Jeff Skilling

From 1979 to August 1990, Skilling worked at the consulting firm McKinsey & Company, where he was a partner.⁠[1]

In August 1990, Skilling joined Enron as chairman and chief executive officer of Enron Finance Corp.; from January 1991 to June 1993 he was chairman and chief executive officer of Enron Gas Services Corp., from June 1993 to December 1994 he headed that company’s risk management and power business, and from December 1994 to June 1995 he was managing director, development, of Enron Capital & Trade Resources Corp. (ECT).⁠[1][1][1][1]

From June 1995 to December 1996, Skilling was chairman, chief executive officer and managing director of ECT. During the same period, Enron’s president and chief operating officer was Richard D. Kinder, who had held the post since October 1990.⁠[1][2][1]

In January 1997, Skilling became president and chief operating officer of Enron, ranking below chairman and chief executive officer Kenneth L. Lay; he was an Enron director from 1997.⁠[2][2][3]

In February 2001, Skilling succeeded Lay as Enron’s president and chief executive officer, with Lay remaining chairman. He also served as a director of the Houston Branch of the Federal Reserve Bank of Dallas.⁠[4][4][4][3]

On August 14, 2001, Skilling resigned as Enron’s chief executive officer after about half a year in the post. Less than four months later, in December 2001, Enron filed for bankruptcy and its stock became virtually worthless; Enron’s collapse was at the time the largest corporate bankruptcy in the United States and led to the dissolution of the accounting firm Arthur Andersen.⁠[5][6][7][8]

On February 26, 2002, Skilling testified before the Senate Commerce Committee. Asked by Senator Byron Dorgan whether he had sold $66 million worth of stock between February 1999 and June 2001, he said that would not surprise him and acknowledged that he still had most of the money; he said he had for many years followed a program of selling a modest portion of his stock, and that between January 2001 and his departure on August 14 he had sold $15 million under an SEC rule-based plan, at a time when his stock and options were worth about $170 million. He also said he faced 36 separate plaintiffs’ lawsuits.⁠[9][9][9][9][9][9][9][9][9]

On February 19, 2004, the Justice Department announced that a federal grand jury in Houston had indicted Skilling on charges of conspiracy to commit securities fraud, 20 counts of securities fraud, four counts of wire fraud and ten counts of insider trading; former chief accounting officer Richard Causey was also charged in the same superseding indictment. Skilling surrendered to the FBI that morning after the indictment was unsealed. The indictment alleged that Skilling, Causey and other executives conspired, between at least 1999 and 2001, to deceive the investing public, the SEC and credit rating agencies by exaggerating the performance of Enron’s businesses.⁠[10][10][10][10][10]

On the same day, the U.S. Securities and Exchange Commission brought civil charges against Skilling in federal district court in Houston, alleging that he improperly used reserves in Enron’s wholesale energy trading business to manipulate earnings, manipulated segment reporting to conceal losses at the retail energy business, manufactured earnings by promoting the broadband business, and used special purpose entities and the LJM partnerships to manipulate financial results; the SEC also alleged that he sold Enron stock while in possession of material non-public information, generating unlawful proceeds of about $63 million, and sought disgorgement, civil penalties and a permanent bar from serving as an officer or director of a public company.⁠[11][11][11][11][11][11][11]

After a 56-day trial before U.S. District Judge Sim Lake, a federal jury in Houston on May 25, 2006, found Skilling guilty on 19 of the 28 counts against him, including conspiracy, 12 counts of securities fraud, one count of insider trading and five counts of making false statements to auditors, and acquitted him on nine insider trading counts. Former chairman Kenneth Lay was found guilty on all counts in the same trial but died before sentencing.⁠[12][12][12][13]

The scheme identified by the Justice Department was designed to make Enron appear to be growing steadily, meeting analysts’ expectations, free of significant write-offs or debt and worthy of an investment-grade credit rating; its effect was to push Enron’s stock from about $30 per share in early 1998 to over $80 in January 2001, and to artificially stem its decline during the first three quarters of 2001. Skilling maintained his innocence throughout the trial and argued that the case should have been tried outside Houston.⁠[12][12][14]

On October 23, 2006, Judge Sim Lake sentenced Skilling to 292 months (24 years and four months) in prison and ordered $45 million in restitution. The judge applied a four-level enhancement for “substantially jeopardizing the safety and soundness of a financial institution,” treating Enron’s employee retirement plans as a financial institution, which raised his guideline range to 292 to 365 months; the sentence was at the bottom of that range.⁠[7][15][16][16][16]

An appeals judge denied Skilling’s request to remain free pending appeal, finding that the issues he raised were not likely to result in the reversal of his convictions. On December 13, 2006, Skilling was ordered to report to a low-security federal prison in Waseca, Minnesota, almost exactly five years after Enron filed for bankruptcy.⁠[14][14][14][14][14]

On January 6, 2009, the U.S. Court of Appeals for the Fifth Circuit affirmed Skilling’s convictions but held that the district court had erred in increasing his sentence for jeopardizing the safety and soundness of a “financial institution,” Enron’s pension plan, and vacated the sentence and remanded for resentencing. The ruling effectively reduced his guideline range by about nine years, to 188 to 235 months.⁠[7][7][7][16]

Skilling appealed to the U.S. Supreme Court, arguing that pretrial publicity and community prejudice had prevented him from receiving a fair trial and that his conviction for conspiracy to commit honest-services wire fraud was improper. On June 24, 2010, in Skilling v. United States, the Court held that pretrial publicity and community prejudice had not prevented him from obtaining a fair trial, but that the federal statute prohibiting fraudulent deprivation of “honest services” must be confined to bribery and kickback schemes; because the conduct Skilling was charged with involved no bribe or kickback, it fell outside that offense. The opinion, written by Justice Ruth Bader Ginsburg, affirmed in part, vacated in part and remanded, leaving the lower court to decide whether the error was harmless.⁠[6][6][6][6][6][6][6]

On remand, the Fifth Circuit ruled that the jury’s consideration of the honest-services fraud theory did not affect his other convictions; he went to the Supreme Court twice, and his conviction was not overturned.⁠[5][16]

In May 2013, the government and Skilling reached an agreement to jointly recommend a sentence of between 168 and 210 months; in exchange, Skilling agreed not to contest the original forfeiture and restitution order and to waive all appeals and other litigation. The Justice Department said it entered the agreement in part to bring finality to the convictions so that about $42 million could be promptly distributed to victims. Defense attorney Daniel Petrocelli said the agreement brought certainty and finality to a long, painful process.⁠[7][7][7][16][16]

In June 2013, Judge Sim Lake resentenced Skilling in federal district court in Houston to 168 months (14 years) in prison, the low end of the jointly recommended range, plus three years of supervised release, and ordered the forfeiture of about $42 million for restitution to victims of the Enron fraud, an amount the government collected by seizing and liquidating his assets. He was 59 and had served about six years; among former Enron executives, his sentence was the harshest.⁠[5][7][5][15][7][16][13]

The SEC’s civil case, filed in 2004, had been stayed for years pending the criminal proceedings. In December 2015, U.S. District Judge Melinda Harmon in Houston granted summary judgment based on the collateral estoppel effect of Skilling’s criminal convictions and his statement of non-opposition to the SEC’s motion, finding him liable on each claim in the SEC complaint, permanently enjoining him from violating the relevant securities law provisions, and permanently barring him from serving as an officer or director of a public company.⁠[15][15][15][15]

In August 2018, Skilling, then 64, was transferred from federal prison to a halfway house in Texas, the location of which the Federal Bureau of Prisons did not disclose; according to Bureau of Prisons records, he was scheduled to leave the halfway house on February 21, 2019.⁠[8][17][13][17]