Enron's Skilling reaches deal for shortened sentence

By Jonathan Stempel

(Reuters) - Jeffrey Skilling, the convicted former Enron Corp chief executive, could be freed from prison a decade earlier than originally expected over his role in bringing down the energy trader, in one of the biggest corporate frauds in U.S. history.

According to court papers filed on Wednesday, federal prosecutors and Skilling have agreed that he should be resentenced to between 14 and 17-1/2 years in prison, down from his original 24-year sentence.

In exchange, Skilling agreed to end his appeals of his May 2006 conviction by a Houston federal jury on 19 counts of securities fraud, conspiracy, insider trading and lying to auditors. Skilling has long maintained his innocence.

U.S. District Judge Sim Lake in Houston is scheduled to resentence Skilling on June 21.

Skilling, 59, has been in prison since December 2006, and with good behavior could be released in 2018 if Lake resentences him as requested. Lake had imposed the original 24-year term, but a federal appeals court later found it too harsh.

"The proposed agreement brings certainty and finality to a long painful process," Skilling's lawyer Daniel Petrocelli said in a statement. "Although the recommended sentence for Jeff would still be more than double any other Enron defendant, all of whom have long been out of prison, Jeff will at least have the chance to get back a meaningful part of his life."

Skilling had already been expected to forfeit more than $40 million to be used as restitution for victims of Enron's fraud. That money had been held up because of negotiations on a new sentence, and Wednesday's agreement would allow it to be freed up.

"This agreement ensures that Mr. Skilling will be appropriately punished for his crimes and that victims will finally receive the restitution they deserve," said Peter Carr, a U.S. Department of Justice spokesman. "Mr. Skilling will no longer be permitted to challenge his conviction for one of the most notorious frauds in American history."

ACCOUNTING SCANDAL

Once ranked seventh on the Fortune 500 list of large U.S. companies, Enron went bankrupt on December 2, 2001.

Along with WorldCom Inc and Adelphia Communications Corp, it was at the center of a series of accounting scandals that led to reforms including the federal Sarbanes-Oxley Act of 2002.

Skilling had worked for Enron for about two decades, the last six months of which as chief executive.

He is being held at a low-security prison for men in Littleton, Colorado, and according to federal prison records is currently scheduled to be freed around February 2028, assuming good behavior.

At the 2006 trial, the Houston jury also found Kenneth Lay, who preceded and followed Skilling as Enron's chief executive, guilty of fraud and conspiracy. Lay died in July 2006, and his death led to his conviction being thrown out.

Former Enron Chief Financial officer Andrew Fastow, considered the mastermind behind the company's fraud, testified against Skilling and Lay.

Fastow was sentenced to six years in prison and released in December 2011. He declined to comment on Wednesday.

In 2009, the 5th U.S. Circuit Court of Appeals upheld Skilling's conviction, but called his sentence too harsh. The following year, the U.S. Supreme Court also upheld the conviction, but rejected one legal theory behind it. Then in 2011, the 5th Circuit reaffirmed the conviction.

The case is U.S. v. Skilling, U.S. District Court, Southern District of Texas, No. 04-cr-00025.

(Reporting by Jonathan Stempel in New York; Additional reporting by Dena Aubin in New York and Aruna Viswanatha in Washington, D.C.; Editing by Gerald E. McCormick and Chris Reese)

Source: http://news.yahoo.com/former-enron-ceo-skilling-prison-term-shortened-183051641.html

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