Over the weekend, I came across a round up of everyone charged in connection with the Enron implosion since December 2001. Many still have legal loose ends to tie up -- chiefly showing up for their sentencing dates, which are scheduled for throughout this fall.
It's a weighty list, but also a rather unsatisfying one. Maybe part of the problem is that it's hard to reconcile what justice might really look like for the American investors who lost tens of billions of dollars, as well as the thousands of workers who seemingly lost their jobs overnight.
Once the country's seventh-largest company with a market value of $68 billion, Enron's bankruptcy filing wiped out more than $1 billion in retirement funds. Investors suing over the company's collapse have claimed that the energy giant's accounting fraud and earnings manipulations cost them upwards of $25 billion.
The May 2006 conviction of Enron founder Kenneth Lay and former chief executive Jeffrey Skilling, on charges of conspiracy to commit securities and wire fraud, stand as the lone big names who lost their trial cases. Skilling was convicted on 19 charges, including fraud, conspiracy and insider trading, while Lay was convicted on six counts mostly relating to covering up the reasons behind Skilling's resignation in the summer of 2001. In a separate case, Lay also was convicted on charges of bank fraud and making false statements to banks.
Skilling faces 20 years or more in jail when he is sentenced Oct. 23. Lay died July 5, and without having had a chance to appeal or been sentenced, it's likely that his convictions will be wiped clean from the slate.
The only other convictions at trial were of the former broadband unit chief financial officer of Enron's broadband unit -- for fraud, conspiracy and falsifying records in May 2006 -- and of a midlevel Enron finance executive and a former executive at Merrill Lynch & Co. who were tied to an ill-fated barge deal.
Three of the five former Enron broadband executives are still awaiting retrials (two of the men were acquitted), and three British bankers will face wire fraud charges in another Enron accounting scheme. Just two defendants were acquitted at trial on lesser charges.
So far at least, the convictions seem to have mostly stuck -- excepting for four fraud and conspiracy convictions against Merrill Lynch executives (mostly overturned on a flawed legal theory), and of course, the U.S. Supreme Court overturning the conviction of former Big Five firm Arthur Andersen LLP on charges of obstruction of justice for destroying audit documents. Whoopsie.
Of the remaining charges, another 16 were settled through guilty pleas, most due for sentencing sometime in the fall. One withdrawn guilty plea, from Arthur Andersen's top Enron accountant has not been pursued. And then of course, there's been the hundreds of millions in settlements, the bulk coming from the financial world and not individuals.
The federal task force set up to prosecute the cases has done an admirable job in meting out even the attempted justice listed above. But taken as a whole, it's hard to think that less than a couple dozen people masterminded such a fraud, unless of course, the rest of the company's workers were that much better at leaving behind reasonable doubt.
Whatever becomes of Lay's convictions, or happens at Skilling's sentencing, most of the Enron cases were more about symbolism and the government showing it's toughness on white-collar criminals. That's probably of little consolation to many in Houston, but it's a start. Here's hoping the feds stick to their guns the next time a public company publicly unravels, even if five years nets only the symbolic few.
