Skilling: The Appeal

Business Week interviewed Skilling lawyer Dan Petrocelli , who discussed how he will likely appeal his client’s guilty verdict. Here’s an excerpt:

Can you give us a sense of what Skilling’s grounds for appeal are likely to be?

A couple of big issues stand out. One is the judge’s refusal to move the case out of Houston, combined with later refusal to allow us to individually examine jurors in order to pick a fair jury. The venue issues in this are worse than the Oklahoma City bombing, and that case was moved out of Oklahoma to Denver. Houston perceived itself to be the victim of Enron’s collapse. Enron helped pull the town out of recession in the mid-1980s. It helped revitalize the Houston economy and bring it into the new age. Ken Lay could have been elected mayor any time he wanted.

When all that came crashing down in such a spectacular way in a matter of weeks, everybody assumed fraud. The government went into motion—private securities cases, congressional hearings, SEC investigations, and, of course, the criminal justice system. Put yourself on that jury. You’re going to go home to your friends and co-workers and say, “I acquitted the two guys who ran Enron.” That’s asking too much of people. For that reason, it wasn’t suitable to try that case in Houston.

That actually colored the jury’s decision?

There’s no piece of evidence that showed Jeff Skilling met or spoke with anyone about breaking the law. There was no evidence by government witnesses that said he directed anyone to change numbers or keep things from accountants. “I want you to change those numbers, don’t tell the accountants”—zero evidence.

What did he do wrong? They were using LJM partnerships for monetizing transactions? Absolutely, they were. That was known, reviewed, and approved all the way up to the board of directors and disclosed in public filings. Was LJM some little secret partnership? Of course not. Its partners were a number of the largest financial institutions in the country, all looking over Fastow’s shoulders.