Friday, May 10, 2013

Jeff Skilling – Who Oversaw the Ruin of Enron and Thousands of Employees and Shareholders Reaches New Sentencing Agreement

A Rare Case Where a Corporate Fraud Criminal Went to Jail

The Enron debacle, which occurred because the senior executives at the company committed massive fraud was a serious blow to the lives of the thousands of employees and investors.  Most employees lost their jobs, and many lost their savings and retirement funds because they were invested in Enron.  The head of the company Ken Lay escaped jail by dying.  Other executives served real time.

The man who received the harshest sentence was Jeffrey Skilling.  However legal issues were going to be continual argued, and so the Justice Department and Mr. Skilling have made a deal.

As part of the agreement with the Justice Department, the former chief executive of the energy giant will waive his rights to any further appeals. In addition, he has agreed to allow more than $40 million of assets that were seized from him to be distributed to victims of Enron’s failure.

What Mr. Skilling gets from all of this is a near certain release from prison in the future, possibly far sooner than he otherwise would have obtained.

Jeffrey K. Skilling, the former Enron chief executive, at his 2006 trial in Houston.
Michael Stravato for The New York TimesJeffrey K. Skilling, the former Enron chief executive, at his 2006 trial in Houston.Not a care in the world about what he did to the employees and investors in Enron who made him a wealthy and successful executive.

Under federal prison rules, Mr. Skilling — who had been sentenced to 24 years and 4 months — could leave prison as soon as 2017.

It is hard to find too much fault with this arrangement.  In Mr. Skilling went to jail during the Bush Administration and the Supreme Court, which is more than willing to impose capital punishment on poor defendants who have inadequate counsel has invalidated a law that was used to convict Mr. Skilling.  So it was possible the Supreme Court, finding nothing wrong with what Mr. Skilling did because he was a rich successful businessman might have let him go altogether.

One wonders, given the leniency of the Obama administration towards Wall Street criminals if jailing Mr. Skilling would have been the case today. Probably, but possibly not. For example, here is how the supposedly progressive Obama administration is treating this fraud.

Billionaire Philip Falcone has reached a preliminary settlement with federal regulators that effectively bans him from financial activities for two years, a rapid fall for a man once seen as the hedge-fund industry’s savviest mind. .  .  .

The agency accused Falcone of leading a “lavish lifestyle” while working to limit the ways clients could pull out their investments. In one instance, Falcone took out a $113.2 million loan from one of his hedge funds to pay personal taxes while most of the fund’s investors were unable to redeem their money.

The agency also alleged that Falcone and others in his firm manipulated the bond prices of Maax, which manufactures bathroom fixtures.

Although the agreement bars Falcone from critical hedge fund activities for two years — such as raising new funds or being involved in dealmaking through his firm — it did not require him to admit wrongdoing. He can also remain chief executive of Harbinger Group.

The agreement calls for Falcone to pay $4 million of the fine — likely a tiny portion of his net wealth — and Harbinger Capital will pay the rest, according to a person familiar with the matter who spoke on the condition of anonymity because the settlement is not final.

Is there any wonder Mr. Falcone must be laughing as hard as he can.  A $4 million fine for him is like a $2.00 fine for the rest of us, something he won’t even notice.  Chump change, although in this case we the public are the chumps.

But one also hopes that the loss of $40 million in assets plus monstrous legal fees will leave Mr. Skilling near penniless.  Even if it does it is very likely he would earn a nice living after leaving prison.  His victims, not so much.

Employees lost their retirement savings and shareholders lost billions of dollars after the once highflying company slid into bankruptcy in 2001.

The reaction of Mr. Skilling’s legal team was this.

“Although the recommended sentence for Jeff would still be more than double any other Enron defendant, all of whom have long been out of prison, Jeff will at least have the chance to get back a meaningful part of his life.”

Let's hope not, let's hope that Mr. Skilling suffers for the rest of his life, that he is deprived of any financial security or well being, the same as he deprived thousands of their financial security and well being.  Mr. Skilling could have had a wonderful, financially rewarding life had he not been so greedy and so willing to destroy others for his own benefit.  He deserves the same fate as his victims.

No comments:

Post a Comment