Prosecutors Seek Assets Of Two Enron Chiefs
Saturday, July 1, 2006
Federal prosecutors asked a judge yesterday to order former Enron Corp. executives Jeffrey K. Skilling and Kenneth L. Lay to turn over $182.8 million, arguing that their homes and other assets were acquired by fraud.
A Houston jury last month convicted Skilling of 19 criminal charges including conspiracy and securities fraud and found Lay guilty of a half-dozen other counts. The government said both men had misled investors about Enron's financial health at the same time they sold stock at inflated prices before the energy company collapsed in bankruptcy. Lay and Skilling face extensive prison terms when they are sentenced this fall.
For the government to recover the funds, prosecutors must prove that money and property held by Skilling and Lay stem from the conspiracy. Prosecutor Patrick T. Murphy argued in court papers that the government established those links by virtue of the criminal convictions and evidence presented at trial about the bonuses, trading records and stock sales of both men.
Skilling collected $139.2 million in bonuses and stock proceeds during the course of the fraud, court papers said. In return, prosecutors are seeking $49 million in securities held in a Charles Schwab account; a $4.6 million mansion in Houston; $808,643 in cash; and a Dallas condominium now valued at $579,475. Government lawyers asked that a $5 million bond that Skilling posted after his indictment two years ago be used to satisfy part of the judgment.
Skilling previously argued that, because jurors acquitted him on nine insider trading charges, he should be entitled to keep his remaining wealth -- a position that prosecutors called "legally baseless." Daniel M. Petrocelli, a defense lawyer for Skilling, yesterday said the government move would leave Skilling "without any means to meet family obligations or satisfy substantial debts for his legal defense." He called the stance "wrong and unfair."
The Washington Post reported earlier this month that Petrocelli's law firm, O'Melveny & Myers LLP, has spent some $25 million on the case, for which it has not yet been paid. Defense lawyers are likely to ask the judge to release some of the money to pay their bills.
Lay collected $43.5 million in bonuses and drawdowns on his Enron-sponsored line of credit, the government claimed. Prosecutors yesterday sought repayment of $1.5 million Lay used to pay off the mortgage on his luxury penthouse apartment in Houston. They also asked for access to Lay's interest in a limited partnership now valued at $6.3 million.
Lay has testified that he is $250,000 in debt. Michael W. Ramsey, a defense lawyer for Lay, did not return phone calls.