Prosecutors want Skilling to pay $183 million

Saturday, August 12, 2006

(8/12/06 - HOUSTON) -- Federal prosecutors want former Enron Corp. CEO Jeffrey Skilling to turn over nearly $183 million for helping perpetuate one of the biggest business frauds in U.S. history -- his alleged share and that of his late co-defendant, company founder Kenneth Lay.

The government had originally split that amount between the two former corporate titans, who were convicted in May of charges including fraud and conspiracy at the close of a four-month trial.

In late June, prosecutors asked U.S. District Judge Sim Lake to issue a money judgment ordering Skilling to pay $139.3 million, and Lay $43.5 million in proceeds the government contends they pocketed by conspiring to present an optimistic public picture of Enron's health when they knew it was an illusion propped up by cooked books.

However, Lay died July 5 of heart disease. His lawyers have since filed court papers noting their intention to ask Lake to wipe Lay's record clean because he hadn't yet been sentenced or appealed. That would thwart the government's money judgment bid against him, but his assets could remain targets in civil litigation.

In a filing Friday, prosecutors responded to Skilling's opposition to the pricey proposed judgment by asking Lake to require the ex-CEO to pony up the entire $182.8 million.

Prosecutors said that with his conspiracy conviction, Skilling is "liable for all the proceeds attributable to all co-conspirators, indicted or unindicted, including Lay," because the conspirators participated in the same scheme.

Lake has yet to rule.

In a money judgment, a judge sets an amount a defendant has to pay and the defendant comes up with the cash through asset sales and other means. That differs from a traditional forfeiture, which could involve seizure of cash as well as assets directly tied to the defendant's crimes that the government later sells.

Skilling was convicted of 19 of 28 counts of fraud, conspiracy, insider trading and lying to auditors for his actions from 1999 through late summer 2001.

Jurors acquitted him of nine counts of insider trading that stemmed from stock trades in 2000, but convicted him of a single insider trading count related to his sale of half his Enron holdings three weeks after he abruptly resigned as CEO in mid-August 2001.

Skilling insisted no fraud occurred at Enron and his optimism about the company was genuine. He faces decades in prison upon his Oct. 23 sentencing, and aims to appeal.

Enron, once the nation's seventh-largest company, went bankrupt in December 2001 amid revelations of hidden debt and inflated profits. Thousands of jobs and the company's $60 billion market value evaporated.

Lay died before his legal team responded to the government's initial money judgment request. But last month Skilling's lead lawyer, Daniel Petrocelli, responded in court papers that said if the ex-CEO forks over anything, it would be substantially less than three digits.

Petrocelli contends that only $12.5 million could arguably be tied to crimes in a money judgment, because the rest stems from insider trading counts of which Skilling was acquitted. Similar issues should shave a forfeiture of frozen cash and property to $4.1 million.

The government had already intended to seize about $60 million in Skilling's cash and assets -- including his $5.1 million mansion -- that have been frozen since the ex-CEO was indicted in February 2004. Prosecutors say those assets and Skilling's $5 million bond can help pay the tab.

Petrocelli noted that Skilling owes his lawyers more than $30 million, was pleased with their work and wants them to be paid. That's above the $23 million Skilling set aside for legal costs upon his indictment, bringing his bill to more than $53 million.

Prosecutors were unsympathetic.

"Skilling's level of satisfaction with his legal representation is wholly irrelevant to the issue of forfeiture," prosecutors said in Friday's filing. "Forfeiture is designed to remove the proceeds of criminal activity from the hands of criminals. Allowing those proceeds to escape forfeiture by funding an unprecedented defense would be directly contrary to the law."

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