Ex-Enron CEO is indicted

HOUSTON -- Former Enron Corp. chief executive Jeffrey Skilling was brought to court in handcuffs Thursday, charged with fraud, insider trading and other crimes in the highest-reaching indictment yet stemming from the energy trader's colossal collapse.

Skilling is accused of participating in widespread schemes to mislead government regulators and investors about the company's earnings. He pleaded not guilty to all 35 federal counts against him and posted his $5 million bond with a cashier's check.

Skilling's lawyer, Dan Petrocelli, said prosecutors "were making a grave mistake."

"Jeff Skilling has nothing to hide," Petrocelli said. "He did not steal. He did not lie. He did not take anyone's money, and in the 60 pages of charges filed by the United States government, they don't even accuse him of these things, and it's not from lack of trying."

Skilling's indictment leaves former chairman Kenneth Lay as the only major Enron executive not charged. It's unclear whether the latest charges make an indictment against Lay more likely; many close to the Enron case doubt Skilling would agree to cooperate with an investigation into Lay or anyone else in exchange for leniency.

"Skilling's been a pretty cool customer. I don't think so," said James Finberg, an attorney who represents former Enron shareholders.

The indictment, handed up Wednesday and unsealed Thursday, accuses Skilling, 50, and Richard Causey, Enron's former chief accounting officer, of taking part in the schemes to mislead regulators and investors. Causey, 44, was first indicted a month ago and is free on $500,000 bond.

Ten of the counts accuse Skilling of insider trading that generated $62.6 million from stock sold from April 2000 through September 2001, about a month after he quit Houston-based Enron. According to the indictment, shares of Enron fell from $87 in September 2000 to $31 a year later.

Skilling, flanked by a pair of attorneys, turned himself in at the Houston FBI offices just before daybreak. About 15 minutes later, his hands behind him in cuffs, he was placed in a car for the trip to the federal courthouse.

The charges against Skilling were among the most anticipated in the Justice Department's investigation, which passed its two-year mark last month.

"The indictment of Enron's CEO shows that we will follow the evidence wherever it leads -- even to the top of the corporate ladder," Assistant Attorney General Christopher Wray said.

Deputy Attorney General James Comey, who heads the Justice Department's corporate fraud task force, said Skilling and other executives were responsible for a "massive, complex scheme to give shareholders and the investing public the false appearance of financial strength and security at a time when Enron was, in fact, failing."

Ex-Enron officials men- tioned in the indictment include former chief financial officer Andrew Fastow, who pleaded guilty and is cooperating with federal prosecutors, and former treasurer Ben Glisan, who pleaded guilty to conspiracy in September and became the first former Enron executive put behind bars.

The indictment mentions Lay twice but only by title: Skilling reported directly to Enron's CEO and chairman; and the CEO and chairman briefly mentioned a $1.2 billion write-down in shareholder equity during a conference call with analysts the same day Enron announced massive third-quarter losses in mid-October 2001.

Lay, who served as CEO before Skilling, has maintained his innocence of any wrongdoing related to Enron's failure.

Petrocelli said Skilling -- unlike other former Enron executives who invoked their Fifth Amendment rights before Congress -- had cooperated fully with investigators and government panels investigating the company's collapse.

"He has come forward, he has raised his right hand, he has answered the hard questions," Petrocelli said. "Jeff Skilling did nothing wrong. ... I guess they need a scapegoat. And I guess Jeff Skilling is their scapegoat."

Petrocelli said Skilling's legal team had given prosecutors results of a lie detector test Skilling took two years ago and passed "with flying colors." Comey declined comment, except to note that sometimes defense lawyers "say the darndest things."

Two years ago, Skilling told two congressional panels that he knew nothing about serious problems at the energy trader until after he quit as CEO. Skilling, who was hired by Lay in 1990 and became chief operating officer in 1997, had held the chief executive job only six months when he stepped down, citing personal reasons he has not explained.

The indictment said the aims of the schemes were to report recurring earnings that grew by 15 to 20 percent each year, to avoid writedowns or losses, to persuade investors that Enron's profitability would grow, and to meet or exceed analysts' expectations.

From 1999 through late 2001, Skilling, Causey and their co- conspirators "engaged in a wide-ranging scheme to deceive the investing public, the (Securities and Exchange Commission), credit rating agencies and others about the true performance of Enron's businesses" by manipulating the company's finances and making false and misleading public statements about Enron's financial performance, the indictment said.

Prosecutors said Skilling faced up to 325 years in prison and more than $80 million in fines if convicted of all counts, although federal sentencing guidelines call for much less time. Another appearance before U.S. District Judge Sim Lake to address trial scheduling is set for March 11.

The government was seeking to seize from Skilling accounts worth more than $50 million, plus an 8,000-square-foot Houston mansion with a market value of $4.7 million.

Causey was fired in February 2002 after an internal probe concluded he failed to adequately look out for Enron's interests when the energy giant did deals with Fastow's partnerships.

Causey, who pleaded innocent to six counts in an earlier indictment, now is charged with 31 counts.

Skilling and Causey are accused of wire fraud, securities fraud, securities fraud regarding presentations to securities analysts, and of making false statements to auditors in annual representation letters and false statement to auditors.

Fastow, who pleaded guilty to conspiracy a month ago, admitted he and others manipulated Enron's books so the company would appear successful while using various partnerships to enrich himself, his family and chosen colleagues. He and Causey reported directly to Skilling.

Associated Press Writers Pam Easton and Juan A. Lozano contributed to this report.

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