Jeffrey Skilling
Encyclopedia
Jeffrey Keith "Jeff" Skilling (born November 25, 1953) is the former president of Enron Corporation
, headquartered in Houston
, Texas
. In 2006 he was convicted of multiple federal felony
charges relating to Enron's financial collapse, and is currently serving a 24-year, four-month prison sentence at the Federal Correctional Institution in Englewood
, Colorado
. The Supreme Court of the United States
heard arguments in the appeal of the case March 1, 2010. On June 24, 2010, the Supreme Court vacated part of Skilling's conviction and sent the case back to the lower court for further proceedings.
, Pennsylvania
, and was the second of four children. He grew up in New Jersey
and Aurora
, Illinois
. When he was 16, he worked at WLXT (channel 60), a UHF
television station in Aurora.
After graduating from West Aurora High School
, Skilling received his B.S.
in applied science
at Southern Methodist University
in 1975, where he was a member of Beta Theta Pi
(Kenneth Lay
was also a member of the fraternity
). During his admissions interview for Harvard Business School
, he stated that he was asked if he was smart, to which he supposedly replied, "I'm fucking smart." Skilling earned his M.B.A. from Harvard Business School
in 1979. He became a consultant at McKinsey & Company
in the energy and chemical consulting practices. Skilling became one of the youngest partners in the history of McKinsey.
Skilling had a daughter and two sons (ages 22, 20, and 16) at the time of his conviction, from his first marriage, which ended in divorce in 1997. His youngest child, John Taylor "JT" Skilling, aged 20, was found dead in his Santa Ana
, California
, apartment on February 3, 2011, by what police have preliminarily determined was the result of a drug overdose. In March 2002, he married Rebecca Carter, a former vice president for board communications and board secretary at Enron. Skilling is the younger brother of Tom Skilling
, the chief meteorologist at CW affiliate/cable superstation
WGN-TV
in Chicago, Illinois. He is also the son of Andrew Skilling, former CEO of Sunbeam
.
Jeffrey Skilling was arrested in New York City on April 9, 2004, for public intoxication, during which he harassed several passersby and accused them of being undercover
FBI agents. Police responding to the 911 calls
found him uncooperative and concluded that he needed to sober up in the local jail.
, Skilling worked with Enron
in 1987, helping the company create a forward market
in natural gas
. Skilling impressed Kenneth Lay
in his capacity as a consultant, and was hired by Lay in 1990 as chairman and chief executive officer of Enron Finance Corp. In 1991, he became the chairman of Enron Gas Services Co., which was a result of the merger of Enron Gas Marketing and Enron Finance Corp. Skilling was named CEO and managing director of Enron Capital & Trade Resources, which was the subsidiary responsible for energy trading and marketing. He was promoted to president and chief operating officer
of Enron in 1997, second only to Lay, while remaining the head of Enron Capital & Trade Resources. In 1999, Enron launched EnronOnline, an Internet-based trading operation, which was used by virtually every energy company in the U.S.
Under Skilling, Enron adopted mark to market accounting, in which anticipated future profits from any deal were accounted at their present market value rather than any historic or future value. Skilling joked about the California energy crisis at one meeting of Enron employees by asking, "What is the difference between California and the Titanic? At least when the Titanic went down, the lights were on." Skilling later attributed the remark to frayed relations between Enron and California. His employees, meanwhile, plotted to keep the price of energy high in California.
Skilling began advocating a novel idea: the company didn't really need any "assets." By pushing the company's aggressive investment strategy, he helped make Enron the biggest wholesaler of gas and electricity, with $27 billion traded in a quarter. On February 12, 2001, Skilling was named CEO of Enron, receiving $132 million in a single year.
On March 28, 2001, PBS
's Frontline interviewed Skilling, where he claimed Enron was one of "the good guys."
Skilling unexpectedly resigned on August 14 of that year, citing personal reasons, and he soon sold large blocks of his shares in the corporation. Then-chairman Kenneth Lay, who previously served as CEO for 15 years, returned as CEO until the company declared bankruptcy in December 2001. When brought in front of congressional committees, Skilling stated that he had "no knowledge" of the complicated chain of scandal that would eventually result in Enron's bankruptcy
. The "no knowledge" claim has come to be known as the "Jeffrey Skilling Defense," meaning an executive who is well educated in the craft and claims he or she had no knowledge of the malfeasance or misfortune that transpired.
, insider trading
, and other crimes related to the collapse of Enron. He surrendered to the Federal Bureau of Investigation
on February 19, 2004, and plea
ded not guilty to all charges. The indictments were primarily focused on his probable knowledge of, and likely direct involvement with, the fraudulent transactions within Enron. About a month after quitting Enron, Skilling sold almost $60 million of his stake in the company (in blocks of 10,000 to 500,000 shares), leading to the prosecutors' allegation that he sold those shares with inside information
of Enron's impending bankruptcy
. Skilling's lead attorney was Daniel Petrocelli, the 52-year-old civil litigator who represented Ron Goldman's father against O.J. Simpson in the negligent death civil suit successfully brought against the former football star and sports broadcaster. Skilling spent $40 million in preparation for the trial
, of which at least $23 million went to his defense lawyers' retainer. Skilling's younger brother Mark is an attorney and assisted his legal team during the criminal trial.
The trial began on January 30, 2006, in Houston, despite repeated protests from defense attorneys calling for a change in venue on the grounds that "it was impossible to get a fair trial in Houston," the base of the Enron catastrophe. Skilling, known for his harsh attitude and arrogance, lost his temper on the witness stand during the trial. Enron's bankruptcy, the biggest in U.S. history when it was filed in December 2001, cost 20,000 employees their jobs. In addition, many of them lost their life savings. Investors also lost billions. However, Skilling and many of the company's executives had sold huge portions of their Enron stock before the bankruptcy filing, making a substantial profit. When asked by a Dutch
journalist in the street during the trial about industrial dominance, Skilling admitted that industrial dominance and abuse constitutes a global problem by saying: "Oh yes, yes sure, it does." On May 25, 2006, the jury returned with the following findings regarding Skilling:
In a front page interview with The Wall Street Journal
on June 17, 2006, Skilling claims, among other things, that he had been in a depression after the Enron bankruptcy and considered committing suicide, but that his indictment actually lifted his spirits and brought him out of his depression; that the worst witness against him was himself; and that he will be able to survive a long prison term as long as he is given "something to do, something to accomplish" while in prison.
On October 23, 2006, Skilling was sentenced to 24 years and four months in prison, and fined $45 million. The case is currently under appeal. Skilling's request to remain free during the appeal was denied by Judge Patrick Higginbotham of the 5th U.S. Circuit Court of Appeals on December 12, 2006. In ordering Skilling's immediate imprisonment, the judge wrote, "Skilling raises no substantial question that is likely to result in the reversal of his convictions on all of the charged counts," although the order also noted "serious frailties" in the convictions.
Skilling began his sentence on December 13, 2006, and is currently housed at low security federal prison
in Littleton
, Colorado
. According to the Federal Bureau of Prisons
, he is scheduled for release on February 21, 2028, when he will be 74 years old.
be turned over to the defense. A number of inconsistencies were discovered soon after a judge ordered that the notes be turned over.
On April 3, 2008, Skilling's defense attorney, Daniel M. Petrocelli
, argued with government prosecutors that Skilling's trial and the conviction itself was based on honest services fraud
which he said did not apply to Jeffrey Skilling. This argument was based on the idea that, even though Skilling committed illegal financial maneuvers, he did so in order to save the company and did not profit from it.
This in turn could lead to all of his convictions being overturned; however, the chances are very narrow.
Experts believe Skilling's best chance lies in citing a parallel appeals court decision that threw out guilty verdicts on three Merrill Lynch bankers accused of helping Enron to inflate profits.
On October 30, 2008, Jeffrey Skilling was moved to a low-security prison near Littleton, as his original prison, FCI Waseca, was being converted to an all-women facility.
The first issue raised by Skilling's defense was whether or not the federal "honest services" fraud statute (title 18 of the United States Code, section 1346) required the government to prove that Skilling's conduct was intended to achieve "private gain" (instead of being intended to advance his employer's interests); and, if not, if this statute is unconstitutionally vague.
The Court heard two other cases about the same statute on December 8, several months before it heard Skilling's appeal: Black v. United States and Weyhrauch v. United States.
The second issue — "in-house judging" — was whether or not -- when a presumption of jury prejudice arises because of the widespread, community impact of the defendant's alleged conduct, plus, widespread, inflammatory pretrial publicity -- the government may rebut that presumption; and, if so, if the government must prove beyond a reasonable doubt that no juror was actually prejudiced.
In the arguments on March 1, the issue of jury selection received the most attention. Justices Steven Breyer and Sonia Sotomayor
seemed especially bothered by the questioning of one potential juror who reported that she herself lost $50,000 to $60,000 in the Enron debacle. ... "How can we be satisfied that a fair and impartial jury was picked when the judge doesn't follow up when the witness said, 'I'm a victim of this crime,'" Sotomayor asked. The government maintained that the judge and the selection process were appropriate. Sri Srinivasan
, a partner at O'Melveny & Myers, was Skilling's Washington defense attorney and Justice Department lawyer Michael Dreeben argued for the government.
On June 24, 2010, in an opinion by Justice Ruth Bader Ginsburg
, the Supreme Court unanimously nullified Skilling's honest services fraud conviction, finding that "Skilling's misconduct entailed no bribe or kickback." The Court remanded the Skilling case back to the lower court for further proceedings to sort out which charges must now be dismissed as the result of the invalidation of the honest services statute.
Enron
Enron Corporation was an American energy, commodities, and services company based in Houston, Texas. Before its bankruptcy on December 2, 2001, Enron employed approximately 22,000 staff and was one of the world's leading electricity, natural gas, communications, and pulp and paper companies, with...
, headquartered in Houston
Houston, Texas
Houston is the fourth-largest city in the United States, and the largest city in the state of Texas. According to the 2010 U.S. Census, the city had a population of 2.1 million people within an area of . Houston is the seat of Harris County and the economic center of , which is the ...
, Texas
Texas
Texas is the second largest U.S. state by both area and population, and the largest state by area in the contiguous United States.The name, based on the Caddo word "Tejas" meaning "friends" or "allies", was applied by the Spanish to the Caddo themselves and to the region of their settlement in...
. In 2006 he was convicted of multiple federal felony
Felony
A felony is a serious crime in the common law countries. The term originates from English common law where felonies were originally crimes which involved the confiscation of a convicted person's land and goods; other crimes were called misdemeanors...
charges relating to Enron's financial collapse, and is currently serving a 24-year, four-month prison sentence at the Federal Correctional Institution in Englewood
Englewood, Colorado
The city of Englewood is a Home Rule Municipality located in Arapahoe County, Colorado, United States. As of 2007, the city is estimated to have a total population of 32,532. Englewood is part of the Denver-Aurora Metropolitan Area. Englewood is located in the South Platte River Valley east of the...
, Colorado
Colorado
Colorado is a U.S. state that encompasses much of the Rocky Mountains as well as the northeastern portion of the Colorado Plateau and the western edge of the Great Plains...
. The Supreme Court of the United States
Supreme Court of the United States
The Supreme Court of the United States is the highest court in the United States. It has ultimate appellate jurisdiction over all state and federal courts, and original jurisdiction over a small range of cases...
heard arguments in the appeal of the case March 1, 2010. On June 24, 2010, the Supreme Court vacated part of Skilling's conviction and sent the case back to the lower court for further proceedings.
Personal life
Skilling was born in PittsburghPittsburgh, Pennsylvania
Pittsburgh is the second-largest city in the US Commonwealth of Pennsylvania and the county seat of Allegheny County. Regionally, it anchors the largest urban area of Appalachia and the Ohio River Valley, and nationally, it is the 22nd-largest urban area in the United States...
, Pennsylvania
Pennsylvania
The Commonwealth of Pennsylvania is a U.S. state that is located in the Northeastern and Mid-Atlantic regions of the United States. The state borders Delaware and Maryland to the south, West Virginia to the southwest, Ohio to the west, New York and Ontario, Canada, to the north, and New Jersey to...
, and was the second of four children. He grew up in New Jersey
New Jersey
New Jersey is a state in the Northeastern and Middle Atlantic regions of the United States. , its population was 8,791,894. It is bordered on the north and east by the state of New York, on the southeast and south by the Atlantic Ocean, on the west by Pennsylvania and on the southwest by Delaware...
and Aurora
Aurora, Illinois
Aurora is the second most populous city in the U.S. state of Illinois, and the 112th largest city in the United States. A suburb of Chicago, located west of the Loop, its population in 2010 was 197,899. Originally founded within Kane County, Aurora's city limits have expanded greatly over the past...
, Illinois
Illinois
Illinois is the fifth-most populous state of the United States of America, and is often noted for being a microcosm of the entire country. With Chicago in the northeast, small industrial cities and great agricultural productivity in central and northern Illinois, and natural resources like coal,...
. When he was 16, he worked at WLXT (channel 60), a UHF
Ultra high frequency
Ultra-High Frequency designates the ITU Radio frequency range of electromagnetic waves between 300 MHz and 3 GHz , also known as the decimetre band or decimetre wave as the wavelengths range from one to ten decimetres...
television station in Aurora.
After graduating from West Aurora High School
West Aurora High School
West Aurora High School, or WAHS, is a public four-year high school located in Aurora, Illinois. It is part of West Aurora Public School District 129. The school is also referred to as "West," and "West High,".- History :...
, Skilling received his B.S.
Bachelor of Science
A Bachelor of Science is an undergraduate academic degree awarded for completed courses that generally last three to five years .-Australia:In Australia, the BSc is a 3 year degree, offered from 1st year on...
in applied science
Applied science
Applied science is the application of scientific knowledge transferred into a physical environment. Examples include testing a theoretical model through the use of formal science or solving a practical problem through the use of natural science....
at Southern Methodist University
Southern Methodist University
Southern Methodist University is a private university in Dallas, Texas, United States. Founded in 1911 by the Methodist Episcopal Church, South, SMU operates campuses in Dallas, Plano, and Taos, New Mexico. SMU is owned by the South Central Jurisdiction of the United Methodist Church...
in 1975, where he was a member of Beta Theta Pi
Beta Theta Pi
Beta Theta Pi , often just called Beta, is a social collegiate fraternity that was founded in 1839 at Miami University in Oxford, Ohio, USA, where it is part of the Miami Triad which includes Phi Delta Theta and Sigma Chi. It has over 138 active chapters and colonies in the United States and Canada...
(Kenneth Lay
Kenneth Lay
Kenneth Lee "Ken" Lay was an American businessman, best known for his role in the widely reported corruption scandal that led to the downfall of Enron Corporation. Lay and Enron became synonymous with corporate abuse and accounting fraud when the scandal broke in 2001...
was also a member of the fraternity
Fraternities and sororities
Fraternities and sororities are fraternal social organizations for undergraduate students. In Latin, the term refers mainly to such organizations at colleges and universities in the United States, although it is also applied to analogous European groups also known as corporations...
). During his admissions interview for Harvard Business School
Harvard Business School
Harvard Business School is the graduate business school of Harvard University in Boston, Massachusetts, United States and is widely recognized as one of the top business schools in the world. The school offers the world's largest full-time MBA program, doctoral programs, and many executive...
, he stated that he was asked if he was smart, to which he supposedly replied, "I'm fucking smart." Skilling earned his M.B.A. from Harvard Business School
Harvard Business School
Harvard Business School is the graduate business school of Harvard University in Boston, Massachusetts, United States and is widely recognized as one of the top business schools in the world. The school offers the world's largest full-time MBA program, doctoral programs, and many executive...
in 1979. He became a consultant at McKinsey & Company
McKinsey & Company
McKinsey & Company, Inc. is a global management consulting firm that focuses on solving issues of concern to senior management. McKinsey serves as an adviser to many businesses, governments, and institutions...
in the energy and chemical consulting practices. Skilling became one of the youngest partners in the history of McKinsey.
Skilling had a daughter and two sons (ages 22, 20, and 16) at the time of his conviction, from his first marriage, which ended in divorce in 1997. His youngest child, John Taylor "JT" Skilling, aged 20, was found dead in his Santa Ana
Santa Ana, California
Santa Ana is the county seat and second most populous city in Orange County, California, and with a population of 324,528 at the 2010 census, Santa Ana is the 57th-most populous city in the United States....
, California
California
California is a state located on the West Coast of the United States. It is by far the most populous U.S. state, and the third-largest by land area...
, apartment on February 3, 2011, by what police have preliminarily determined was the result of a drug overdose. In March 2002, he married Rebecca Carter, a former vice president for board communications and board secretary at Enron. Skilling is the younger brother of Tom Skilling
Tom Skilling
Thomas Ethelbert Skilling, III , known on-air as Tom Skilling, is a popular meteorologist in Chicago, Illinois. He is the chief meteorologist for the weekday midday, 5 and 9 p.m. newscasts at CW affiliate and national cable superstation WGN-TV .-Early beginnings:Skilling began his career in...
, the chief meteorologist at CW affiliate/cable superstation
Superstation
Superstation in United States television can have several meanings. In its most precise meaning, a superstation is defined by the Federal Communications Commission as "A television broadcast station, other than a network station, licensed by the FCC that is secondarily transmitted by a satellite...
WGN-TV
WGN-TV
WGN-TV, virtual channel 9 , is the CW-affiliated television station in Chicago, Illinois built, signed on, and owned by the Tribune Company. WGN-TV's studios and offices are located at 2501 W...
in Chicago, Illinois. He is also the son of Andrew Skilling, former CEO of Sunbeam
Sunbeam
Sunbeam may refer to:* Sunlight* Crepuscular rays, rays of sunlight that appear to radiate from a single point in the sky - Biology :...
.
Jeffrey Skilling was arrested in New York City on April 9, 2004, for public intoxication, during which he harassed several passersby and accused them of being undercover
Undercover
Being undercover is disguising one's own identity or using an assumed identity for the purposes of gaining the trust of an individual or organization to learn secret information or to gain the trust of targeted individuals in order to gain information or evidence...
FBI agents. Police responding to the 911 calls
9-1-1
9-1-1 is the emergency telephone number for the North American Numbering Plan .It is one of eight N11 codes.The use of this number is for emergency circumstances only, and to use it for any other purpose can be a crime.-History:In the earliest days of telephone technology, prior to the...
found him uncooperative and concluded that he needed to sober up in the local jail.
Enron
Skilling started his career in Houston as an analyst for First City Bancorporation of Texas in Houston. First City was one of Enron's banks and just before it failed the first time, Skilling quit. The CEO of Collecting Bank, the FDIC's facility for managing the bad assets of First City, was Sam Segnar, the first CEO and chairman of Enron. The new First City Bank, headed by A. Robert Abboud, was also an Enron bank. Abboud was the former president of First Chicago Bank and Occidental Petroleum under Armand Hammer. First City was founded by Judge James Andersen Elkins and his law firm, Vinson & Elkins, one of Enron's lead law firms. As a consultant for McKinsey & CompanyMcKinsey & Company
McKinsey & Company, Inc. is a global management consulting firm that focuses on solving issues of concern to senior management. McKinsey serves as an adviser to many businesses, governments, and institutions...
, Skilling worked with Enron
Enron
Enron Corporation was an American energy, commodities, and services company based in Houston, Texas. Before its bankruptcy on December 2, 2001, Enron employed approximately 22,000 staff and was one of the world's leading electricity, natural gas, communications, and pulp and paper companies, with...
in 1987, helping the company create a forward market
Forward market
The forward market is the over-the-counter financial market in contracts for future delivery, so called forward contracts. Forward contracts are personalized between parties The forward market is the over-the-counter financial market in contracts for future delivery, so called forward contracts. ...
in natural gas
Natural gas
Natural gas is a naturally occurring gas mixture consisting primarily of methane, typically with 0–20% higher hydrocarbons . It is found associated with other hydrocarbon fuel, in coal beds, as methane clathrates, and is an important fuel source and a major feedstock for fertilizers.Most natural...
. Skilling impressed Kenneth Lay
Kenneth Lay
Kenneth Lee "Ken" Lay was an American businessman, best known for his role in the widely reported corruption scandal that led to the downfall of Enron Corporation. Lay and Enron became synonymous with corporate abuse and accounting fraud when the scandal broke in 2001...
in his capacity as a consultant, and was hired by Lay in 1990 as chairman and chief executive officer of Enron Finance Corp. In 1991, he became the chairman of Enron Gas Services Co., which was a result of the merger of Enron Gas Marketing and Enron Finance Corp. Skilling was named CEO and managing director of Enron Capital & Trade Resources, which was the subsidiary responsible for energy trading and marketing. He was promoted to president and chief operating officer
Chief operating officer
A Chief Operating Officer or Director of Operations can be one of the highest-ranking executives in an organization and comprises part of the "C-Suite"...
of Enron in 1997, second only to Lay, while remaining the head of Enron Capital & Trade Resources. In 1999, Enron launched EnronOnline, an Internet-based trading operation, which was used by virtually every energy company in the U.S.
Under Skilling, Enron adopted mark to market accounting, in which anticipated future profits from any deal were accounted at their present market value rather than any historic or future value. Skilling joked about the California energy crisis at one meeting of Enron employees by asking, "What is the difference between California and the Titanic? At least when the Titanic went down, the lights were on." Skilling later attributed the remark to frayed relations between Enron and California. His employees, meanwhile, plotted to keep the price of energy high in California.
Skilling began advocating a novel idea: the company didn't really need any "assets." By pushing the company's aggressive investment strategy, he helped make Enron the biggest wholesaler of gas and electricity, with $27 billion traded in a quarter. On February 12, 2001, Skilling was named CEO of Enron, receiving $132 million in a single year.
On March 28, 2001, PBS
Public Broadcasting Service
The Public Broadcasting Service is an American non-profit public broadcasting television network with 354 member TV stations in the United States which hold collective ownership. Its headquarters is in Arlington, Virginia....
's Frontline interviewed Skilling, where he claimed Enron was one of "the good guys."
Skilling unexpectedly resigned on August 14 of that year, citing personal reasons, and he soon sold large blocks of his shares in the corporation. Then-chairman Kenneth Lay, who previously served as CEO for 15 years, returned as CEO until the company declared bankruptcy in December 2001. When brought in front of congressional committees, Skilling stated that he had "no knowledge" of the complicated chain of scandal that would eventually result in Enron's bankruptcy
Bankruptcy
Bankruptcy is a legal status of an insolvent person or an organisation, that is, one that cannot repay the debts owed to creditors. In most jurisdictions bankruptcy is imposed by a court order, often initiated by the debtor....
. The "no knowledge" claim has come to be known as the "Jeffrey Skilling Defense," meaning an executive who is well educated in the craft and claims he or she had no knowledge of the malfeasance or misfortune that transpired.
Indictment and trial
Skilling was indicted on 35 counts of fraudFraud
In criminal law, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation...
, insider trading
Insider trading
Insider trading is the trading of a corporation's stock or other securities by individuals with potential access to non-public information about the company...
, and other crimes related to the collapse of Enron. He surrendered to the Federal Bureau of Investigation
Federal Bureau of Investigation
The Federal Bureau of Investigation is an agency of the United States Department of Justice that serves as both a federal criminal investigative body and an internal intelligence agency . The FBI has investigative jurisdiction over violations of more than 200 categories of federal crime...
on February 19, 2004, and plea
Plea
In legal terms, a plea is simply an answer to a claim made by someone in a civil or criminal case under common law using the adversary system. Colloquially, a plea has come to mean the assertion by a criminal defendant at arraignment, or otherwise in response to a criminal charge, whether that...
ded not guilty to all charges. The indictments were primarily focused on his probable knowledge of, and likely direct involvement with, the fraudulent transactions within Enron. About a month after quitting Enron, Skilling sold almost $60 million of his stake in the company (in blocks of 10,000 to 500,000 shares), leading to the prosecutors' allegation that he sold those shares with inside information
Insider trading
Insider trading is the trading of a corporation's stock or other securities by individuals with potential access to non-public information about the company...
of Enron's impending bankruptcy
Bankruptcy
Bankruptcy is a legal status of an insolvent person or an organisation, that is, one that cannot repay the debts owed to creditors. In most jurisdictions bankruptcy is imposed by a court order, often initiated by the debtor....
. Skilling's lead attorney was Daniel Petrocelli, the 52-year-old civil litigator who represented Ron Goldman's father against O.J. Simpson in the negligent death civil suit successfully brought against the former football star and sports broadcaster. Skilling spent $40 million in preparation for the trial
Trial of Kenneth Lay and Jeffrey Skilling
The trial of Kenneth Lay, former chairman and CEO of Enron,and Jeffrey Skilling, former CEO and COO, was presided over by federal district court Judge Sim Lake in 2006 in response to the Enron scandal.-Timeline:* The trial began January 30, 2006....
, of which at least $23 million went to his defense lawyers' retainer. Skilling's younger brother Mark is an attorney and assisted his legal team during the criminal trial.
The trial began on January 30, 2006, in Houston, despite repeated protests from defense attorneys calling for a change in venue on the grounds that "it was impossible to get a fair trial in Houston," the base of the Enron catastrophe. Skilling, known for his harsh attitude and arrogance, lost his temper on the witness stand during the trial. Enron's bankruptcy, the biggest in U.S. history when it was filed in December 2001, cost 20,000 employees their jobs. In addition, many of them lost their life savings. Investors also lost billions. However, Skilling and many of the company's executives had sold huge portions of their Enron stock before the bankruptcy filing, making a substantial profit. When asked by a Dutch
Netherlands
The Netherlands is a constituent country of the Kingdom of the Netherlands, located mainly in North-West Europe and with several islands in the Caribbean. Mainland Netherlands borders the North Sea to the north and west, Belgium to the south, and Germany to the east, and shares maritime borders...
journalist in the street during the trial about industrial dominance, Skilling admitted that industrial dominance and abuse constitutes a global problem by saying: "Oh yes, yes sure, it does." On May 25, 2006, the jury returned with the following findings regarding Skilling:
- guilty on one count of conspiracyConspiracy (crime)In the criminal law, a conspiracy is an agreement between two or more persons to break the law at some time in the future, and, in some cases, with at least one overt act in furtherance of that agreement...
- guilty on one count of insider tradingInsider tradingInsider trading is the trading of a corporation's stock or other securities by individuals with potential access to non-public information about the company...
- guilty on five counts of making false statements to auditors
- guilty on twelve counts of securities fraudSecurities fraudSecurities fraud, also known as stock fraud and investment fraud, is a practice that induces investors to make purchase or sale decisions on the basis of false information, frequently resulting in losses, in violation of the securities laws....
- not guilty on nine counts of insider trading
In a front page interview with The Wall Street Journal
The Wall Street Journal
The Wall Street Journal is an American English-language international daily newspaper. It is published in New York City by Dow Jones & Company, a division of News Corporation, along with the Asian and European editions of the Journal....
on June 17, 2006, Skilling claims, among other things, that he had been in a depression after the Enron bankruptcy and considered committing suicide, but that his indictment actually lifted his spirits and brought him out of his depression; that the worst witness against him was himself; and that he will be able to survive a long prison term as long as he is given "something to do, something to accomplish" while in prison.
On October 23, 2006, Skilling was sentenced to 24 years and four months in prison, and fined $45 million. The case is currently under appeal. Skilling's request to remain free during the appeal was denied by Judge Patrick Higginbotham of the 5th U.S. Circuit Court of Appeals on December 12, 2006. In ordering Skilling's immediate imprisonment, the judge wrote, "Skilling raises no substantial question that is likely to result in the reversal of his convictions on all of the charged counts," although the order also noted "serious frailties" in the convictions.
Skilling began his sentence on December 13, 2006, and is currently housed at low security federal prison
Federal Correctional Institution, Englewood
The Federal Correctional Institution Englewood is a Federal Bureau of Prisons low security facility for male offenders, located in unincorporated Jefferson County. FCI Englewood is located off of U.S. Route 285 and Kipling Street, southwest of Denver...
in Littleton
Littleton, Colorado
Littleton is a Home Rule Municipality contained in Arapahoe, Douglas, and Jefferson counties in the U.S. state of Colorado. Littleton is a suburb of the Denver-Aurora Metropolitan Statistical Area. Littleton is the county seat of Arapahoe County and the 20th most populous city in the state of...
, Colorado
Colorado
Colorado is a U.S. state that encompasses much of the Rocky Mountains as well as the northeastern portion of the Colorado Plateau and the western edge of the Great Plains...
. According to the Federal Bureau of Prisons
Federal Bureau of Prisons
The Federal Bureau of Prisons is a federal law enforcement agency subdivision of the United States Department of Justice and is responsible for the administration of the federal prison system. The system also handles prisoners who committed acts considered felonies under the District of Columbia's...
, he is scheduled for release on February 21, 2028, when he will be 74 years old.
2008 events
Prior to the trial, attorneys for Skilling requested that the notes taken from FBI agents on the interviews with Andrew FastowAndrew Fastow
Andrew Stuart Fastow was the chief financial officer of Enron Corporation that was based in Houston, Texas until the U.S. Securities and Exchange Commission opened an investigation into his and the company's conduct in 2001...
be turned over to the defense. A number of inconsistencies were discovered soon after a judge ordered that the notes be turned over.
On April 3, 2008, Skilling's defense attorney, Daniel M. Petrocelli
Daniel M. Petrocelli
Daniel M. Petrocelli is an American defense attorney, known in part for his work in a 1997 wrongful death civil suit against O.J. Simpson and for representing Enron CEO Jeffrey Skilling...
, argued with government prosecutors that Skilling's trial and the conviction itself was based on honest services fraud
Honest services fraud
Honest services fraud refers to a 28-word sentence of , added by the United States Congress in 1988, which states: "For the purposes of this chapter, the term, scheme or artifice to defraud includes a scheme or artifice to deprive another of the intangible right of honest services."The statute...
which he said did not apply to Jeffrey Skilling. This argument was based on the idea that, even though Skilling committed illegal financial maneuvers, he did so in order to save the company and did not profit from it.
This in turn could lead to all of his convictions being overturned; however, the chances are very narrow.
Experts believe Skilling's best chance lies in citing a parallel appeals court decision that threw out guilty verdicts on three Merrill Lynch bankers accused of helping Enron to inflate profits.
On October 30, 2008, Jeffrey Skilling was moved to a low-security prison near Littleton, as his original prison, FCI Waseca, was being converted to an all-women facility.
Supreme Court review
On October 13, 2009 the Supreme Court of the United States agreed to hear two questions presented by Skilling's appeal. The Court subsequently scheduled and heard argument March 1, 2010.The first issue raised by Skilling's defense was whether or not the federal "honest services" fraud statute (title 18 of the United States Code, section 1346) required the government to prove that Skilling's conduct was intended to achieve "private gain" (instead of being intended to advance his employer's interests); and, if not, if this statute is unconstitutionally vague.
The Court heard two other cases about the same statute on December 8, several months before it heard Skilling's appeal: Black v. United States and Weyhrauch v. United States.
The second issue — "in-house judging" — was whether or not -- when a presumption of jury prejudice arises because of the widespread, community impact of the defendant's alleged conduct, plus, widespread, inflammatory pretrial publicity -- the government may rebut that presumption; and, if so, if the government must prove beyond a reasonable doubt that no juror was actually prejudiced.
In the arguments on March 1, the issue of jury selection received the most attention. Justices Steven Breyer and Sonia Sotomayor
Sonia Sotomayor
Sonia Maria Sotomayor is an Associate Justice of the Supreme Court of the United States, serving since August 2009. Sotomayor is the Court's 111th justice, its first Hispanic justice, and its third female justice....
seemed especially bothered by the questioning of one potential juror who reported that she herself lost $50,000 to $60,000 in the Enron debacle. ... "How can we be satisfied that a fair and impartial jury was picked when the judge doesn't follow up when the witness said, 'I'm a victim of this crime,'" Sotomayor asked. The government maintained that the judge and the selection process were appropriate. Sri Srinivasan
Sri Srinivasan
Srikanth "Sri" Srinivasan is the Principal Deputy Solicitor General of the United States. He has argued 17 cases before the U.S. Supreme Court and was also a lecturer at Harvard Law School...
, a partner at O'Melveny & Myers, was Skilling's Washington defense attorney and Justice Department lawyer Michael Dreeben argued for the government.
On June 24, 2010, in an opinion by Justice Ruth Bader Ginsburg
Ruth Bader Ginsburg
Ruth Joan Bader Ginsburg is an Associate Justice of the Supreme Court of the United States. Ginsburg was appointed by President Bill Clinton and took the oath of office on August 10, 1993. She is the second female justice and the first Jewish female justice.She is generally viewed as belonging to...
, the Supreme Court unanimously nullified Skilling's honest services fraud conviction, finding that "Skilling's misconduct entailed no bribe or kickback." The Court remanded the Skilling case back to the lower court for further proceedings to sort out which charges must now be dismissed as the result of the invalidation of the honest services statute.
Articles by Skilling
Other links
- Jeffrey Skilling at Forbes.com
- Jeffrey Skilling's political donations
- Jeffrey Skilling Pied by the BBB
- Jeffrey Skilling post-conviction interview of 17 June 2006 with The Wall Street Journal
- Jeffrey Skilling "suicide interview" available at Houston Chronicle
- Complete coverage of the Fall of Enron at the Houston Chronicle
- A Fish Called Jeffrey: 'Disappointed' after Enron, JURISTJURISTJURIST is an online legal news service hosted by the University of Pittsburgh School of Law, powered by a staff of more than 40 law students working in Pittsburgh and other US locations under the direction of founding Publisher & Editor-in-Chief Professor Bernard Hibbitts, Research Director Jaclyn...
- Skilling's current location within the Bureau of Prisons system
- article Malcolm Gladwell's January 8, 2007 New Yorker questioning apportionment of guilt