Skilling denied bail while conviction’s reviewed

By Dow Jones Newswires-Wall Street Journal
Posted Sep. 3, 2010 at 5:49 p.m.

A federal appellate court judge on Friday turned down former Enron Corp.  executive Jeffrey Skilling’s request for bail pending the continuing judicial review of his 2006 conspiracy and fraud conviction. The former Enron chief executive is serving a 24-year prison sentence.

Skilling’s bail effort followed a favorable Supreme Court decision in June. The High Court found that one of the theories under which  Skilling was prosecuted — known as “honest services” fraud — had been used improperly by federal prosecutors. The justices ordered Skilling’s case to be re-reviewed by the Fifth Circuit Court of Appeals to determine whether  his conviction on 19 counts should be vacated or otherwise modified. That matter is pending before the appeals court.

Skilling’s attorneys are arguing that the conviction should be overturned in light of the Supreme Court’s ruling. The Justice Department in a recent court filing argues that use of the honest-services statute was “harmless” error. The filing said there was sufficient evidence for the jury to convict  Skilling for committing other crimes, such as securities fraud.

The bail denial Friday was handed down by Judge Edward C. Prado in a one-sentence ruling without explanation.

A Justice Department spokeswoman declined to comment on the  decision. An attorney for  Skilling, who is in a federal prison in Colorado, couldn’t immediately be reached for comment.

Under the leadership of  Skilling and Enron’s late chairman Kenneth Lay, the Houston-based energy giant became one of the highest-profile companies in America in the 1990s. It collapsed into bankruptcy in late 2001 after a series of Wall Street Journal stories raising questions about some of its financial and accounting practices. The collapse spurred a federal criminal investigation that resulted in numerous guilty pleas from former executives and culminated in the 2006 trial of  Skilling and Lay in a Houston federal court. Lay was also convicted of conspiracy and fraud. But he died shortly after the trial of heart-related problems and his conviction was vacated.

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