Risk & Compliance

Skilling to Start His Prison Term Next Month

The former Enron CEO heads north to prison and settles a lawsuit with the Department of Labor.
Sarah JohnsonNovember 16, 2006

Former Enron CEO Jeffrey Skilling, who has been confined to his Houston home since his sentencing last month, is scheduled to begin his prison term of 24 years and four months in mid-December.

On Wednesday, U.S. District Judge Simeon Lake ordered Skilling to surrender to a federal prison in Waseca, Minnesota, on December 12, according to The Houston Chronicle. More than three weeks ago, Lake sentenced Skilling on 19 counts of fraud, conspiracy, and insider trading, and ordered him to home confinement, wearing an ankle bracelet.

Skilling had hoped to be assigned to a Butner, North Carolina, facility, according to the Texas paper. Instead he may run into another former Enron executive, David Delainey, who was sentenced in September to two and a half years in prison after pleading guilty to insider trading and reportedly requested the Waseca prison as one of three preferences. The Federal Bureau of Prisons describes the prison, 75 miles south of Minneapolis, as a low security facility housing male inmates.

In addition to finding out where he will serve his prison term, Skilling recently agreed to resolve a dispute with the Department of Labor. Under the settlement, announced on Thursday, Skilling will no longer fight a previous $85 million settlement, will waive any claim to benefits from the bankrupt energy giant’s pension plans, and cannot serve as a fiduciary.

The DoL’s settlement requires Skilling to pay $2.5 million to participants and beneficiaries of Enron’s savings and employee stock ownership plan, and $500,000 in penalties to the labor agency if his convictions are overturned or vacated, or his $45 million restitution fund for Enron-related fraud victims is dissolved.

In June 2003, the DoL sued Skilling and others for mismanaging benefits plans and accused them of violating the Employee Retirement Income Security Act. The department alleged that Skilling had failed to properly oversee the fiduciaries who ran Enron’s plans and did not correct then chairman Kenneth Lay’s misstatements about the company’s financial condition to plan participants. Skilling also was sued as a member of Enron’s board of directors for failing to properly appoint and monitor a trustee to oversee the employee stock ownership plan.

None of the $220.8 million in pension plan money that DoL has collected from Enron’s former directors, officers, and fidicuaries has come from Skilling.