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Ex-Enron CEO named in 42-count indictment

As published by MSNBC.com:

Ex-Enron CEO named in 42-count indictment
Skilling pleads not guilty to all counts, released on $5 million bail

The Associated Press
Updated: 12:28 p.m. ET Feb. 19, 2004

HOUSTON - Former Enron Corp. chief executive Jeffrey Skilling, taken to court in handcuffs Thursday, was charged with 42 counts of fraud and other crimes in the highest-reaching indictment yet stemming from Enron’s colossal collapse.

Skilling, the top-ranking executive arrested so far in the scandal that shook Wall Street and Washington alike, was named in an indictment accusing him 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 for him at $5 million.

One of three attorneys accompanying him before the judge told her he was prepared to post the bond in cash.

Prosecutors said Skilling faced a maximum of 325 years in prison and more than $80 million in fines if convicted of all counts.

Another court appearance for Skilling was set for March 11.

The indictment accuses Skilling, 50, and Richard Causey, Enron’s former chief accounting officer, of taking part in the schemes to mislead regulators and investors. Causey, 44, was indicted a month ago and is free on $500,000 bond.

Skilling was named in 36 of the counts, 10 of them specifically accusing him of insider trading that generated $62.6 million from stock sold from April 2000 through September 2001, which was about a month after he quit Houston-based Enron. During that time, according to the indictment, he sold shares in blocks ranging from 10,000 to 500,000. In that time, Enron stock sold as high as $87 in September 2000 to $31 in September 2001.

The indictment also mentions 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 and became the first former Enron executive put behind bars.

The indictment makes no mention of Skilling’s former boss, former Enron chairman Kenneth Lay, either by name or by title. Lay, who served as CEO before Skilling, has maintained his innocence of any wrongdoing related to Enron’s failure.

Flanked by a pair of attorneys, Skilling turned himself in at the Houston FBI offices just before daybreak. About 15 minutes later, his hands behind him in cuffs, he was placed in a car for the trip to the federal courthouse.
“Under the circumstances, he is doing extraordinarily well,” said Dan Petrocelli, one of his lawyers.

Skilling becomes the highest-profile former Enron executive to date 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.

The indictment unsealed Thursday said the objectives of the schemes were to report recurring earnings that grew by 15 to 20 percent each year, to avoid writedowns or losses, to persuade investors that Enron’s profitability would grow and to meet or exceed analyst expectations.

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 the company’s finances and making false and misleading public statements about Enron’s financial performance, the indictment said.

The government was seeking to seize from Skilling accounts worth more than $50 million, plus an 8,000-square-foot Houston mansion with a market value of $4.7 million.

Causey, who was fired in February 2002 after an internal probe concluded he failed in his duty to adequately look out for Enron’s interests when the energy giant did deals with Fastow’s partnerships, initially had been charged with six counts. He has pleaded innocent.

Additional counts unsealed Thursday accuse him specifically of insider trading and allege he sold shares of stock generating $10.3 million from January 2000 to September 2000. The government is seeking forfeiture of Causey’s suburban Houston home plus three accounts worth more than $3 million.

In the latest indictment, both men are accused of wire fraud, securities fraud, securities fraud regarding presentations to securities analysts and of making false statements to auditors in annual representation letters and false statement to auditors.

Almost exactly two years ago, Skilling was alone among former Enron executives in not invoking his Fifth Amendment rights before Congress, telling two panels he knew nothing about serious problems at the energy trader before he quit after serving as CEO for only six months.

Skilling maintained that he believed Enron was financially healthy when he stepped down, citing personal reasons he has not explained.

Fastow pleaded guilty a month ago to two counts of conspiracy and agreed to help prosecutors pursue other cases. Fastow admitted that he and others manipulated Enron’s books so the company would appear successful while using various partnerships to enrich himself, his family and chosen colleagues.

Fastow’s lawyers said when he was indicted in October 2002 that he was hired to do off-the-books financing and that Enron’s top brass approved and praised his work. Causey and Fastow reported directly to Skilling.

But top executives, including Skilling, pocketed millions of dollars from sales of stock that prosecutors allege was inflated.

Shareholder lawsuits in Houston allege Skilling gained more than $70 million from selling 1.3 million shares of stock — about 43 percent of his holdings — from June 1996 through November 2001. Skilling also received $13.2 million in bonuses from 1997 through 2001.

Skilling has said his stock sales were part of an ongoing program to sell a certain amount each month, and he didn’t dump shares for fear of Enron going under.

Posted by Mark at February 19, 2004 12:49 PM | TrackBack

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