(Adds word "as" in first sentence)
* Previous sentence was 24 years
* Defendant agrees to stop appealing conviction
* Enron collapsed in 2001
By Kristen Hays and Anna Driver
HOUSTON, June 21 A federal judge slashed 10
years off of his prison sentence of former Enron Corp Chief
Executive Jeffrey Skilling on Friday, a decision that could set
him free as early as 2017.
U.S. District Judge Simeon Lake reduced his term to 14 years
from 24 years, accepting a deal struck between prosecutors and
Skilling's lawyers that will end years of appeals.
Under the deal, more than $40 million of Skilling's fortune,
which has been frozen since his conviction in 2006, will be
distributed to victims of Enron's collapse.
"This is not an easy decision," Lake told the hearing before
he acknowledged both the gravity of Skilling's crimes and his
charitable works in Houston, and in prison, where he reads to a
blind inmate and teaches English and Spanish. He has also held a
job fair for inmates about to be released.
In May 2006, a jury had convicted Skilling of 19 counts of
conspiracy, securities fraud, insider trading and lying to
auditors for his role in maintaining a facade of success as
Enron's energy business crumbled.
Enron founder Kenneth Lay also was found guilty of multiple
counts of conspiracy and fraud. He died of heart failure six
weeks after the trial ended, prompting Lake to throw out the
"We are relieved that we can now see the light burning at
the end of the tunnel," Daniel Petrocelli, Skilling's attorney
told reporters after the hearing.
Skilling, who looks much as he did when last seen in public
in 2006 save a graying beard, thinner hair and eyeglasses,
appeared relieved. His wife, former Enron corporate secretary
Rebecca Carter, as well as his brother, Mark Skilling, and
sister, Sue Skilling, all wept when Lake announced the new
Petrocelli hopes his client will be freed in 2017, which is
possible with credit for good behavior and completion of an
alcohol-abuse treatment program. Skilling is only now eligible
for rehab, since a prisoner must have 10 years or fewer to
Diana Peters, one of the thousands of Enron workers left
jobless when the company collapsed, told the hearing that
Skilling betrayed employee and investor trust. "I pray that your
decision is to give Jeff Skilling the maximum sentence for his
crimes," she said.
Skilling's resentencing had been pending since 2009, when a
federal appeals court ruled that Lake wrongly added years to his
sentence because Skilling's actions had jeopardized a financial
In the interim his legal team pursued more appeals and
sought a new trial, reaching the U.S. Supreme Court in 2010.
His lawyers were on their third such effort when they and
U.S. prosecutors in May forged a deal for a 14- to 17-1/2-year
sentence to end the litigation for good.
Skilling still has the longest sentence of more than two
dozen former Enron executives, including Chief Financial Officer
Andrew Fastow, and others who pleaded guilty or were convicted
of Enron-related crimes. All have served their prison terms.
More than 12 years after Enron's 2001 collapse threw
thousands out of work, sparked federal probes and prompted
Congress to crack down on corporate accounting, Skilling is a
remnant of an era of scandal that landed several CEOs in prison.
Those include former WorldCom CEO Bernard Ebbers, who is
serving a 25-year term for fraud and conspiracy in Louisiana -
the only top executive to get a longer term than Skilling during
that wave of prosecutions.
Skilling's new prison term comes amid a debate on how
sentencing guidelines apply in white-collar crimes, where the
penalty is often tied to the financial loss caused.
The American Bar Association recently established a group to
look at those guidelines, while critics, like U.S. District
Judge Jed Rakoff in Manhattan in March, have urged they be
scrapped. The U.S. Sentencing Commission has identified looking
at how the guidelines apply to economic crimes as a priority.
RISE AND FALL
A graduate of Southern Methodist University and Harvard
Business School, Skilling had been a star McKinsey & Co
consultant when he caught Lay's eye in 1990 and joined Enron.
He led Enron's transformation from a staid U.S. natural gas
pipeline company to a global energy-trading juggernaut that
reached No. 7 on the Fortune 500. In 2000, Enron claimed to have
$100 billion in revenue.
Skilling succeeded Lay as chief executive in February 2001
but abruptly resigned that August, just two months before Enron
revealed hundreds of millions of dollars in third-quarter losses
and a massive writedown in shareholder equity. Enron went
bankrupt that December.
At his trial alongside Lay, Skilling insisted he had quit
because he was worn out and troubled by Enron's sinking share
price, not because he knew years of murky accounting were about
to come to light.
"I am absolutely innocent," he said almost immediately after
taking the witness stand. He told jurors he was devastated by
the company's failure, saying "I bled 'Enron blue,'" referring
to the color of the company logo.
Prosecutors called him a liar and crook who minimized or hid
bad news in 2001 to keep analysts and investors bullish.
On Friday as U.S. trial attorney Patrick Stokes recounted
Skilling's lies to investors and Enron employees, Skilling
listened intently, his jaw tight, and once looked down in
When the prosecutor and, later, Petrocelli noted that both
of his parents and his 20-year-old son had died during his
incarceration, Skilling's face went white and haggard.
He did not make a statement, leaving his written comments to
Lake sealed from public view.
Fastow pleaded guilty to fraud in 2004, admitting to
skimming millions of dollars from Enron through shady deals and
kickbacks, and helped prosecutors secure indictments against
Skilling and Lay.
He agreed to serve 10 years, but another judge reduced his
term. Fastow went to prison in September 2006 and was released
Since his release, Fastow has shunned media interviews but
gained traction on the speaking circuit.
Next Wednesday he is slated to speak at the Association of
Certified Fraud Examiners' global fraud conference in Las Vegas,
and last year he spoke to business students at the University of
Colorado and Dartmouth College.
The ACFE website notes under Fastow's biography on the
conference agenda that the organization "does not compensate
(Reporting by Anna Driver and Kristen Hays in Houston;
Additional reporting by Eileen O'Grady; editing by Prudence