(MoneyWatch) Former Enron CEO Jeffrey Skilling could see years taken off his original prison term after the Justice Department said today that it has recommended reducing his sentence.
While U.S. District Judge Sim Lake of the Southern District of Texas must still approve the deal, the convicted felon could walk as early as 2017, meaning his 24-year sentence could be reduced by as much as 10 years.
The Judge set a sentencing hearing for June 21, 2013.
Both prosecutors and the government emphasized that $40 million in restitution, currently held up as Skilling pursued appeals, could be released to victims.
"Today's agreement will put an end to the legal battles surrounding this case," a Justice Department spokesman said in a statement. "Mr. Skilling will no longer be permitted to challenge his conviction for one of the most notorious frauds in American history, and victims of his crime will finally receive the more than $40 million in restitution they are owed. This agreement ensures that Mr. Skilling will be appropriately punished for his crimes and that victims will finally receive the restitution they deserve."
The sentencing reduction was also presented as a milestone by Skilling's legal team. "The proposed agreement brings certainty and finality to a long and painful process," said Daniel Petrocelli, Skilling's lawyer and an attorney at O'Melveny and Myers. "Although the recommended sentence for Jeff would still be more than double that for any other Enron defendant, all of whom have long been out of prison, he will have a chance to get back a meaningful part of his life."
Skilling, along with former CEO Kenneth Lay, transformed Enron into the world's largest energy trading company. Skilling took the reins of the company himself in February 2001, in the process reaping a salary of $132 million a year. But he resigned in August of the same year, citing personal reasons, and began selling massive amounts of Enron shares. The company went bankrupt in December 2001. One of the largest accounting frauds in history, the debacle cost investors and employees billions of dollars, and resulted in the conviction and demise of its auditor, accounting firm Arthur Anderson, an ancillary disaster that also cost thousands of jobs.
Skilling and Lay were both indicted and convicted for securities fraud and other charges; Lay died before serving any time, while Skilling received a 24-year sentence of which he has served about six and a half years. He is housed at a low-security prison in Littleton, Colo.
In laying out the reasons for seeking to reduce the sentence, Justice Department lawyers cited first the fact that $40 million would be released to victims. That money has been held by the government while Skilling pursued his appeals. In addition to the fact that Skilling would give up all rights to challenge the the distribution of the money and any rights to appeal the case, DoJ noted that the case has been a long and costly one for the government.
"If I were in the government, I would enter into this deal," said Wes Porter, a law professor at Golden Gate University who served as a Justice Department lawyer on the Enron Task Force. "It doesn't give up much and Skilling still got a 13-year sentence, which is appropriate for what he did."
But Porter questioned whether the judge in the case would be so ready to accept the deal, even with the $40 million that would be released and the finality of the deal.
"The idea that 'It's been a long time and there's going to be more litigation' would not be persuasive to judges in most cases. It's possible that it may be to this judge in the Skilling case, but I think he will have questions about why he should accept it. It really requires him to go back in time and re-sentence Skilling, and I'm not sure the judge would see these as reasons to vary the sentence."
Porter was also surprised that the money has been tied up this long. "It's amazing that it didn't go to victims before," he said. "That it's still tied up in appeals and challenges after all this time is baffling to me"