Former Enron chief leaves prison
Skilling, 64, is sent to halfway house until his release date next February
Jeffrey Skilling, the former Enron CEO sentenced to a long prison term for his role in one of most notorious corporate fraud cases in history, was recently released from a minimum security federal prison camp in Alabama to a halfway house at an undisclosed location.
Enron’s spectacular collapse cost investors billions of dollars and wiped out the retirement savings — not to mention the jobs — of thousands of employees. Skilling, 64, was convicted of 12 counts of securities fraud, five counts of making false statements to auditors, one count of insider trading and one count of conspiracy in 2006 for his role in hiding debt and orchestrating a web of financial fraud that ended in the Houston company’s bankruptcy.
He was sentenced to 24 years in prison and fined $45 million, the harshest sentence of any former Enron executive. Five years ago, Skilling’s sentence was reduced to 14 years by U.S. District Judge Sim Lake. He is scheduled to be released Feb. 21, according to the Bureau of Prisons.
Federal prisoners are often released several months early to a halfway house, a highly restricted dormitory like setting that helps inmates ease back into society. They must maintain curfews, find work and stay out of trouble. A. Kelley, assistant residential reentry manager for the Bu---
reau of Prisons in San Antonio, said the bureau would not say where Skilling is living.
The Bureau of Prisons typically sends inmates to a halfway house in their home city where they resided before incarceration. It helps them reacclimate to a more normal life and re-establish relationships with their families, said Philip Hilder, a whitecollar defense lawyer who represented Sherron Watkins, a former vice president at Enron who went to then-Enron Chairman Kenneth Lay to warn him of accounting irregularities she discovered while reviewing Enron’s assets.
Inmates are typically required to get a job while they’re at a halfway house and report regularly to the federal probation department for up to three years, Hilder said. Skilling’s lawyer could not be reached for comment.
Lay went on trial at the same time as Skilling and was convicted of wire fraud, securities fraud, bank fraud and making false statements to banks. Lay, who founded Enron in 1985 by merging two natural gas pipeline companies, died before he was sentenced, succumbing to an apparent heart attack while vacationing in Colorado.
The Enron scandal destroyed what was once one of Houston’s hottest companies and in many ways brought to an end the boom of the 1990s, when accounting tricks and hype helped drive the stock market higher. It led to widespread financial and accounting reforms that reined in many of the questionable practices on Wall Street, such as analysts promoting companies that their investment bankers were preparing for initial public stock offerings.
Enron was considered a shining example of the so-called new economy, in which physical assets no longer seemed to matter so much and value was created by making markets. Enron became one of the most admired companies in the United States, its executives hailed as visionaries.
The company climbed to No.7 on the Fortune 500 list. It became a point of pride in Houston, attracting to the region other companies that wanted to rub shoulders with people famously described in a book and documentary on the scandal as “the smartest guys in the room.”
Enron employees walked with a “swagger,” according to one gas logistics coordinator who described what it was like working for the company. It wasn’t a stodgy wires and line company, but an energy firm that capitalized on the new trading opportunities of electricity and natural gas along with broadband, water, pulp and paper.
But by the end of 2001, the magic that started about a decade earlier had ended. Enron had filed for Chapter 11 protection, the biggest in U.S. corporate bankruptcy in history, ultimately revealing a company whose profits had been built, and heavy debts hidden, by accounting fraud. Its stock plummeted from nearly $91 to less than $1 by the end of 2001.
The collapse also destroyed the accounting firm Arthur Andersen, which, at the time, was one of the nation’s five largest. The firm, which signed off on Enron’s financial statements, was convicted in 2002 of obstruction of justice for interfering with the federal government’s Enron investigation.