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Federal agencies are coming up empty-handed in their efforts to recoup payments from corporate wrongdoers.
Stephen Taub, CFO.com | US
August 14, 2006
The government wants restitution from the collapse of Enron Corp. and is hoping that former CEO Jeffrey Skilling pays the tab.
Skilling may have to cough up nearly $183 million if federal prosecutors are able to get their way, according to the Associated Press. In June, prosecutors asked U.S. District Judge Sim Lake to order Skilling to pay $139.3 million, and his co-defendant, Ken Lay, to pay $43.5 million as restitution for their convictions on fraud and conspiracy charges. The amounts presumably are the proceeds the government claims the duo kept as part of their scheme.
In early July, however, Lay unexpectedly died of heart disease. His lawyers are trying to get Lay's record wiped clean because he hadn't yet appealed his conviction or been sentenced, the AP noted. If they are successful, the government would be unable to recoup a money judgment against Lay, although his assets could still be fair game in civil litigation, according to the wire service.
If prosecutors cannot recover Lay's payment, it will be the second time this year that the government has come up empty-handed in a corporate scandal case. In July, the SEC said that, pending court approval, it would waive payment of disgorgement and prejudgment interest and would not impose a civil penalty against former WorldCom CFO Scott Sullivan based on his demonstrated inability to pay.
Prosecutors in the Skilling case claim that the former CEO is "liable for all the proceeds attributable to all co-conspirators, indicted or unindicted, including Lay," because they participated in the same scheme, noted AP. According to the report, Skilling's lawyer, Daniel Petrocelli, asserts that just $12.5 million could be tied to crimes in a money judgment because the rest stems from insider trading counts of which Skilling was acquitted.
The government, however, plans to seize about $60 million in Skilling's cash and assets that have been frozen since he was indicted in February 2004, according to the AP.