Jeffrey Skilling, the imprisoned former Enron Corp. chief executive officer, lost a challenge to his convictions contending that prosecutors relied on a legal theory invalidated by the U.S. Supreme Court.
The U.S. Appeals Court in New Orleans yesterday affirmed all of Skilling’s convictions. The three-judge panel said the trial judge made a harmless error in allowing the jury to convict Skilling for conspiracy on a so-called honest-services fraud theory as well as on a securities-fraud theory.
“Based on our own thorough examination of the considerable record in this case, we find that the jury was presented with overwhelming evidence that Skilling conspired to commit securities fraud, and thus we conclude beyond a reasonable doubt that the verdict would have been the same absent the alternative-theory error,” the appellate panel said.
In addition to conspiracy, Skilling was convicted at a 2006 jury trial for securities fraud, making false statements to auditors and insider trading.
Skilling is serving a 24-year sentence in a federal prison in Colorado after he and former Enron Chairman Kenneth Lay were found guilty of deceiving investors about the company’s true financial condition.
“We disagree with the court’s decision and believe it does not conform with the law,” Skilling’s lawyer, Daniel Petrocelli, said yesterday in an e-mailed statement. “We will continue to fight to overturn the wrongful convictions of Mr. Skilling.”
After Skilling’s trial, the appeals court declared the honest-services fraud theory legally invalid in an appeal by four Merrill Lynch & Co. bankers, who were convicted in a related Enron case. The appellate court said the bankers didn’t deprive Enron of their honest services because they had acted in Enron’s best interest and didn’t personally profit.
The Supreme Court last year ruled in Skilling’s favor, finding that “honest services theft” only applies to instances of bribery or kickbacks, which weren’t at issue in Enron. The high court ordered the lower appellate court to review Skilling’s convictions in light of this finding.
The appeals court said in yesterday’s ruling that according to its ruling on Skilling’s initial appeal, he still needs to be resentenced because the trial judge incorrectly applied a “sentencing enhancement for substantially jeopardizing a financial institution.”
The case is U.S. v. Skilling, 06-20885, U.S. District Court, U.S. Court of Appeals for the Fifth Circuit (New Orleans).