Skilling Appeals Enron Conviction, Asks for a New Trial

Jeffrey K. Skilling was sentenced to 24 years in federal prison.
Jeffrey K. Skilling was sentenced to 24 years in federal prison. (By Johnny Hanson -- Getty Images)
By Carrie Johnson
Washington Post Staff Writer
Saturday, September 8, 2007

Former Enron chief executive Jeffrey K. Skilling yesterday urged an appeals court to throw out his fraud and conspiracy convictions and order a new trial over his role in a scandal that rocked investor confidence and transformed U.S. business practices.

Lawyers for Skilling, 53, cited deficient jury instructions and "defective" legal theories adopted by the government in a wide-ranging brief that they said their client had reviewed draft by draft in a low-security prison in Waseca, Minn.

Skilling surrendered in December to serve a 24-year sentence that he now attacks as unfair and excessive. The former executive is teaching himself Spanish and instructing other inmates to pass the time. Working on the appeal has been "a catharsis of sorts," his lead attorney said.

Although two courts rejected his request to remain free pending the results of the appeal, Skilling has received a measure of support for one of his key arguments. Last year, a judge cited "serious frailties" with Skilling's conviction on conspiracy, securities fraud and insider trading counts. At issue is a theory that prosecutors employed to charge Skilling with conspiracy, a strategy invalidated in a case that flowed from Enron's collapse.

Lawyers for Skilling argue that the jury verdict form in his case did not separate the problematic legal theory from harmless ones, tainting the entire prosecution. It remains unclear whether an appeals panel will reach the same conclusion about most of Skilling's convictions -- and whether wiping away at least one of them would significantly affect his sentence. Skilling's sentence is four times longer than any other former Enron executive and six years longer than the average federal murder sentence, according to his court filing.

Skilling has become a scapegoat because his fellow defendant, Enron founder Kenneth L. Lay, died in July 2006, before he could be sentenced, the lawyers wrote. Skilling was "the last man standing when the court meted out its punishment," they said.

A desire to punish someone for the 2001 fall of the Houston energy trading company masked "profound, inherent weaknesses in the government's case," the lawyers wrote in the brief filed with the U.S. Court of Appeals for the 5th Circuit.

Justice Department spokeswoman Jaclyn Lesch said prosecutors were reviewing the filing. The government previously rejected claims that its lawyers denied Skilling access to witnesses and engaged in other misconduct, allegations the defense lodged again in court papers yesterday.

The central question, said Washington-based white collar criminal defense lawyer A. Jeff Ifrah, is whether the "spillover effect" of the problematic legal theory splashes on all of Skilling's 19 criminal convictions or merely some of them. If he prevails on appeal, Skilling could win a new trial and possibly engineer the return of $45 million the government is holding in escrow.

Lawyers at O'Melveny & Myers, who mounted one of the most expensive individual criminal defenses ever on Skilling's behalf, argued that 14 of the convictions are "indefensible" in light of the court precedent in the related case. They wrote in court papers that five more charges of lying to Enron's auditors should go by the wayside, too, because the jury may have used the same faulty reasoning to convict Skilling on those counts.

The earlier appeals court case involves Enron employees who entered into a questionable business deal with Merrill Lynch. There, the court ruled that executives must put money in their own pockets or otherwise hurt a company and its shareholders in order to be found guilty of conspiring to defraud a business of their honest services. Businessmen cannot be held liable for defrauding their employers if they intended to help their companies and they did not engage in self-dealing, the appeals court said.

Legal experts who reviewed the court filing expressed skepticism that the appeals court would wipe away all of Skilling's convictions. They said, however, that judges might consider seriously another defense argument that improper instructions prompted jurors to find Skilling guilty on the ground that he should have known about widespread accounting fraud.

The jury instruction, known as deliberate ignorance or willful blindness, may have been inappropriate for Skilling because he never pretended to be out of touch about fraud at Enron. Instead, his lawyers said, Skilling testified that there was no such fraud.

The lawyers also criticized U.S. District Judge Simeon T. Lake III for refusing to move the trial out of Houston, whose residents lost thousands of jobs and millions of dollars in retirement accounts after Enron's demise.

"If you don't move venue in this case, you don't move venue in any case," said Daniel M. Petrocelli, Skilling's lead attorney. "It's really a litmus test for the court of appeals."

The 5th Circuit appeals court, based in New Orleans, could schedule oral argument in the case next year.

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