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Skilling indicted for fraud
Ex-Enron CEO pleads not guilty, bail set at $5M; faces life in prison and $80M in fines.
February 19, 2004: 4:02 PM EST

HOUSTON (CNN) - Ex-Enron CEO Jeffrey Skilling was charged with fraud and insider trading Thursday, making him the highest ranking former executive charged in the collapse of the once-mighty energy company.

Ex-Enron CEO Jeffrey Skilling surrenders to the FBI in Houston Thursday.

The indictment unsealed in Houston lays out 36 charges against Skilling, as well as new charges against Richard Causey, Enron's former chief accounting officer, who pleaded not guilty to six charges last month.

The charges against Skilling and Causey allege that from 1999 to 2001 the two men used various devices and schemes to manipulate Enron's financial results.

The indictment came just five weeks after former Enron CFO Andrew Fastow pleaded guilty to wire and securities fraud and agreed to cooperate with investigators probing the accounting scandal.

Skilling, 50, has become the highest-ranking ex-official charged in the government's investigation of Enron. He faces 10 counts of insider trading; 15 counts of securities fraud; four counts of wire fraud; six counts of making false statements to auditors, and one count of conspiracy to commit wire and securities fraud.

According to the charges against them, who may have been guilty of the more serious crime, Jeff Skilling or Martha Stewart?

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In an arraignment hearing at a Houston courthouse Thursday morning, Skilling pleaded not guilty to all the charges.

U.S. Magistrate Frances H. Stacy set bail at $5 million and revoked Skilling's passport. His travel was confined to the continental United States.

If convicted on all charges he could face the rest of his life in prison and a maximum of $80 million in fines.

Speaking outside the federal courthouse, Skilling's lawyer accused the federal government of making his client a "scapegoat."

The government has spent 2-1/2 years and "millions of dollars" digging for evidence against Skilling, Daniel Petrocelli told reporters. "And it doesn't exist because Jeff Skilling did nothing wrong.

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Former CEO of Enron, Jeffrey Skilling, is charged with fraud, insider trading and making false statements. CNNfn's Chris Huntington reports.

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"I guess they need a scapegoat. I guess Jeff Skilling is their scapegoat." He said Skilling will prove his innocence in court.

In Washington, federal law enforcement officials said the indictment pushed forward efforts to stamp out corporate fraud.

"This indictment marks an important milestone in the life of the president's Corporate Fraud Task Force," said Deputy Attorney General James Comey, who heads the unit.

"Our investigators were able to cut through the maze of paperwork and financial trickery to get to the bottom of the scheme and charge Skilling, once the top executive at Enron, with fraud and other crimes that contributed to Enron's collapse," he added. (For more on the comments from both sides, click here).

Related Links
U.S. v. Skilling and Causey
First Amended Complaint (S.E.C. v. Skilling and Causey)
Skilling's Feb. 7, 2002 Prepared Testimony to Congress
Enron Investigation & Litigation

Skilling's lawyers have repeatedly said he relied on his subordinates, lawyers and accountants at Enron, where he relinquished the No. 2 post just months before the company's finances collapsed in late 2001.

That collapse has come under scrutiny by the Justice Department, the Securities and Exchange Commission and numerous congressional committees seeking answers as to how the company that once stood at No. 7 on the Fortune 500 could fall so quickly.

The collapse left thousands of employees jobless, and those whose 401(k) plans were invested in Enron stock were wiped out. But many top executives unloaded their stock before the bottom fell out. Prosecutors said company leaders purposely kept employees in the dark about Enron's real financial situation.

Skilling, unlike other top Enron officials, did not invoke his Fifth Amendment rights when questioned by Congress in early 2002. He has blamed Enron's death spiral on what he has called a classic "run on the bank."

Jeffrey Skilling
Crime, Law and Justice

"It is my belief that Enron's failure was due to a classic run on the bank, a liquidity crisis spurred by a lack of confidence in the company," he testified before Congress.

"At the time I left the company, I fervently believed that Enron would continue to be successful in the future. I did not believe the company was in any imminent financial peril."

Skilling served as president and COO of Enron from late 1996 to early 2001. He was then appointed CEO, but resigned six months later, in August 2001, just five months before Enron filed for bankruptcy.

The only person higher up the Enron chain than Skilling is its former chairman and longtime CEO, Kenneth Lay, who has not been charged and whose attorney has denied he was involved in any wrongdoing.

According to congressional investigators, Skilling sold more than 500,000 shares of Enron stock for more than $21 million in 1999 alone, and profited greatly by cashing in more stock in the months before the collapse.

Enron's questionable partnerships hid more than $1 billion in debt, ultimately plunging the company into bankruptcy.

From Fortune
The Smartest Guys in the Room

"I spent probably most of my professional life helping to build Enron Corporation," Skilling told CNN's Larry King in 2002. "I don't think there was anyone that was as shocked by the collapse of the company as I was."

Pressed on the matter, Skilling was asked, "You didn't see anything coming?"

"Not only that, Larry, I'd go even farther than that. I think we had made some tremendous progress in the six months before I left," the former CEO said.

King asked, "Then why did you leave?"

"I was tired," he replied.  Top of page

-- from staff and wire reports

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