Friday, February 20, 2004

Skilling says he's not guilty

Former Enron CEO facing 35 counts, 325 years in prison

By Kristen Hays
The Associated Press

HOUSTON - Former Enron Corp. chief executive Jeffrey Skilling, taken to court in handcuffs Thursday, was charged with almost three dozen counts of fraud, insider trading and other crimes. It was the highest-reaching indictment yet from Enron's colossal collapse.

Skilling, the top-ranking executive arrested so far in the scandal that shook Wall Street and Washington, was accused of participating in widespread schemes to mislead government regulators and investors about the company's earnings.

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

Prosecutors said Skilling, 50, faces up to 325 years in prison and more than $80 million in fines if convicted of all counts. Another court appearance to address trial scheduling is set for March 11.

The indictment names Skilling in 35 counts - 10 of them accusing him of insider trading that generated $62.6 million from stock sold from April 2000 through September 2001, about a month after he quit Houston-based Enron. According to the indictment, he sold shares in blocks ranging from 10,000 to 500,000 during that time, when Enron stock sold as high as $87 in September 2000 and as low as $31 in September 2001.

Defense lawyer Dan Petrocelli said prosecutors "were making a grave mistake" in pursuing Skilling, "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."

He said Skilling - unlike other former Enron executives who invoked their Fifth Amendment rights before Congress - had cooperated fully with investigators and government panels investigating the company's collapse.

"He has come forward, he has raised his right hand, he has answered the hard questions," Petrocelli said. "Jeff Skilling did nothing wrong. ... I guess they need a scapegoat. And I guess Jeff Skilling is their scapegoat."

Deputy Attorney General James Comey, who heads the Justice Department's corporate fraud task force, said Skilling and other executives were responsible for a "massive, complex scheme to give shareholders and the investing public the false appearance of financial strength and security at a time when Enron was, in fact, failing."

"The indictment of Enron's CEO shows that we will follow the evidence wherever it leads - even to the top of the corporate ladder," Assistant Attorney General Christopher Wray said.

Skilling, flanked by a pair of lawyers, turned himself in at the Houston FBI offices just before daybreak. He was placed in a car for the trip to the federal courthouse.

He becomes the highest-profile former Enron executive to face criminal charges and one of the most anticipated in the Justice Department's methodical investigation, which passed its two-year mark last month.

Two years ago, Skilling told two congressional panels that he knew nothing about serious problems at the energy trader before he quit after serving as CEO for six months. Skilling maintained that he thought Enron was financially healthy when he stepped down, citing personal reasons he has not explained.

The superseding indictment unsealed Thursday originally contained charges only against Richard Causey, Enron's former chief accounting officer. Causey, 44, was indicted a month ago and pleaded innocent. He is free on $500,000 bond.

Also mentioned by name in the indictment are former chief financial officer Andrew Fastow, who pleaded guilty and is cooperating with federal prosecutors, and former treasurer Ben Glisan, who pleaded guilty to conspiracy in September and became the first former Enron executive put behind bars.

Skilling's former boss, former Enron chairman Kenneth Lay, is referred to by title in the indictment twice: that Skilling reported directly to Enron's CEO and chairman; and that Enron's chairman/CEO mentioned a $1.2 billion write-down in shareholder equity during a conference call the day the company announced massive losses in October 2001.

Lay, who was CEO before Skilling, has denied any wrongdoing related to Enron's failure though his lawyers.

The indictment said that from 1999 through late 2001, Skilling, Causey and their co-conspirators "engaged in a wide-ranging scheme to deceive the investing public, the (Securities and Exchange Commission), credit rating agencies and others, about the true performance of Enron's businesses" by manipulating Enron's finances, making false and misleading public statements about Enron's financial performance.

The government was seeking to seize more than $50 million from Skilling's accounts, plus an 8,000-square-foot Houston mansion valued at $4.7 million.

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