5th Cir. to Hear Skilling's Enron Appeal

Bump and Update: White Collar Crime Blog is following the developments. The issues to be argued are these.

Update: Here' s a preliminary news report on the hearing.


Original Post

Former Enron CFO Jeff Skilling, serving a 24 year sentence in federal prison, has his day in the 5th Circuit Court of Appeals.

By all accounts, he has a very good chance of getting a reversal on most of the counts he was convicted on. [More...]

Skilling could be freed from prison pending a new trial, or be relieved of criminal convictions altogether. And the government, which hasn't fared well in most other Enron appeals, could lose its biggest prize in the Enron scandal.

Thanks to an appeals ruling in a separate Enron case, issued less than two months after Skilling was convicted in 2006, legal experts say Skilling has a strong chance to get most — and perhaps all — of his 19 convictions overturned.

What was the error?

That error, as cited in Skilling's appeal, was prosecutors' contention that his behavior robbed Enron of his "honest services." The government used that argument in obtaining a conspiracy conviction that was linked to most of Skilling's 18 other convictions.

Soon after Skilling's trial, an appeals panel rejected the "honest services" theory prosecutors used in gaining convictions against participants in Enron's sale of three barge-mounted power plants — which the government alleged was a disguised loan.

The 2-1 ruling said that the "honest services" issue didn't apply because the defendants didn't steal, embezzle or otherwise take money or property, and their actions were aligned with corporate goals.

The judges hearing the appeal will be 5th Circuit Judge Jerry Smith, 5th Circuit Judge Edward Prado and U.S. District Judge Alia Ludlum of Del Rio. Smith was one of the judges on the panel that overturned the convictions of Kevin Howard, the former finance chief for Enron's broadband division. I'm a big fan of Judge Prado (he was an early vocal opponent of mandatory minimum sentences.)

As for Skilling, I think 24 years is way too harsh a sentence for any non-violent criminal. Especially when other culpable defendants get 6 years because they cooperated and told the Government's truth. I hope he wins his appeal.

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    I think 24 years is too harsh also. (5.00 / 1) (#4)
    by ChrisO on Tue Apr 01, 2008 at 09:18:25 PM EST
    But as a layman,i'm curious. How is it argued that "their actions were aligned with corporate goals" when their actions led to the company's bankruptcy? It seems that their actions specifically put the company at undue risk.

    I am not current on the Skilling case (5.00 / 1) (#5)
    by facta non verba on Tue Apr 01, 2008 at 09:21:53 PM EST
    but wasn't there securities fraud involved? I mean did not Enron executives hide accounts off-shore and  provide misleading information to Wall Street analysts and to their auditors in order to manipulate the stock price and hence their own net worth?

    While I agree that a 24-year sentence is too harsh certainly 10 year sentence, a life-time ban from a financial role in a publicly traded firm and a stiff fine seem in order. People lost their life savings and Enron's manipulation of the energy markets had an effect on California's political landscape.

    Why is 24 years too harsh (5.00 / 0) (#12)
    by gyrfalcon on Tue Apr 01, 2008 at 11:28:17 PM EST
    for somebody who ruined so many innocent people's lives?  I think it's the other way around, the 6 years the others got is wayyy too lenient.

    If it were up to me, I'd sentence "white collar" criminals who destroy other people's financial security just as harshly as criminals who destroy other people's lives through physical violence.  I honestly don't see the difference.

    This is one class of criminal where I think punishment really does serve as a deterrent to egregiously bad behavior.

    I'm only sorry Kenny Boy didn't get to spend 10 or 20 years in prison.

    Good Point (none / 0) (#22)
    by flashman on Wed Apr 02, 2008 at 09:07:20 AM EST
    This is a criminal defense oriented blog (5.00 / 2) (#18)
    by Jeralyn on Wed Apr 02, 2008 at 03:06:35 AM EST
    I shake my head in disbelief that so many commenters here are as conservative as Repbulicans when it comes to crime and punishment. You are the ones who should not be called progressives.

    If you asked 25,000 criminal defense lawyers whether 24 years was too stiff a sentence, I'd bet 24,000 would say yes. The remaining 1,000 would be ex-prosecutors that recently changed sides and haven't changed their mindset yet.

    This is not a blog that supports victims' rights, it's a blog that supports the rights of people accused of crime.

    If that makes you uncomfortable, please visit a blog more to your way of thinking. But don't mock  our positions. It's you that is the ill-fitting piece, not us.

    I support the rights of the accused (5.00 / 1) (#26)
    by dianem on Wed Apr 02, 2008 at 11:37:51 AM EST
    I believe in a fair trial, and recognize that accused criminals often face poor odds in terms of getting a fair deal from the courts. That said, I still think that the punishment has to fit the crime, and the people involved in this crime have a lot to answer for. They defrauded thousands of people, causing untold pain and suffering. This wasn't a case of some innocent bookkeeping errors, or even one of people simply getting in over their heads and lying to cover up the problem. These men set out to game the financial system and profit themselves, taking money out of the pockets of hard-working people in the process. They were nothing more than high level con men taking advantage of investor's and employees who thought that they could win against a rigged system. I can't say that 24 years is appropriate, but I'm very glad that there are stiff sentences being handed down. It's not right that some people steal a few thousand dollars and get years in prison, while people who steal millions get a slap on the hand.

    After re-reading the comment I was replying to (none / 0) (#19)
    by Jeralyn on Wed Apr 02, 2008 at 03:07:37 AM EST
    it was so filled with insults that I deleted it.

    I consider myself (none / 0) (#25)
    by eric on Wed Apr 02, 2008 at 11:32:04 AM EST
    criminal defense friendly and agree that 24 years is probably a bit too harsh, but I would say that he should get at least half of that.  You note that 24 is too much for a non-violent criminal.  However, this guy is, in my view, at least as evil as a violent offender.  Actually, he is worse because many violent offenders do not do what he did - commit his crime with the benefit of cool deliberation.  He is a monster for what he did to this company, the shareholders, the employees, the state of California, and this country in general.

    A harsh penalty in Mr. Skilling's case also does something that a harsh penalty for a violent offender does not - it actually has a good chance of deterring others of doing something like this.

    Ordinarily, I find myself disagreeing with the length of criminal sentences.  They are far too harsh.  I think that most liberals do.  But I do think that in a case like this, some liberals and progressives might not be as forgiving.


    Yes (none / 0) (#27)
    by squeaky on Wed Apr 02, 2008 at 02:00:27 PM EST
    I shake my head in disbelief that so many commenters here are as conservative as Repbulicans when it comes to crime and punishment.

    Being a Clinton supporter does not necessarily translate into being a progressive. Many are Independents, Conservatives and Republicans.


    I think you mean Democrats (none / 0) (#28)
    by Jeralyn on Wed Apr 02, 2008 at 05:38:12 PM EST
    not just Hilary supporters. Many of the above comments come from Obama supporters.

    Interesting (none / 0) (#35)
    by squeaky on Wed Apr 02, 2008 at 09:54:14 PM EST
    And good to know. I was starting to think that Obama supporters were more progressive than Clinton supporters based on comments here, but that is skewed because it is 20 to 1 or something like that, so not a reliable pool.

    Not wishing to argue with your point of view... (none / 0) (#1)
    by white n az on Tue Apr 01, 2008 at 09:11:02 PM EST
    but there is a complete disconnect in this country because corporations like Enron, WorldCom, etc. go bust, honest people's savings are wiped out and there is never recourse because the courts protect the investment houses that pitched these corporations until the end, in concert with people like Skilling who knew what was going on.

    So it becomes a case where you get the best justice money can buy and people's savings are still wiped out.

    Excuse me if I don't have any enthusiasm for the prospects of Skilling's getting the verdict overturned.

    I think the issue of plea bargains and mandatory sentencing guidelines might be more eagerly visited when the subject is less contemptible.

    I still want the notes from the Cheney energy (none / 0) (#2)
    by athyrio on Tue Apr 01, 2008 at 09:12:44 PM EST
    meeting....We could offer to trade that for clemancy.... lol.....

    A good thing . . . NOT. (none / 0) (#3)
    by Marguerite Quantaine on Tue Apr 01, 2008 at 09:14:10 PM EST
    I bet Martha Stewart is just stewing.

    24 years.... (none / 0) (#6)
    by Alec82 on Tue Apr 01, 2008 at 09:23:39 PM EST
    ...may be too harsh, but would ten or fifteen years be too harsh?  I have no doubt there are victims of economic crimes that must shoulder their burdens for just as long.

     It is one thing to distinguish between violent and non-violent crimes, but some non-violent crimes lead to human tragedy, like Enron.  The drug market, take it or leave it, is consensual.  Their manipulations were not.

    should mr. skilling's appeal be (none / 0) (#7)
    by cpinva on Tue Apr 01, 2008 at 09:59:56 PM EST
    successful, he'd do well to keep a wary eye over his shoulder, for the rest of his natural life. many of the people, who's life savings he greatly contributed to wiping out, are not at all happy with him.

    granted, 24 years may be excessive, but he would at least be guaranteed a roof over his head, clothing, three meals daily and free medical/dental care.

    i wonder how many of his "non-violent" victims will have that same luxury?

    Yes. Many people whose savings (none / 0) (#9)
    by hairspray on Tue Apr 01, 2008 at 11:23:15 PM EST
    were lost are dismissed because it was only money.  But for many a very human tragedy took place putting many people into deep depression and often serious physical jeopardy.

    A decade or two of life in poverty (none / 0) (#10)
    by LHinSeattle on Tue Apr 01, 2008 at 11:23:20 PM EST
    would be most appropriate. That's what thousands of hard-working employees ended up with for their retirement, thanks to Mr. Skillings' "non-violent" crimes.

    Is this an April Fool's joke? (none / 0) (#11)
    by dianem on Tue Apr 01, 2008 at 11:23:57 PM EST
    If it is, it's not funny. If it isn't, then it's still not funny. This guy caused a lot of pain for a lot of people. The fact that he did it non-violently is a mitigating factor, but does not excuse his behavior. People who con senior citizens out of their life's savings don't use violence, either, but that is no reason to let them get away with it.

    sister of ye (none / 0) (#13)
    by sister of ye on Tue Apr 01, 2008 at 11:34:18 PM EST
    Perhaps we need a new understanding of violent crime. Perhaps the standard should be life-endangering. If you wipe out people's livelihoods and/or life savings, you have impacted their abilities to provide food, shelter, medical care and other life-sustaining needs. Think of the poor 11-year-old who died for lack of an $80 tooth extraction, or retired or unemployed people forced to choose between food and medicine.

    If I go into a 7/11 with a gun to steal $200, that's a moment of high danger for whoever might be therr. Skilling's sort of crime may be slower-acting, but it's a cumulative sort of thing that can have tragic consequences, particularly since other parts of the safety net are also severely shredded.

    I don't think that is too harsh, given (none / 0) (#14)
    by FlaDemFem on Tue Apr 01, 2008 at 11:41:49 PM EST
    the amount of damage he did to other people. How many years is it going to take the victims of Enron to recover? How many suicides were there because of it? How many older people who were counting on their savings to get them through retirement with some health care now have nothing? How many lives were ruined by people whose idea of tragedy is having to sell one of their vacation homes in Aspen? Skilling and his cronies destroyed people's lives, and livelihoods. They should pay accordingly. Ten years minimum, hard time, no country club minimum security crap. Thick walls, bars and small cells. That's what they deserve.

    as to your final paragraph (none / 0) (#16)
    by TheRefugee on Wed Apr 02, 2008 at 12:52:48 AM EST
    I'd bet you'd feel different were the non-violent crime committed against you or your parents.

    I'm a criminal!  I break into a house, steal whatever I can.  I get caught.  It is not my first offense.  I go to jail for a while over a few hundred bucks in jewelry and a crappy dvd player.

    Jeff Skilling?  He steals from every single investor, every single employee's pension plan, not robbing them of watching Top Gun for the 82nd time, but robbing them of financial security.  The retiree goes from having a robust portfolio and comfortable retirement to being destitute and instead of the home in Boca gets a future in a state funded senior home.

    This wasn't a crime of passion or desperate act, this was a premeditated and well planned and orchestrated scheme to defraud investors.  A bank robber doesn't affect the depositor because the money is insured.  He goes to jail for a long time.  Who insured the stock price?  Who insured the investor that a multibillion dollar company would do the right thing?  

    Sorry, people like Skilling, Lay, Nacchio, Tyco boy, World-com guy, etc deserve every day of their sentences.  

    Mandatory sentences are bs.  No argument there.  But the punishment must fit the crime and if you truly believe this is less severe than a two or three strike punk mugging someone then you and I have completely different views on fairness and justice.  In this case the embarrassment of prosecution is not enough.  The attorney fees are not enough.  The loss of assets is not enough.  Because unlike his victims he probably will have enough left in the bank to start over and live a comfortable life.

    Blanket Amnesty for White-Collar Criminals? (none / 0) (#20)
    by Arabiflora on Wed Apr 02, 2008 at 03:28:32 AM EST
    As for Skilling, I think 24 years is way too harsh a sentence for any non-violent criminal. Especially when other culpable defendants get 6 years because they cooperated and told the Government's truth. I hope he wins his appeal.

    Delete if you will, as is your privilege, but the preceding is a pretty weak beer defense of your 'client' given the harm that his crimes have inflicted upon the victims. A reasoned legal analysis would have helped readers wade through the issues, but you settled for "It's too mean", and then deleted the comments that called you out.


    I deleted only one comment (none / 0) (#29)
    by Jeralyn on Wed Apr 02, 2008 at 05:39:52 PM EST
    filled with insults. Follow the links provided in my post to the earlier Skilling posts -- and type Ebbers in the search box and you'll come up with the reasoning.

    Well, 24 uyears might be too harsh. (none / 0) (#21)
    by Fabian on Wed Apr 02, 2008 at 06:21:02 AM EST
    But how much of it is a white collar criminal likely to serve?  Especially compared to a violent offender?

    The numbers may look shocking, but how many criminals serve their full sentences?

    I think we can mostly agree that many terms are (none / 0) (#24)
    by DandyTIger on Wed Apr 02, 2008 at 11:28:47 AM EST
    too much and not fair. Our justice system is a bit wonky. First it's horribly biased against A-A's. Then we have this crazy three strikes crap. Then all the crazy attitude toward drugs. Man, we need to clean house.

    How about if we reserve the big prisons and long terms for the real nasties. And only if we really know they're nasties. You know, like how my home town guy Tommy J. intended. And can we pleeeeaase get ride of the death penalty already... OK, I"ll get off the soap box now.


    funny, I always thought he was railroaded (none / 0) (#23)
    by DandyTIger on Wed Apr 02, 2008 at 11:22:02 AM EST
    and that the real issues were between the former CEO and the bushies. I see a lot of heat and blame happening here that really should be directed towards policies, an administration, greed, and of course Skilling and others. And mostly, towards finding policies that don't let this happen. And of course, how about some help for all those x employees. Let's hear the candidates make a statement about those x employees and about the related policies that lead to this.

    Justice System as Rehabilitation or Retribution (none / 0) (#31)
    by matthiasS on Wed Apr 02, 2008 at 06:19:21 PM EST
    I know this is a little off-topic, but isn't our justice system supposed to be mainly rehabilitative? That is... isn't the point to keep people off the street and out of the general public so that they don't commit the same crime (or a similar one) again?

    With that in mind, how can we justify 24 years... or even 6 years... of jail time for someone who will obviously never be in a position to commit a similar crime? Wouldn't a ban from the financial sector be sufficient?

    Not really (5.00 / 1) (#32)
    by txpublicdefender on Wed Apr 02, 2008 at 07:03:12 PM EST
    It is said that punishment in a criminal case is supposed to serve three purposes:  punishment, rehabilitation, and deterrence.  

    I agree that that the 24-year sentence is too harsh, but I thinka 10-year sentence would be fair.  (This is based on my having followed the case pretty closely.  Obviously, I wasn't at the trial.)  And I think that the third purpose, deterrence, is what is really at stake with these big corporate frauds.  I think severe prison sentences act as a good deterrent to officers and executives contemplating a corporate fraud.  These are the type of people who are more likely to do a risk-reward analysis when contemplating such behavior--moreso than your average crackhead, to be sure.  So, I think a stiff prison sentence, especially in cases like Skilling's that involved massive fraud and multiple schemes that ultimately caused tremendous loss to thousands of people.  24 years still seems too harsh.  But I think 10 years would be fair.

    All that said, I am happy to see the 5th Circuit doing what it can to chip away at that horrible "honest services" thing that the feds love to rely on in these various fraud cases.  

    And the fact remains that it was our lax regulatory environment that allowed the Enron folks to get away with the type of double dealing that Skilling was engaging in in the first place.  So many conservatives are always clamoring for less regulation, and then want to harshly punish the lawbreakers after they've already cost investors billions of dollars.  Perhaps having enough oversight and enforcement up front would prevent these types of schemes from getting as far as they did.


    This Case Had Nothing To Do With Justice (none / 0) (#33)
    by notrich on Wed Apr 02, 2008 at 08:09:59 PM EST
    All of you should read the appeal materials from both sides--the three briefs and the supplemental Fastow briefs--you'll learn a lot that wasn't covered by any media source. There was fraud at Enron, Fastow and Kopper were guilty, and there was plenty of hard evidence against them. There was none against Skilling, no paper trail, no smoking gun, not one incrimating signature on any document, only hearsay. John Heuston even admitted the Task Force case against Skilling was weak in a post-trial article. Not surprisingly, the government took it off the web , but you can find it here-- http://caraellison.wordpress.com/2008/03/17/the-case-of-the-mysterious-vanishing-document/ Read the the recently released brief on the Fastow FBI notes and you'll see how his story changed to get himself that 10 year sentence (oops, only 6 years, though the jury was told 10). Read all of the appeal materials and then ask yourself these questions: Why did the Task Force deviate from the standard practice of presenting the defense with FBI prepared interview summaries (Form 302s) only for Fastow (they created their own "Composite 302")? Funny, they thought the FBI summaries were good enough for every other witness. The FBI raw notes show the Task Force withheld information favorable to Skilling's case. This is prosecutorial misconduct and it is against the law. Think Mike Nifong. Why did the Task Force name 100+ unindicted co-conspirators, unheard of in white collar criminal cases, and then present no evidence of this conspiracy at trial (can you say witness intimidation)? How can you produce a "fair minded" jury in just five hours? Martha Stewart got a week, Tim McVeigh--who Skilling is often compared to with McVeigh coming out more favorably, got 18 days and a change of venue. Only 8 more than the minimum number of prospective jurors were polled in the Lay Skilling trail--in Houston, where a person without an Enron bias is about as easy to come by as an Astros World Series win. Why did the Task Force push for the jury to receive "Ostrich Instruction"--(Skilling should have known better even if he wasn't involved) after they presented a case that argued Skilling was part of the conspiracy? Couldn't they make up their mind if he was involved or not? Why would someone set on raping his company attempt to invest his own money in a last minute attempt to save the company--more money than he supposedly gained in insider trading deals? All this and we haven't even touched on "Honest Services" or other faulty jury instructions. This trial was filthy. seeing things set right has nothing to do with conservative vs. liberal and everything to do with justice (or the lack of it, rather). If this was anyone but Skilling, the social justice folks would be all over this. For those of you who believe Bush will pardon, perhaps you don't remember Mr. Bush divorced himself of all things Enron oh so quickly. He didn't even attend his "friend's" funeral. Time to start remembering this trial was driven by that "law abiding" institution known as the Bush Administration DOJ.

    What happenned to my paragraphs? (none / 0) (#34)
    by notrich on Wed Apr 02, 2008 at 08:12:14 PM EST
    I had them all nice and neat and now they're gone...sorry

    I don't know about your paragraphs (none / 0) (#36)
    by Jeralyn on Thu Apr 03, 2008 at 12:40:58 AM EST
    you probably should hit the preview button before submitting the comment.

    Thanks for the comment though, it does have a lot the media didn't bother to report.