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The Honolulu Advertiser
Posted on: Saturday, July 1, 2006

Prosecutors go after Skilling, Lay assets

By Carrie Johnson
Washington Post

Federal prosecutors asked a judge yesterday to order former Enron Corp. CEOs Jeffrey Skilling and Kenneth Lay to turn over $182.8 million, arguing that their homes and other assets were acquired by fraud.

A Houston jury last month convicted Skilling of 19 criminal charges including conspiracy and securities fraud and found Lay guilty of a half-dozen other counts. The government said both men had misled investors about Enron's financial health while they sold stock at inflated prices before the energy company collapsed in bankruptcy. Lay and Skilling face prison terms when they are sentenced this fall.

For the government to recover the money, prosecutors must prove that money and property held by Skilling and Lay stem from the conspiracy. Prosecutor Patrick Murphy argued that the government established those links by virtue of the criminal convictions and evidence presented at trial about the bonuses, trading records and stock sales of both men.

Skilling collected $139.2 million in bonuses and stock proceeds during the course of the fraud, court papers said. In return, prosecutors are seeking $49 million in securities held in a Charles Schwab account; a $4.6 million mansion in Houston; $808,643 in cash; and a Dallas condominium valued at $579,475. Government lawyers asked that a $5 million bond that Skilling posted after his indictment two years ago be used to satisfy part of the judgment.

Skilling previously argued that because he was acquitted on nine insider-trading charges, he should be entitled to keep his remaining wealth a position prosecutors called "legally baseless."

Daniel Petrocelli, a defense lawyer for Skilling, said yesterday that the government move would leave Skilling "without any means to meet family obligations or satisfy substantial debts for his legal defense."