Enron victims could speak at Skilling, Fastow sentencings

Kristen Hays

HOUSTON - Two of the most notorious felons to emerge from Enron Corp.’s rubble - Jeffrey Skilling and Andrew Fastow - could hear firsthand at their sentencing hearings how their crimes affected the people who lost their money and their jobs when the company crashed.

A federal judge ruled recently that victims who show up at Fastow’s Sept. 26 hearing can sign in and speak. Such statements, U.S. District Judge Kenneth Hoyt ruled, “will continue until completed” and Fastow has to be there to listen.

Skilling’s lawyers said in court filings that they also expect Enron victims to speak about their financial hardships at the former CEO’s Oct. 23 sentencing hearing. Skilling was convicted May 25 of 19 counts of fraud, conspiracy and other charges for lying to investors and employees about the company’s financial health.

Diana Peters, a former Enron worker left jobless after Enron collapsed, said she would participate and has been spreading the word among other ex-Enron workers that they could likely speak at Skilling’s sentencing as well.

“I am going to start writing my three minutes. I can say the most powerful stuff in three minutes,” she said, though Hoyt hasn’t specified a time limit for victim statements.

The right to be heard stems from a two-year-old federal law that enhances the rights of victims of federal crimes - even sprawling white-collar cases with too many victims to count.

Sen. Dianne Feinstein, D-Calif., who sponsored the Crime Victims Rights Act with Sen. Jon Kyl, R-Ariz., said the legislation is beginning to pay off.

“It ensures that victims can look a perpetrator in the eyes and describe the real harm that he or she caused,” Feinstein said. “This puts a real face on the crime.”

Enron, once the nation’s seventh-largest company, crumbled into bankruptcy proceedings in December 2001 after years of accounting tricks could no longer hide billions in debt or make flailing ventures appear profitable. The collapse wiped out thousands of jobs, more than $60 billion in market value and more than $2 billion in pension plans.

The law says victims have the right to be “reasonably heard” in hearings involving a defendant’s release, plea, sentencing or parole. It directs the Justice Department to make “best efforts” to ensure victims know about such proceedings and their right to be heard, and judges to ensure they can exercise that right.

“Unquestionably, it was going to reach white-collar crime cases, typically with many victims, sometimes thousands, and this provision was made for it to contemplate that and give the judiciary some leeway in order to accommodate multiple victims,” said John Stein, spokesman for the National Organization for Victim Assistance.

In January, The 9th Circuit Court of Appeals further interpreted “reasonably heard” to mean judges cannot restrict victims to written impact statements if they want to speak.

“The criminal justice system has long functioned on the assumption that crime victims behave like good Victorian children - seen but not heard. The Crime Victims Rights Act sought to change this by making victims independent participants of the criminal justice process,” said the opinion written by 9th Circuit Judge Alex Kozinski.

In Fastow’s case, Hoyt’s order says the Justice Department must publish advance notice of Fastow’s sentencing hearing on its Web site as well as in newspapers distributed in Houston and nationally. U.S. District Judge Sim Lake, who presided over Skilling’s trial, hasn’t yet issued such an order.

Skilling’s co-defendant, Enron founder Kenneth Lay, was also convicted of fraud and conspiracy, but he died July 5.

Fastow, 44, Enron’s former chief financial officer who pleaded guilty in January 2004 to two counts of conspiracy, testified in his former bosses’ trial that Lay and Skilling knew he and his staff engineered fraudulent financial structures.

Lay and Skilling countered that Fastow, who admitted he skimmed millions of dollars from secret scams without their knowledge, was a liar and a crook who couldn’t be believed.

Fastow agreed when he entered his plea to serve the maximum 10-year term for his admitted crimes. Hoyt cannot impose more time, but has discretion to order less.

Skilling faces decades in prison.

His attorney, Daniel Petrocelli, said in court papers that they expect some victims to push for the ex-CEO to serve a lengthy term. He asked Lake to schedule a hearing for victims to speak so all - including those sympathetic to Skilling - can have their say.

“There are other victims - and we have communicated with some - who want to describe for the court’s consideration Skilling’s generosity, work ethic, and value to Enron, and express their view that a lengthy term of incarceration is not fair, does not serve justice, and will rob the community of a man with the potential to do so much good,” Petrocelli said.