crime pays

Former Enron CEO Due to Receive about $1 Million

Jun. 15--A federal judge has ordered that ex-Enron CEO Jeff Skilling should get what could be about $1 million in annual interest from some of the $66 million in assets frozen by the Justice Department when he was indicted. U.S. District Judge Sim Lake issued the order made public Monday that will provide Skilling with 50 percent of the interest income from the bulk of his frozen assets. The government will keep the other 50 percent and add it to the frozen funds that could be shared by victims of Enron's demise should Skilling be convicted. Daniel Petrocelli, the Los Angeles-based head of Skilling's trial team, said Monday that although they still contest the government's right to seize any of the assets, this compromise will at least allow his client money for living expenses, taxes and insurance. He said Skilling is still "grievously prejudiced" by the ongoing freeze of the assets. Enron Task Force prosecutors have alleged that the funds are the profit from crimes Skilling committed while at Enron. Andrew Weissmann, director of the task force, had no comment on the judge's order Monday. As part of the agreement that led to Lake's order, Skilling will abandon his appeal of Lake's March decision upholding the government freeze of about $55 million in liquid assets, Skilling's River Oaks home and a Dallas condominium. The judge's new order allows $3.7 million to be used to pay a debt related to one of the frozen accounts. The new order also says that should Skilling be convicted, the government could seek forfeiture of some of any unspent remains of the $23 million trust held by Petrocelli's law firm for Skilling's defense in criminal and civil lawsuits. The exact amount of interest Skilling and the government will split is hard to determine. His lawyers estimated in February, when the assets were seized, that the funds generated about $3 million in annual interest. But the interest could vary, and not every asset's interest will be shared. Requests for funds to be unfrozen to provide necessary living expenses and legal defense fees are common in cases where assets have been taken by the government. Skilling and ex-Enron Chief Accounting Officer Rick Causey are charged with conspiracy, fraud and insider trading leading to the energy trading giant's collapse. In April, Lake unfroze $225,000 for Causey's one-year living expenses. The Enron Task Force froze about $6 million in Causey's assets, including his home in The Woodlands. In Causey's case, the actual frozen assets were given back to him. In Skilling's case, the assets remain frozen and he gets only a portion of the interest. Skilling has pleaded not guilty to 35 charges, and Causey has pleaded not guilty to 31 charges. The two men are accused of conspiracy to commit securities and wire fraud; securities fraud involving Enron's off-balance-sheet financing deals; securities fraud for presentations to stock analysts; making false statements to auditors; and insider trading. In the 57-page indictment against the pair, the government alleges they lied and schemed to pump up the company's stock price to enrich themselves at the expense of the company and its shareholders. Defense lawyers for Skilling and Causey are likely to point out the deals in question were reviewed by numerous lawyers and accountants and that some colleagues hid their crimes. Between 1998 and 2001, the indictment states, Skilling took in an $89 million profit from the sale of artificially inflated Enron stock and options -- on top of a $14 million salary. Causey netted a $5 million profit from such sales, in addition to $4 million in paychecks, the indictment says.