Guilty Verdicts for Ex-Enron Execs Spark Little Sympathy

A Texas jury on Thursday declared former Enron executives Kenneth Lay and Jeffrey Skilling guilty of fraud and conspiracy. The verdicts could mean life in prison for the men behind the quick rise and disastrous fall of the once-mighty energy giant.


Advertisement



Over 400,000 customers use Monarch to transform any report into live data. No more re-keying data into spreadsheets, no need for IT help! Download our white paper today!


Lay, founder and former chief executive officer, was found guilty on all six counts of fraud and conspiracy charges, along with four counts of bank fraud in a separate case. Skilling was found guilty on 18 counts of fraud and conspiracy and one count of insider trading. He was acquitted of nine insider-trading charges.

The conspiracy and fraud convictions each carry a sentence of five to 10 years in prison. Sentencing is set for the week of Sept. 11.

Lay told the New York Times: "Certainly, we're surprised, but it's probably more appropriate to say we're shocked." He added, "I firmly believe I am innocent of the charges against me."

Skilling, the former chief executive and president said as he left the courthouse, “Obviously, I'm disappointed, but that's the way the system works."

Nell Minnow, co-founder of The Corporate Library, a leading shareholder watchdog group, hailed the outcome. "I'm very happy with the verdict," she told MarketWatch. "I want to see them go to jail. I don't want a community-service thing."

Enron's 2001 implosion, along with other high-profile corporate scandals, led to the Sarbanes-Oxley Act, which requires CEOs and chief financial officers to sign off on company financial statements, among other things.

U.S. Rep. Michael Oxley, who helped write the corporate reform legislation as chairman of the House Financial Services Committee, said in a written statement, "The jury's verdicts help to close a notorious chapter in the history of America's publicly traded companies." The Lay-Skilling trial lasted nearly four months, involved about four dozen witnesses and hundreds of documents.

A raft of civil cases is still pending. William S. Lerach, the plaintiff's lawyer in the largest civil case, told the Times, "Everyone knows that most of their assets have been burned up in legal fees and the like. They are not the ones who are going to pay the billions of dollars in additional recoveries that we hope to obtain on top of the $7.2 billion we already have from banks in our previous settlements."

Legal experts told the Wall Street Journal that chances of overturning Thursday's guilty verdicts are slim.

“Your typical white-collar defendant has a better chance of winning a Golden Globe award than getting his conviction reversed in the Fifth Circuit," said Brian Wice, a Houston lawyer who specializes in criminal appeals.

You may like these other stories...

Ernst & Young 2013 audit deficiency rate 49%, regulators sayMichael Rapoport of the Wall Street Journal reported on Thursday that the Public Company Accounting Oversight Board (PCAOB) found deficiencies in 28 of the...
Some of your clients may get away to business conventions from time to time. It gives them a chance to rub shoulders with colleagues, catch up on the latest developments, and fine-tune their skills. And, when the meetings or...
PwC must face $1 billion lawsuit over MF Global adviceA federal judge on Wednesday ordered PricewaterhouseCoopers (PwC) to face a $1 billion lawsuit claiming that its bad accounting advice was a substantial cause of the...

Already a member? log in here.

Upcoming CPE Webinars

Sep 9
In this session we'll discuss the types of technologies and their uses in a small accounting firm office.
Sep 10
Transfer your knowledge and experience to prepare your team for the challenges and opportunities of an accounting career.
Sep 11
This webcast will include discussions of commonly-applicable Clarified Auditing Standards for audits of non-public, non-governmental entities.
Sep 24
In this jam-packed presentation Excel expert David Ringstrom, CPA will give you a crash-course in creating spreadsheet-based dashboards. A dashboard condenses large amounts of data into a compact space, yet enables the end user to easily drill down into details when warranted.