By Kate Murphy
His hair still wet from a morning shower, his tieless collar open, ex-Enron CEO Jeffrey K. Skilling surrendered to the FBI in Houston shortly before 7 a.m. local time on Feb. 19. After processing, which essentially amounted to putting his pocket change and watch in a Ziploc bag, FBI agents escorted Skilling in handcuffs to the federal courthouse 15 minutes away in the city's downtown business district. Skilling was the latest corporate exec to do his rendition of the humiliating "perp walk" into the courthouse, in the shadow of the two vacant glass skyscrapers that once housed Enron's world headquarters.
Once inside, prosecutors unsealed a 57-page indictment against Skilling, which a special Enron grand jury handed down the night before. In U.S. Magistrate Judge Frances Stacy's courtroom, Skilling sat at a table with his attorneys, flipping through the thick document, which accused him of 35 counts of wire and securities fraud (see BW Online, 2/19/04, "The Case Against Jeff Skilling"). While reading, he shook his head and smiled as if at the absurdity of the allegations.
Occasionally, he bit his lower lip, revealing perhaps a trace of anxiety, maybe even fear. Skilling disappeared with a Texas marshal, shortly before the judge appeared and returned wearing a slim, blue tie that matched his eyes.
Judge Stacy swept into the courtroom at 9 a.m., her hair disheveled. The hearing wasn't scheduled until 11:30 a.m., but she said she decided to move it up because "the balls seemed to be rolling here." She informed Skilling that he had the right to an attorney. Upon surveying the bevy of high-powered lawyers flanking him, including Daniel Petrocelli of Los Angeles and Bruce Hiler of Washington, D.C., Judge Stacy said, "It looks like you have an embarrassment of riches in that regard." The press in the gallery laughed. Skilling did not.
Prosecutor Samuel Buell read the charges against Skilling, which essentially accuse him and former Enron Chief Accounting Officer Richard Causey of inflating Enron's earnings to meet analysts' expectations through bogus statements and fraudulent accounting. Skilling appeared straining to remain silent as Buell ticked off the allegations (see BW Online, 2/19/04, "The Books Being Thrown at Skilling").
The maximum penalty, Buell said, is 325 years in jail and $80 million in fines should the allegations result in conviction. Not surprisingly for a man who testified before Congress last year that he was completely innocent, Skilling emphatically pleaded, "not guilty to all counts."
"NOTHING TO HIDE."
Bail was set at $5 million. Said a wide-eyed Texas marshal in the courtroom: "He wrote a check. I touched it." Skilling also surrendered his passport and promised not to travel outside the continental U.S. In return, he got back the Ziploc bag with his watch and pocket change and walked with his team of lawyers outside the courthouse to face a crowd of reporters, microphones, and TV cameras.
Skilling listened calmly, blinking his disconcertingly long eyelashes, as Petrocelli lambasted prosecutors in the Enron task force for making a scapegoat of his client. Over the sound of news helicopters hovering overhead, Petrocelli said, "Jeff Skilling has nothing to hide, he did not steal, he did not lie, and he didn't take anyone's money." The defense attorney added that after "two-and-a-half years and untold millions of dollars," the prosecutors had failed to find anything to pin on Skilling, and the length of the indictment was an attempt to hide "that the evidence doesn't exist."
Petrocelli said Skilling had taken a lie detector test shortly after Enron's collapse and "he passed with flying colors." He wouldn't go into detail as to what Skilling was asked during that test but revealed, "He was not asked one or two questions. He was asked if he was aware of improper financial transactions." Petrocelli said he told the Enron prosecutors about the test and that "they were making a grave mistake."
As the indictment suggests, they were unmoved. "The good news," Petrocelli said, "is that this case will be decided by 12 decent people" who will listen to "real witnesses" and "real facts," he declared. With that, Skilling and his lawyers sped off in a green Chevrolet Tahoe SUV.
Prosecutors in Houston declined to talk to the press, leaving public comment to officials in Washington, D.C. But Diana Peters, a former graphics clerk at Enron who lost $75,000 in savings when it imploded, said the indictment spoke for itself. "I'm very excited. Skilling wouldn't have been brought down here if they didn't have a concrete case," she said outside the courtroom. "I came down here because I wanted to see the expression on his face, and I wanted him to know that the employees are still paying attention." Peters said Skilling was chiefly responsible for Enron's bankruptcy, and "he should see the inside of a jail."
Like many other former employees of the company, Peters doesn't think Ken Lay was culpable. "He was probably a little negligent, but his ethics were so much higher than Skilling's. He was always encouraging the employees to better themselves," she said. "I'll really be heartbroken if they press charges against Lay." This sunny February morning in Houston, all eyes were on Skilling.
Murphy is a contributing correspondent for BusinessWeek
Edited by Douglas Harbrecht