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Skilling Indicted For Fraud

Ex-Enron CEO also faces insider trading and perjury charges related to energy company's collapse

Feb 19, 2004 | CNN

Ex-Enron CEO Jeffrey Skilling was charged with fraud, insider trading and making false statements Thursday, making him the highest ranking former executive charged in the collapse of the once-mighty energy company.

Ex-Enron CEO Jeffrey Skilling surrenders to the FBI in Houston Thursday.
The indictment unsealed in Houston laid out 35 charges against Skilling, as well new charges against Richard Causey, Enron's former chief accounting officer, who pleaded not guilty to six charges last month.

The conspiracy charges against Skilling and Causey allege that from 1999 to 2001 the two men used various devices and schemes to manipulate Enron's financial results.

The indictment came just five weeks after former Enron CFO Andrew Fastow pleaded guilty and agreed to cooperate with investigators probing the implosion of Houston-based Enron.

Skilling, 50, has become the highest-ranking ex-official charged in the government's investigation into that collapse. He faces 10 counts of insider trading; 13 counts of securities fraud; four counts of wire fraud; seven counts of making false statements, and one count of conspiracy to commit wire and securities fraud.

Skilling surrendered to the FBI at its Houston office Thursday and was taken in handcuffs to the federal courthouse, where he was scheduled to appear before Judge Frances H. Stacy for an arraignment hearing.

One of Skilling's attorneys, Daniel Petrocelli, speaking to reporters in front of the FBI offices, said his client was "doing extremely well under the circumstances" and would release a statement later in the day, according to Reuters.

Skilling and his attorneys have repeatedly denied he did anything wrong. Bruce Hiler, Skilling's Washington-based lawyer, has repeatedly said Skilling relied on his subordinates, lawyers and accountants. He gave up the No. 2 position at Enron several months before the company's finances collapsed in late 2001.

The collapse of the company in late 2001 has come under scrutiny by the Justice Department, the Securities and Exchange Commission and numerous congressional committees seeking answers as to how the company that once stood at No. 7 on the Fortune 500 could fall so quickly.

The collapse left thousands of employees jobless, and those whose 401(k) plans were invested in Enron stock were wiped out. But many top executives unloaded their stock before the bottom fell out. Prosecutors said company leaders purposely kept employees in the dark about Enron's real financial situation.

Skilling, unlike other top Enron officials, did not invoke his Fifth Amendment rights when questioned by Congress in early 2002. He has blamed Enron's death spiral on what he has called a classic "run on the bank."

"It is my belief that Enron's failure was due to a classic run on the bank, a liquidity crisis spurred by a lack of confidence in the company," he testified before Congress.

"At the time I left the company, I fervently believed that Enron would continue to be successful in the future. I did not believe the company was in any imminent financial peril."

Skilling served as president and COO of Enron from late 1996 to early 2001. He was then appointed CEO, but resigned six months later, in August 2001, just five months before Enron filed for bankruptcy.

The only person higher up the Enron chain than Skilling is its former chairman and longtime CEO, Kenneth Lay, who has not been charged and whose attorney has denied he was involved in any wrongdoing.

According to congressional investigators, Skilling sold more than 500,000 shares of Enron stock for more than $21 million in 1999 alone, and profited greatly by cashing in more stock in the months before the collapse.

Enron's questionable partnerships hid more than $1 billion in debt, ultimately plunging the company into bankruptcy.

"I spent probably most of my professional life helping to build Enron Corporation," Skilling told CNN's Larry King in 2002. "I don't think there was anyone that was as shocked by the collapse of the company as I was."

Pressed on the matter, Skilling was asked, "You didn't see anything coming?"

"Not only that, Larry, I'd go even farther than that. I think we had made some tremendous progress in the six months before I left," the former CEO said.

King asked, "Then why did you leave?"

"I was tired," he replied.

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