Enron's Skilling Indicted for Fraud, Pleads Not Guilty | AccountingWEB

Enron's Skilling Indicted for Fraud, Pleads Not Guilty

Former Enron chief executive Jeffrey Skilling surrendered to the FBI in Houston Thursday, accused of fraud, insider trading and lying about the company’s finances in a 42-count criminal indictment.

Skilling, 50, is the highest ranking former executive to be charged in the implosion of the once-formidable energy giant. After surrendering, Skilling was taken in handcuffs to the federal courthouse, where an arraignment hearing was held. "I plead not guilty to all counts," Skilling told U.S. Magistrate Judge Frances Stacy, who set his bond at $5 million.

Skilling and Richard Causey, Enron's former chief accounting officer, are accused of using various accounting schemes to manipulate Enron’s financial results from 1999 to 2001. Causey pleaded not guilty to six charges last month.

Reuters reported that Skilling was named in 35 of the criminal counts. He was specifically accused of insider trading that generated $62.6 million from stock sold from April 2000 through September 2001. During that time, he sold shares in blocks ranging from 10,000 to 500,000, according to the indictment. In that time, Enron stock prices ranged from $87 in September 2000 to $31 in September 2001.

According to a WSJ report, prosecutors said that Skilling could face 325 years in prison and over $80 million in fines if convicted of all the counts.

Skilling's lawyers said he has nothing to hide. "He did not steal, he did not lie, he did not take anyone's money," attorney Daniel Petrocelli said. "I guess they need a scapegoat, and Jeff Skilling is that scapegoat."

Also Thursday, the Securities and Exchange Commission (SEC) filed civil fraud charges against Skilling, who is accused with Causey of manipulating Enron’s books and then repeatedly lying to analysts and auditors in a cover-up. The SEC is seeking $63 million in restitution from gains he made by selling Enron stock. The regulators also aim to bar Skilling from serving as a corporate officer or director.

Skilling is accused of wire fraud, securities fraud, securities fraud regarding presentations to securities analysts, of making false statements to auditors in annual representation letters and false statement to auditors.

Skilling served as Enron president and COO from 1996 to early 2001. He was then appointed CEO and resigned six months later, a few months before the company’s collapse. He has repeatedly denied wrongdoing, saying he relied on scores of expert lawyers and accountants and acted with full knowledge of the board. He has said the collapse of the company — once No. 7 on the Fortune 500 list — was due to a "classic run on the bank."

The indictment also mentions Andrew Fastow, the former chief financial officer who pleaded guilty and is cooperating with federal prosecutors, and former Treasurer Ben Glisan, who pleaded guilty to conspiracy, the AP reported. The indictment makes no mention of former Enron chairman Kenneth Lay.

Deputy Attorney General James Comey, speaking to reporters in Washington, would not comment on Lay’s future, but he said, "The Skilling indictment demonstrates in no uncertain terms that no executive is too prominent or too powerful and that no scheme to defraud is too complex or too fancy to avoid the long arm of the law."

Wait, there's more!
There's always more at AccountingWEB. We're an active community of financial professionals and journalists who strive to bring you valuable content every day. If you'd like, let us know your interests and we'll send you a few articles every week either in taxation, practice excellence, or just our most popular stories from that week. It's free to sign up and to be a part of our community.
Premium content is currently locked

Editor's Choice

WHAT KIND OF FIRM ARE YOU?
As part of our continued effort to provide valuable resources and insight to our subscribers, we're conducting this brief survey to learn more about your personal experiences in the accounting profession. We will be giving away five $50 Amazon gift cards, and a $250 Amazon gift card to one lucky participant.
This is strictly for internal use and data will not be sold
or shared with any third parties.