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US: U.S. says Skilling mislead the SEC

Government filing alleges ex-Enron CEO tried to deceive agency on $15.6M stock sale.

January 4th, 2006

Prosecutors intend to argue that former Enron CEO Jeff Skilling attempted to deceive the Securities and Exchange Commission in a deposition he gave soon after the company's bankruptcy about his reason for selling 500,000 shares of Enron stock, according to a motion filed in a Houston federal court Tuesday.

TheWall Street Journal first reported that prosecutors argued they should be able to use the deposition Skilling gave to the SEC on Dec. 6, 2001, in the upcoming trial of Skilling and former Enron Chairman and CEO Kenneth Lay, due to start in Houston on Jan. 30.

Skilling and Lay face conspiracy and securities-fraud allegations as well as insider-trading charges in that trial.

Skilling's lawyers have tried to exclude that deposition, arguing that SEC officials didn't properly warn Skilling about his criminal exposure before he testified in what he believed was a purely civil investigation. The government's motion disputed the argument that a criminal probe couldn't use information gleaned from a civil investigation.

Skilling told the government on Dec. 6, 2001, that concern about the impact of the Sept. 11 terrorist attacks was the only reason for his decision to sell 500,000 Enron shares on Sept. 17 for $15.6 million.

The government said Skilling had tried to sell 200,000 shares of Enron on Sept. 6 through the brokerage firm Charles Schwab but that trade didn't go through because the brokerage firm hadn't received formal notification that Skilling, who left the company in August, was no longer a top company officer, which would have restricted his ability to sell Enron stock.

"Skilling's attempt to deceive the SEC about the reason for his sale in sworn testimony gives rise to an inference that material nonpublic information was a factor in his decision to sell in September 2001," the government argues in its filing.

Daniel Petrocelli, Skilling's lead defense attorney, denied the government's allegations in Tuesday's filing that Skilling wasn't truthful in his deposition.

"This was a publicity stunt. They cited Mr. Skilling's SEC deposition out of context. It's clear when you read the transcript he was not misleading anyone, and the government knows that." he told CNN.

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