Thursday, June 15, 2006

Skilling and Lay Seek to Delay Sentencing

Jeffrey Skilling filed a motion, joined by Ken Lay, requesting that U.S. District Judge Sim Lake postpone their sentencing for 35 to 45 days beyond the currently scheduled date of September 11.  Among the reasons raised by Skilling (brief available below) is that the fairly short (108-day) period between conviction and sentencing has not allowed his defense team time to decompress and renew ties with their families.  In addition, Skilling's lead trial counsel, Daniel Petrocelli, has a trial set to begin on September 6 in a civil matter in Los Angeles Superior Court that was postponed so he could participate in the Enron trial. 

The schedule set by Judge Lake, now famous for his punctilious devotion to maintaining his calendar, does not leave much room for delay, which may explain why the Probation Office does not oppose the defendants' request.  Getting things done over the summer in any business can be difficult, and a key issue in the case will be determining the amount of the loss caused by the illegal conduct, a major component for calculating the Sentencing Guidelines offense level.  That issue will be subject to expert testimony, which can create even more uncertainty about whether the pre-sentence report can be completed in time to give the parties sufficient time for filing objections.  It may be that Judge Lake will have to budge, even slightly, from the September 11 sentencing date, although if that happens don't expect to see much of a delay.

Skilling's motion also requests that the court schedule a hearing on the amount of forfeiture that will be ordered, and that the hearing be held at least 45 days in advance of the sentencing.  The government obtained a freeze on over $60 million of Skilling's assets in 2004 related to his gains on Enron stock sales allegedly based on insider trading.  There is at least some question regarding the amount of the forfeiture that can be ordered, and the indictment does not contain a general forfeiture count that the jury had to determine, so the court will have to make that determination.  Skilling's motion notes that he has some rather substantial outstanding legal bills owed to O'Melveny & Myers -- the case records show six attorneys from that firm listed as counsel of record, which probably means another dozen or so put in significant hours on the case..

Whether Skilling will ever see any of the frozen $60 million, assuming the forfeiture is less than that, is very much an open question  The SEC still has its civil securities fraud action outstanding that seeks disgorgement and civil penalties, which could be significant, and the private securities class action will want a chunk of change from Skilling (and Lay).  Lead counsel in the class action is the Lerach Coughlin firm, which filed additional documents in that case alleging that Vinson & Elkins was not a "mere scrivener" in Enron's financial dealings that led to the company's collapse (see Houston Chronicle story here).  Skilling's $60 million pot of money will probably not make its way back to his pocket -- or into O'Melveny's coffers -- any time soon. (ph)

Download skilling_scheduling_brief_june_12_2006.pdf

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