Enron, a Houston energy trading company, restated years of results in November 2001 and filed for bankruptcy weeks later. A federal jury convicted former chief executives Kenneth Lay and Jeffrey Skilling in 2006, and its auditor Arthur Andersen was convicted of obstruction in 2002. Lay's conviction was vacated after his death, and the Supreme Court reversed Andersen's conviction and narrowed the law used against Skilling.
The criminal cases are over. Skilling's 168 month sentence became final under his 2013 agreement and he left federal custody in February 2019, while Lay's conviction was vacated after his death and prosecutors chose not to retry Andersen after the Supreme Court reversal.
Jeffrey Skilling served as Enron's chief executive from February to August 2001, according to the Supreme Court. Enron, founded in Houston in 1985, had become the seventh highest revenue company in the United States, the Court said.
Enron announced Skilling's resignation, citing personal reasons, according to the SEC's later complaint.
After a Wall Street Journal article suggested improprieties at Enron, the SEC opened an informal investigation, according to the Supreme Court's account in the Andersen case.
An Andersen partner spoke about the firm's document retention policy at a training meeting attended by 89 employees. The Supreme Court said this and other meetings were followed by substantial destruction of paper and electronic documents.
Enron's third quarter earnings release included a $1.01 billion charge, which it described as nonrecurring. The SEC later alleged that Lay knew the release omitted a $1.2 billion reduction in shareholder equity.
The SEC opened a formal investigation into Enron, according to the Supreme Court. Two leading credit rating agencies downgraded Enron on 29 October and 1 November, the SEC complaint said.
Enron announced it would restate its results for 1997 to 2000 and the first two quarters of 2001, reducing net income by $586 million in total, according to the SEC complaint.
After Andersen was served with a subpoena for its documents, an e-mail sent within Andersen told staff to stop shredding, the Supreme Court recorded.
Enron filed for bankruptcy, leaving its stock nearly worthless, according to the SEC and the Justice Department. The Supreme Court noted the filing came less than four months after Skilling resigned.
The Justice Department unsealed an indictment charging the Arthur Andersen partnership with obstruction of justice under 18 U.S.C. 1512 over the destruction of Enron related documents. The indictment covered conduct between 10 October and 9 November 2001, the Supreme Court said.
A Houston jury returned its guilty verdict against Andersen on 15 June 2002, the Fifth Circuit later recorded, after 10 days of deliberation, PBS NewsHour reported. PBS said Judge Melinda Harmon had told jurors they did not need to agree on which person at the firm committed the crime, and that Andersen's lawyer said the firm would appeal.
Judge Harmon sentenced Andersen to a $500,000 fine and five years of probation, UPI and the St. Petersburg Times reported. UPI said the firm had already lost its right to audit public companies at the end of August, and its staff had shrunk from about 28,000 at its peak to roughly 3,000.
Andrew Fastow, Enron's former chief financial officer, pleaded guilty to two conspiracy counts, agreed to serve 10 years, to forfeit more than $29 million and to cooperate with investigators, the Justice Department said.
Prosecutors charged Skilling with conspiracy, securities fraud and insider trading, adding him to the case against former chief accounting officer Richard Causey, who was indicted in January 2004. The SEC filed a parallel civil complaint alleging Skilling's insider sales brought about $62.6 million.
A Fifth Circuit panel affirmed Andersen's obstruction conviction. The Justice Department described the ruling as unanimous and an important victory.
A superseding indictment returned the previous day charged Lay with 11 counts including conspiracy, securities fraud, wire fraud and bank fraud, and he surrendered to the FBI in Houston. The SEC filed civil fraud and insider trading charges, alleging his 2001 stock sale proceeds exceeded $90 million.
The Supreme Court unanimously reversed the Fifth Circuit's affirmance of Andersen's conviction, in an opinion by Chief Justice Rehnquist. It held that the jury instructions failed to convey the elements of corrupt persuasion under the statute.
Federal prosecutors told the Fifth Circuit in a four page filing that they would not retry Andersen, UPI reported, dating the announcement to Tuesday 22 November. Accounting Today also reported the decision. The firm had about 200 employees left, UPI said.
Richard Causey pleaded guilty to securities fraud, according to the Justice Department's Enron archive, leaving Lay and Skilling to stand trial together.
Jury selection began in January 2006, followed by a four month trial, according to the Supreme Court. The trial court had denied Skilling's requests to move the trial out of Houston and used a 77 question juror questionnaire.
A federal jury convicted Lay on all six counts against him, and Judge Sim Lake separately convicted him of bank fraud and three counts of false statements to banks at a bench trial. Skilling was convicted on 19 of 28 counts and acquitted on nine insider trading counts.
Lay died of heart disease on 5 July while on vacation in Aspen, Colorado, before he could appeal his convictions, the Associated Press and NPR reported.
Judge Kenneth Hoyt sentenced Fastow to six years in prison for two counts of conspiracy to commit securities and wire fraud, the Justice Department said.
Judge Lake vacated Lay's convictions and dismissed the indictment, relying on a 2004 Fifth Circuit decision that a defendant's death pending appeal erases the case, the AP reported. The ruling ended the government's criminal effort to seek $43.5 million, though civil claims against his estate remained possible.
Judge Lake sentenced Skilling to 292 months in prison, according to the Justice Department.
The Fifth Circuit affirmed Skilling's convictions but vacated his sentence, holding that the trial court wrongly increased it based on the risk to Enron's pension plan, the Justice Department said.
In Skilling v. United States, the Supreme Court held that the honest services statute covers only bribery and kickback schemes, so Skilling's conspiracy conviction was flawed, and sent the case back to decide whether the error was harmless. It rejected his claim that pretrial publicity denied him a fair trial.
On remand from the Supreme Court, the Fifth Circuit held that the honest services instruction error was harmless beyond a reasonable doubt and affirmed Skilling's convictions on all counts. Its earlier order for resentencing stood.
The government and Skilling agreed to jointly recommend 168 to 210 months. Skilling agreed not to contest the forfeiture and restitution order and to waive all appeals, which the government said would let it distribute about $42 million to victims.
Judge Lake resentenced Skilling to 168 months in prison and ordered him to forfeit about $42 million to be applied to restitution for fraud victims, the Justice Department said.
Skilling was released from federal custody after six months in a halfway house, having served about 12 years, the Associated Press reported.
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Fox News (Associated Press) · foxnews.comLast updated 1 November 2026. Spotted an error? See corrections. Every event links to the record it comes from. Allegations are attributed to whoever made them.