Skilling’s Show Trial has Predictable Result

Former Enron CEO Jeff Skilling was sentenced today to 24 years. We blogged frequently during the trial about the misguided prosecution who struggled to make their case and yet still ended up winning.( Ken Lay is Innocent, Sean Berkowitz on the Run, Berkowitz Blows It, Ken Lay Falling Short) Although they had no real evidence, the prosecution relied on word games and things unrelated to anything that occurred at Enron (does anyone remember Photofete?) to smear Mr. Skilling. By charging him with dozens of crimes and holding the trial in an unfriendly court the prosecution managed to eke out a victory. The brilliant Jeff Skilling crushed Sean Berkowitz on the stand but the lynch mob wasn’t satisfied with that.

Enron Issues:

The bad guy got away – It wasn’t Dr. Kenneth Lay. It wasn’t genius Jeff Skilling. There was only one repugnant criminal in this entire case; Andrew Fastow. He lied, he stole, he deceived and even got his own wife throw in jail. Somehow this Judas, staying in character, ratted (more accurately blamed) Mr. Skilling for Enron’s issues and got away nearly scot-free. Essentially the prosecutors didn’t have a case unless they could find someone desperate enough to blame Skilling and Lay, so they went to the most dishonest guy they could find and he was willing to do it.

Criminalizing Agency Cost - Skilling brought this up during the trial. History will look back on the Enron trial like the Salem witch trials. Skilling was the victim of a hysterical lynch mob, he wasn’t a criminal. A bankruptcy isn’t a crime. A bad business decision isn’t a crime. A stock market decline isn’t a crime. But logic never works on lynch mobs.

Retroactive Crimes – This paragraph from the New York Times says it all:

His lawyers are arguing that he should be sentenced under the 2000 guidelines because the 2001 guidelines did not take effect until Nov. 1, 2001 — three months after Mr. Skilling resigned his chief executive post and left the company. The jury in the Enron case, however, convicted Mr. Skilling of being part of a conspiracy the government defined as extending through December 2001.

Note: Judge Sim ruled that the gov't did not prove the timeline for conspiracy extended into November of 2001 so the previous sentencing guidelines would apply. It is simply more evidence of a shoddy, abusive type of prosecution that was common during the trial.

Prosecutorial Abuse – Here is how justice works in America: Press hungry prosecutors will indict based on the way the political winds are blowing, regardless of actual crimes taking place. And what better way to get headlines then to attack someone rich and famous? Since the indictment will be based on weak/no evidence the only way to lean on an innocent person is by loading up on the number of charges to force a settlement. Even if an innocent person can afford to fight all of the charges (in Skillings case he spend over $30 million. What kind of justice can a normal person expect?) there is always a chance that one charge might stick. And if not the prosecutors can always use Section 1001, a law so arbitrary that anyone can be turned into a criminal by the State.

Enron as a business may have has some flaws, but the biggest fraud in this case was the political prosecution of Jeff Skilling and Kenneth Lay.

Links:

During the trial the Houston Chronicle Enron Blog was the best source of real-time info, they still put out good updates: http://blogs.chron.com/enrontrialwatch/