WASHINGTON, D.C. – Deputy Attorney General James B. Comey, Assistant

Attorney General Christopher A. Wray of the Criminal Division, Federal Bureau

of Investigation Director Robert Mueller, and Enron Task Force Director Leslie

R. Caldwell announced today that a federal grand jury in Houston has indicted

former Enron Corp. Chief Executive Officer Jeffrey K. Skilling on charges of

conspiracy, securities fraud, wire fraud and insider trading.

A superseding indictment

returned by the grand jury in Houston yesterday

charges Skilling, 50, with conspiracy to commit securities fraud, 20 counts of

securities fraud, four counts of wire fraud and ten counts of insider trading.

Former Enron Chief Accounting Officer Richard Causey, who was originally

indicted last month, was also charged in the superseding indictment with

conspiracy to commit securities fraud, 20 counts of securities fraud, eight

counts of wire fraud, and two counts of insider trading.

Skilling surrendered this morning to agents of the Federal Bureau of

Investigation in Houston, after the indictment was unsealed. Skilling had an

initial appearance this morning before Magistrate Judge Frances Stacy.

This indictment marks an important milestone in the life of the Presidents

Corporate Fraud Task Force, said Deputy Attorney General James B. Comey, who

heads the Task Force. The indictment alleges that Jeffrey Skilling and other

Enron executives concocted a massive, complex scheme to give shareholders and

the investing public the false appearance of financial strength and security

at a time when Enron was, in fact, failing. Our investigators were able to cut

through the maze of paperwork and financial trickery to get to the bottom of

the scheme and charge Skilling, once the top executive at Enron, with fraud

and other crimes that contributed to Enrons collapse.

The indictment of Enrons CEO shows that we will follow the evidence wherever

it leads – even to the top of the corporate ladder, said Assistant Attorney

General Christopher Wray of the Criminal Division. No corporate executive –

not even the CEO – is above the law. The Department of Justice and our Task

Force partners will work tirelessly to hold accountable all those who

participate in corporate fraud, no matter how devious the scheme, and no

matter how highly placed the perpetrators.

The FBI continues to investigate allegations of fraud, particularly with

regard to corporations that victimize innocent investors, said FBI Director

Robert Mueller. The Enrons Task Forces probe and todays indictment

represents both a substantial step for justice and strong continued action on

the part of the FBIs Corporate Fraud Initiative.

The indictment alleges that, between at least 1999 and 2001, Skilling, Causey

and other Enron executives engaged in a wide-ranging scheme to deceive the

investing public, the SEC, credit rating agencies and others about the true

performance of Enrons businesses. The scheme was allegedly designed to make

it appear that Enron was growing at a healthy and predictable rate, consistent

with analysts published expectations, that Enron did not have significant

write-offs or debt and was worthy of investment-grade credit rating, that

Enron was comprised of a number of successful business units, and that the

company had an appropriate cash flow. It had the effect of inflating

artificially Enrons stock price, which increased from approximately $30 per

share in early 1998 to over $80 per share in January 2001.

As a part of the scheme, Skilling and Causey allegedly set unrealistic and

unattainable earnings goals for Enron, based on analysts expectations rather

than on actual or reasonably achievable business results. When, as expected

within the company, Enron consistently fell short of those goals, Skilling,

Causey and others allegedly orchestrated a series of accounting gimmicks

designed to make up the shortfall between actual and predicted results. Enron

then announced publicly that it had met or exceeded analysts expectations

when, as Skilling and Causey allegedly knew, it made its numbers only by

engaging in fraud. The indictment also alleges that Skilling and Causey made

false and misleading representations about Enrons finances and business

operations to analysts, at press conferences, in SEC filings and elsewhere.

Skilling, Causey and other executives and senior managers allegedly employed a

variety of fraudulent devices, including:

– The concealment of massive energy trading profits made during the

California energy crisis by placing the profits in fraudulent reserve accounts

created for that purpose;

– The concealment of large losses and failures in Enrons two highly-touted

new businesses, Enron Energy Services (EES) and Enron Broadband Services

(EBS), by manipulating Enrons segment reporting and using its reserved

energy trading earnings to hide EESs losses, and by manipulating expense

accounting to hide the extent of EBSs losses;

– The manufacturing of earnings by falsely touting Enrons EBS business in

order to drive up Enrons stock price, then misleadingly presenting earnings

from the resulting increase in Enrons share price as recurring earnings from

energy operations;

– The manufacturing of earnings and artificially improving Enrons balance

sheet by fraudulently overvaluing assets in Enrons merchant investment


– The structuring of financial transactions in a misleading manner in order

to achieve earnings objectives, avoid booking of large losses in asset values,

and conceal debt, including the fraudulent use of a purportedly third-party

investment entity that in fact was not truly independent from Enron and which

was used only to achieve Enrons financial reporting objective and to enrich

Enron executives and senior managers; and

– The structuring of financial transactions in a misleading manner in order

to conceal the amount of Enrons debt and to create the false appearance of

greater cash flows, such as disguising multi-billion dollar loans to Enron

from large banks as energy trading transactions.

The indictment alleges that, through a combination of these fraudulent

accounting devices and their misleading public statements, Skilling, Causey

and others were able to create and maintain the illusion that Enron was a

successful company when, in fact, it was failing.

The indictment further alleges that Skilling, Causey and other executives and

senior managers received millions of dollars in salary, bonuses and the sale

of stock even as they conspired to fraudulently manipulate the companys

earnings. Skilling allegedly received approximately $200 million from the sale

of Enron stock options and restricted stock between 1998 and 2001, and was

paid more than $8 million in salary and bonuses. Insider trading charges

contained in the indictment allege that from April 2000 to September 2001,

Skilling sold shares of Enron stock generating more than $63 million while

possessing material, non-public information about the company. This includes

the sale of 500,000 shares of Enron stock, generating more than $15 million,

on Sept. 17, 2001, approximately four weeks after Skilling abruptly resigned

from Enron. The indictment alleges that Causey also engaged in insider trading

to generate more than $10 million in the sale of stock from January 2000 to

October 2000.

The indictment seeks forfeiture of more than $66 million from Skilling and $6

million from Causey.

If convicted of all the charges in the indictment, Skilling faces a maximum

sentence of 325 years in prison and hundreds of millions of dollars in fines,

and Causey faces a maximum of 265 years and hundreds of millions of dollars in

fines. The indictment is viewable at


Criminal indictments are only charges and not evidence of guilt. A defendant

is presumed to be innocent unless and until proven guilty.

The investigation into Enrons collapse is being conducted by the Enron Task

Force, a team of federal prosecutors supervised by the Justice Departments

Criminal Division and agents from the FBI and the IRS Criminal Investigations

Division. The Task Force also has coordinated with and received considerable

assistance from the Securities and Exchange Commission. The Enron Task Force

is part of President Bushs Corporate Fraud Task Force, created in July 2002

to investigate allegations of fraud and corruption at U.S. corporations.

Twenty-nine defendants have been charged to date, including 20 former Enron

executives. Nine defendants have been convicted to date, including Andrew

Fastow, the former CFO, former Enron Treasurer Ben F. Glisan, Jr., former

Enron North America and EES Chief Executive Officer David Delainey, and former

Enron Global Finance Managing Director Michael Kopper. To date, the Enron Task

Force has restrained more than $95 million in proceeds derived from criminal

activity. The Task Force investigation is continuing.

Superseding indictment