Twenty Year Sentence - Did Jeff Skilling Kill Someone?

The verdict Wall Street has been waiting for is in with Enron CEO Jeff Skilling receiving a sentence of 24 years four months for his conviction in a stock fraud scandal. The sentence is the latest controversy in a wave of reform in the financial markets. It is considered by many Wall Street observers to be a severe sentence, but not to the four thousand people who lost their jobs and the dozens of others who lost millions in pension benefits when the energy giant collapsed and filed bankruptcy in 2001. New York Attorney General Elliot Spitzer, a bristly energetic prosecutor with strong political ambitions, scored a knockout with his convictions of both Skilling and Ken Lay. The prosecutor successfully proved, at least for the jurors, a case wherein the defendants were found guilty of hiding the massive 31.8 billion dollars of debt. The Enron Corporation, once the seventh largest energy company in the U.S., saw its stock shares plummet.

Ken Lay's conviction was expunged when he died of a heart attack in July and there were many who said they were bitter at the notion of Lay's cheating the penalties levied by the court. But Lay always maintained his innocence and felt that his financial myopia did not rise to the level of criminal negligence. The court may have declared the one-time darling of Wall Street guilty of eleven counts of securities fraud, but it's difficult to understand how anyone could think that sentence more severe than the one imposed upon Lay by the Grim Reaper. Jeff Skilling, convicted alongside Ken Lay, maintains his innocence and has filed an appeal of the charges.

Skilling once stated in an interview with a Wall Street Journal reporter that he'd been in a depression after the Enron bankruptcy, but that his indictment had 'lifted his spirits'. It certainly won't lift the spirits of other financial executives who come under scrutiny of the Securities and Exchange Commission, and there are those who grumble that the sentences imposed for white collar crimes is excessive, often exceeding the penalties of those convicted of violent offenses.

On the other hand, Lay and Skilling refused to cooperate with prosecutors in their investigations of insider trading and questionable accounting practices. Some say this earned them the zealous prosecution at a time when a reform wave has hit the securities industry. Number two investor relations executive Paula Rieker drew two years probation for her role in the Enron scandal and her guilty plea on a charge in insider trading. Her tearful apology before the court and her earnest entreaties for a lenient sentence were supported by the prosecution, for it was her testimony as a witness for the prosecution that brought down Ken Lay and Jeff Skilling. Skilling was convicted on nineteen criminal counts involving securities violations.
Rieker's testimony was dramatic and damning for the defendants. After the scandal came to light and Lay had resigned from Enron, she said, the board of directors was 'outraged' at the financial manipulations of Enron executives, including Andrew Fastow, who received a six year sentence on two counts of conspiracy to commit fraud. She alluded to a statement made about Ken Lay by former Enron director John Duncan.

"He was using Enron as a damn ATM machine", Duncan is reported to have said.

She testified the statement was a reference to Lay's repayment of some seventy million dollars in personal loans with Enron stock.

Unlike Paula Rieker who very early on knew the jig was up and jumped at the lenient deal offered prosecutors, Jeff Skilling had always been something of a maverick . For better or for worse, it was Skilling who brought the concept of trading on electricity production to the commodities market. Interviewed in a 2001 segment of PBS's Frontline program, Skilling attacked California's overregulation of energy companies and attributed the wave of blackouts to that factor.

"They have fixed prices to consumers and they've got a regulatory system that basically prohibits you from building new facilities," said Skilling.

Skilling's advocacy of free markets in the energy field, while not a factor leading to his conviction, paints an unappealing portrait for public consumption in a world which little understands the underlying assumptions of a free-market economy.
Prodded by the interviewer's reference to consumer advocates who 'didn't want the nuclear power plant and Homer Simpson running it…" Skilling bristled.

"It was a regulatory system that allowed the power plants to be built…. which meant that you could shove it through to a captive ... consuming base. I (the people) have no ability to fire my electricity supplier. They are monopolists. If they do something really stupid, like build a nuclear power plant, I want to fire them. I can't do that in a regulated system. ...'

In the end, it may very well be Skilling's individualistic and unapologetic nature which does indeed help him to survive his sentence in a federal prison.