their investigation is continuing, Deputy Attorney General James Comey seemed to suggest the buck stopped with Skilling.

"The indictment alleges that this was the guy at Enron, both as the chief operating officer and the chief executive officer," Comey said Thursday at a news conference in Washington.

The indictment accuses Skilling, 50, and Richard Causey, Enron's former chief accounting officer, of taking part in complex accounting schemes to mislead regulators and investors about the company's financial performance.

Causey, 44, was indicted a month ago and is free on $500,000 bail. He was named in 31 counts in Thursday's indictment and has pleaded innocent to all charges.

Between late 1999 and December 2001, the indictment alleges, the two executives repeatedly disguised Enron's debts and manipulated earnings so it appeared the company was growing according to analysts' published expectations. The upshot, the government charges, is Enron's stock price was artificially inflated from about $30 a share in early 1998 to more than $80 a share in January 2001.

Skilling is charged with 10 counts of insider trading involving his sale of Enron shares from April 2000 to September 2001, generating proceeds of $62.6-million. This included the sale of 500,000 shares of Enron stock, generating more than $15-million, on Sept. 17, 2001, four weeks after his resignation. The government alleges the trades took place while Skilling possessed "material, nonpublic information about the company."

One of Skilling's attorneys, Dan Petrocelli, said prosecutors "were making a grave mistake" in pursuing his client. "But they have decided to turn a blind eye."

"Jeff Skilling has nothing to hide," Petrocelli said. "He did not steal. He did not lie. He did not take anyone's money and in the 60 pages of charges filed by the United States government, they don't even accuse him of these things and it's not from lack of trying."

Ex-Enron employees, who saw their retirement savings evaporate as Enron stock crashed, disagree.

Gary Bush, a 60-year-old former manager in Enron's engineering subsidiary, figures he lost $1-million when his employer collapsed. After hearing of Skilling's indictment on the radio Thursday morning, he said, "I guess we're all satisfied that the wheels of justice are slowly grinding away, but every one of us lost our shirts. When all is said and done, Skilling and the rest of them are going to end up with a whole lot more money than a lot of us."

The indictment seeks forfeiture by Skilling of more than $66-million in cash and assets, including homes in Dallas and Houston. About $6-million in cash and property is sought from Causey.

Skilling is the 29th person and highest-ranking Enron employee to be charged as a result of the government's Enron Task Force investigation into the company's failure. FBI director Robert Mueller said Thursday that the investigation is not finished.

Skilling's indictment mentions former chief financial officer Andrew Fastow, who pleaded guilty in mid January and is cooperating with federal prosecutors, and former treasurer Ben Glisan, who pleaded guilty to conspiracy and became the first former Enron executive put behind bars. Both reported directly to Skilling.

Skilling joined Enron in 1990 after a career at the management consulting firm McKinsey & Co. In 1997, he was named chief operating officer and in February 2001 became chief executive officer, succeeding Lay.

Skilling resigned abruptly six months later, citing personal reasons. Lay, Enron's chairman, resumed the chief executive's position until he was forced to resign in January 2002 after the Justice Department launched its criminal investigation into the company.

Almost exactly two years ago, Skilling told two congressional panels he had known nothing about serious problems at Enron before he resigned. Unlike other Enron executives who were summoned to Washington to testify about Enron's collapse, Skilling did not invoke his Fifth Amendment right to decline answering questions.

In recent months, prosecutors have intimated that making a case against Lay, who ceded most if not all of the day-to-day operations at Enron to Skilling, will be difficult.

Since Enron's collapse, Lay has steadfastly maintained his innocence of any wrongdoing.

Several former employees say they will be surprised if Lay, whose warm personality contrasted sharply with Skilling's arrogance, is directly tied to any wrongdoing.

"If they come up with a concrete case against Lay, I will really be saddened," said Peters, the ex-computer technician. "I truly believe he was negligent but not deliberately involved in any of this."

- Information from Times wires was used in this report. Kris Hundley can be reached at hundley@sptimes.com or 727 892-2996.

Former Enron Corp. chief executive Jeffrey Skilling was indicted on 35 counts. He's accused of insider trading that generated $62.6-million from stock sales and of wire fraud, securities fraud and making false statements in widespread schemes to mislead government regulators and investors about the energy company's earnings.

"I plead not guilty to all counts," Skilling, 50, told U.S. Magistrate Judge Frances Stacy, who set bond at $5-million. Skilling posted bond with a cashier's check.

A court appearance is set for March 11. Skilling faces up to 325 years in prison and more than $80-million in fines if convicted on all counts, prosecutors said. The government is seeking to seize from Skilling's accounts more than $55-million, plus an 8,000-square-foot Houston mansion with a market value of $4.7-million.

- Source: Associated Press

World and national headlines

© 2006 • All Rights Reserved • St. Petersburg Times 490 First Avenue South • St. Petersburg, FL 33701 • 727-893-8111 Contact the Times | Privacy Policy Standard of Accuracy | Terms, Conditions & Copyright