By Juan A. Lozano
Wednesday, January 7, 2009
HOUSTON, Jan. 6 -- A federal appeals court Tuesday upheld former Enron chief executive Jeffrey K. Skilling's convictions for his role in the energy giant's collapse but threw out his 24-year prison term and ordered that he be resentenced.
A three-judge panel of the U.S. Court of Appeals for the 5th Circuit in New Orleans denied Skilling's request to overturn his convictions. Skilling argued that his convictions were invalid because they were based on incorrect legal theory, the jury instructions were faulty, the jury was biased, and there was prosecutorial misconduct, including accusations of witness intimidation and withholding evidence.
The panel wrote in its opinion that Skilling "failed to demonstrate that the government's case rested on an incorrect theory of law or that any reversible errors infected his trial."
While denying those arguments, the appellate panel found that U.S. District Judge Simeon T. Lake III improperly applied a sentencing guideline that resulted in a longer prison term for Skilling, and ordered that he be resentenced. But legal experts expect Skilling to get a lengthy prison term whenever he is resentenced.
Skilling was convicted in May 2006 on 19 counts of fraud, conspiracy, insider trading and lying to auditors for his role in the collapse of Houston-based Enron, once the nation's seventh-largest company.
Company founder Kenneth L. Lay also was convicted of conspiracy, fraud and other charges, but his convictions were vacated after he died less than two months later of heart disease.
Skilling's attorney, Daniel Petrocelli, said he was "extremely disappointed." Petrocelli said he planned to ask for a rehearing before the three-judge panel, or before the entire 5th Circuit court, or he'll appeal to the U.S. Supreme Court.
Skilling is serving his time, the longest sentence in the Enron scandal, in a federal prison in Minnesota.
Federal prosecutors said they were pleased with the decision.
Prosecutors won their convictions of the top two men at Enron by arguing that Enron employees were bound to serve honestly and not put their interests ahead of the company's. If they failed to do so, they deprived the company of "honest services" and committed a crime.
Prosecutors argued that Skilling's actions were dishonest and contrary to the needs of the company's shareholders and its financial stability.
When Petrocelli argued his appeal before the 5th Circuit last April, he characterized his client as a loyal employee who didn't commit a crime and might have only bent the rules for the company's benefit.
The 5th Circuit has overturned several Enron-related convictions that were based on the honest-services theory, ruling that executives did only what Enron wanted them to do and did not profit at its expense.