This is one of the crazier sounding stories we’ve seen tossed across the transom in some time. Former Enron bigwig Jeffrey Skilling (who I once listed on my 12 most evil Americans in history compilation) will be getting a shortened prison stay.
He can walk early, but not that early. Former Enron CEO Jeffrey Skilling succeeded in getting his prison sentence reduced by 10 years as part of a court-ordered reduction.
U.S. District Judge Sim Lake of the Southern District of Texas announced at a hearing in Houston today that Skilling will serve 14 years. His original conviction called for him to serve 24 years in connection with the collapse of the once high-flying energy trading firm. Under the agreement with federal prosecutors, Skilling could be released as early as 2017.
Skilling isn’t being cut this much slack because of some sudden revelation that he’s not as guilty as previously found or deserves some new fount of sympathy. In fact, the government has come out and essentially admitted that this move is coming because they’re tired of fighting his endless string of well funded appeals. They also want a huge chunk of his cash freed up to pay the victims of the fraud perpetrated at the convict’s former company.
Indeed, ending the legal battles with Skilling was one of the main reasons the Justice Department cited in announcing in May that it would seek a reduction in Skillings’ sentence.
“Mr. Skilling will no longer be permitted to challenge his conviction for one of the most notorious frauds in American history, and victims of his crime will finally receive the more than $41 million in restitution they are owed,” a DOJ statement said when the deal was announced.
On the one hand, I can absolutely sympathize with the motivation to get the money to the victims. In particular, the many employees of ENRON and their families have been waiting for more than a decade after their life savings and retirement plans were wiped out. They were locked out of access to their stock holdings, watching them plummet to worthless paper, while Skilling and his cohorts sold off their holdings for tens of millions of dollars in advance of the company’s exposure as a fraudulent, criminal enterprise and its abrupt downfall. This settlement will allow the funds to be disbursed, with Skilling forfeiting any chance to appeal or stall any longer.
But is that really justice? Writing for Moneywatch at CBS back in April, Charles Wilbanks indicated that the government had flubbed a number of elements of the original case, but if they let Skilling off now it would be a huge black eye for the system. Still, this move seems to reinforce the idea that somehow white collar crime shouldn’t be treated the same as other, more coarse criminal actions, though the damage such villains can inflict has the potential to harm a lot more people. One of the big money journos, John Carney, goes so far as to say that Skilling couldn’t have done anything all that bad to deserve such punishment.
Skilling was convicted in 2006 on 19 counts, including 12 counts of securities fraud and one count of insider trading. Skilling’s offenses added up to 36 points under the federal sentencing guidelines, which would have resulted in a sentence of 188 to 235 months, or 15 to 19 years. But the trial judge added a four-point “enhancement” because Skilling allegedly jeopardized the safety and soundness of a financial institution, namely the employee retirement plans. That four point enhancement meant that Skilling could be sentenced to far more time, 292 to 365 months, 24 to 30 years.
The result was one of the harshest sentences ever handed down for a white-collar crime. As legal scholar Larry Ribstein pointed out, Skilling got 13 more years than Al Capone.
(For the record, Carney contacted me via Twitter while I was working on this piece to supply his long history of covering the case. The titles alone speak for themselves.)
Part of the problem with Skilling’s case and the coverage of it seems to be a temptation to conflate him with the rest of the legitimate banking and investment industry executives in the country. Highly successful executives in this industry are regularly villainized for the “crime” of being too successful. But love them or hate them, that’s part of what America is about. We want people to succeed by dint of their own hard work, ambition and skill. But that doesn’t mean that they are exempt from scrutiny or that we won’t find some criminals among their numbers. Skilling is a villain who victimized a lot of people, making himself tremendously wealthy in the process. He had his day in court – far, far more days than most people, in fact – and he lost. Seeing the government back down now just to avoid another round of appeals battles may say a lot less about Skilling than the uneven way which the appeals process can be manipulated and extorted by the small number of criminals with Skilling’s vast financial resources.