Saturday, September 23, 2006
As discussed in earlier posts (here and here), former Dynegy executive Jamie Olis was resentenced by U.S. District Judge Sim Lake to serve six years in prison for his convictions on securities fraud and conspiracy charges. While Judge Lake determined that the Sentencing Guidelines called for a prison term of approximately 12-15 years, he gave a lower sentence because of Olis' exemplary background and the fact that he was not a high-level executive at Dynegy, which remains a viable company that was not undermined by his misconduct. Judge Lake also presided over the trial of former Enron CEOs Ken Lay and Jeffrey Skilling, and he is scheduled to sentence Skilling on October 23. One passage of Judge Lake's opinion explaining why he gave Olis a lower sentence than called for by the Guidelines may be particularly chilling for Skilling and his lawyers:
Although Olis was intimately involved in the conspiracy and in planning Project Alpha, he did not have the ultimate authority at Dynegy to approve Project Alpha, nor was he responsible for drafting the documents by which the conspiracy was carried out and concealed. Moreover, unlike some other recently publicized corporate fraud cases, the purpose of this conspiracy was not to defraud Dynegy or to enrich Olis. Nor did the conspiracy cause Dynegy to file for bankruptcy. Although Dynegy suffered a loss in its market capitalization after the true facts of Project Alpha became public and paid large amounts to settle the resulting civil cases, the company remains a viable entity. The initial success of Project Alpha brought Olis a promotion and stock options, but it did not result in substantial pecuniary benefits to him. Although these facts do not detract from the seriousness of the crime for which Olis was convicted, they mitigate against the type of harsh sentence that may be deserved in cases where the defendant’s conduct enriched him at the company’s detriment or brought about the downfall of the company. [Emphasis added]
Although Judge Lake never uses the word "Enron" in his opinion, it is plain that the company -- and perhaps the impending sentencing of Skilling -- is on his mind when he describes his rationale for the Olis sentence.
The Sentencing Guidelines applicable to Skilling will, in all likelihood, call for a sentence in excess of twenty years, and could even reach life imprisonment if the highest relevant enhancements apply, particularly a probable loss calculation in excess of $400 million. Between Skilling's sales of Enron stock, which triggered a conviction on one count of insider trading, and the company's sudden demise that wiped out the retirement savings of a number of workers and retirees, he sure seems to fit Judge Lake's description of the type of case in which a "harsh" sentence is "deserved." (ph)