NEW YORK – The more than $40 million that will go to Enron victims under a sentencing agreement with Jeffrey Skilling this week will be used to revive a depleted victims' fund, a Justice Department official said.
Spokesman Peter Carr said on Thursday the money will go to the Enron Fair Fund for investor victims, which finished paying out more than $500 million last July.
Skilling agreed to allow the funds to be released as part of a deal announced on Wednesday under which his sentence will be cut by as much as 10 years. He was sentenced to 24 years in prison in 2006 for his role in one of the biggest corporate frauds in U.S. history. A federal appeals court upheld Skilling's conviction but found the original sentence too harsh.
U.S. District Judge Sim Lake in Houston, who must approve the deal, is scheduled to resentence Skilling on June 21.
About $450 million was paid into the Enron Fair Fund through corporate and individual settlements with the U.S. Securities and Exchange Commission. The Department of Justice contributed another $65 million recovered through federal forfeiture actions.
Investors who purchased Enron securities between January 20, 1998, and November 7, 2001, may be eligible for money from the fund, according to the website of the Enron Victim Trust, which distributes money from the Enron Fair Fund.
The more than $40 million that Skilling will contribute to victims pales in comparison to the amount of money he has spent on legal fees. Skilling's legal defense reportedly had cost some $70 million by 2006, the year he was sentenced. He has been involved in costly appeals since then.
Once ranked seventh on the Fortune 500 list of largest U.S. companies, Enron went bankrupt on December 2, 2001, in an accounting scandal that remains one of the largest and most infamous U.S. corporate meltdowns. Thousands of workers lost their jobs and retirement savings.
The case is U.S. v. Skilling, U.S. District Court, Southern District of Texas, No. 04-cr-00025.
(Reporting by Karen Freifeld; Editing by Steve Orlofsky)