Enron's Ex-CEO Turns Himself In

During the months of investigation, Skilling has mostly receded from public view in Houston, where he has sometimes been jeered by angry former employees and members of the public. He has spent time with his three children and traveling in the United States, according to a person familiar with his activities.

Skilling set up a company called Veld Interests Inc. shortly after leaving Enron. It is unclear how much business he is conducting, though. Prosecutors moved yesterday to freeze $91,800 in cash from Veld.

Prosecutors and investigators at the Securities and Exchange Commission, who filed a separate civil fraud complaint against Skilling yesterday, got a boost from last month's guilty plea by a Skilling protege, former Enron chief financial officer Andrew S. Fastow. Fastow, a mastermind behind many of the company's secretive partnerships, led the government to Skilling's doorstep, building on accounts from other corporate insiders in Enron's finance and accounting ranks.

Still under investigators' microscope is Lay, Enron's founder and longtime chairman, who has said through attorneys that he was hoodwinked by Fastow and other employees. The government continues to probe what Lay knew about Enron's worsening finances at the same time he was selling stock and making optimistic statements about the company's health. Lay was referred to only briefly in yesterday's indictment, and not by name, in connection with an October 2001 announcement related to some of Enron's failing partnerships.

In essence, the government contends in the 57-page indictment that Skilling stood at the center of a wide-ranging conspiracy from 1999 to 2001 that employed accounting maneuvers, false statements and other methods to prop up Enron's stock price and enrich himself.

Corporate executives are required under the law to provide full and complete disclosure about significant or "material" developments that affect a company's finances. Instead, prosecutors claim, Skilling repeatedly misled shareholders and analysts about Enron's financial health.

Some of the methods Skilling and accomplices allegedly employed were simple, such as a decision to beat Wall Street earnings targets in July 2000 by counting as profits millions of dollars in cash reserved to cover potential losses. This was done without a "legitimate business purpose" or the knowledge of investors, the indictment charges. The decision, which prosecutors said was made after the fiscal quarter, when the actual results were known to company insiders, added two cents to Enron's earnings per share for the second quarter of 2000.

Other accounting tricks were more complex, the indictment alleges, including a deal known as Project Grayhawk, after an Arizona golf resort where Enron executives met. It was designed to take advantage of an expected spike in Enron stock from a January 2000 conference for stock analysts that featured Sun Microsystems Inc. chief executive Scott McNealy to give Enron "dot-com luster." Before the gathering, Skilling and other complicit Enron officials purportedly removed a hedge on a related investment that would not have allowed Enron to benefit from stock price gains. The hedge was put back in place later.

When the analysts anointed Enron a dot-com and the stock jumped from $47 to $67 a share within a few weeks, the company was able to book $85 million in earnings through the Grayhawk gimmick. Enron then falsely described the earnings hike to analysts and in SEC filings as "ordinary and recurring" profits from its energy business, according to the indictment.

"Mr. Skilling was quick to take credit for the 'innovations' behind Enron's spectacular rise and its apparent transformation into a 'new economy' powerhouse," said SEC Enforcement Division Director Stephen M. Cutler. "Of course, many of these so-called 'innovations' were, in truth, nothing more than fraudulent business practices."