On December 28, 2005, Enron's former chief accountant Richard Causey pleaded guilty in court to securities fraud. He was sentenced to seven years in prison and fined $1.25 million. Richard Causey's sentence could be reduced by two years if he agrees to cooperate with the court in prosecuting Kenneth Ray and Jeffrey Skilling.
On January 13, 2006, William Roberts, a professional lobbyist nicknamed "The Counselor," admitted to impersonating a Senate committee staff member during the Enron investigation. Due Diligence Certification of Enron's Collapse (Reference)
In January 2006, the U.S. court indicted Enron's founder and former chairman Kenneth Ray and former CEO Jeffrey Sky Lin and the company's former chief financial officer Richard Causey are on trial for their roles in the company scandal. The 65-page indictment contains 53 charges, including loan fraud, financial fraud, securities fraud, email fraud, planning and engaging in money laundering, and insider trading violations, among others. Lawyers for Enron had filed motions to hold the case in camera and to have the case heard outside of Houston, arguing that negative publicity at Enron's location would impede the integrity of the trial, but those requests were denied by U.S. District Judge Sim Lake .
Kenneth Ray has pleaded not guilty to the 11 charges he faces, claiming he had no prior knowledge of the scandal and was completely misled by his staff. The U.S. Securities and Exchange Commission will fine Kenneth Ray more than $90 million, which does not include compensation claims from shareholders. At the same time, the U.S. Securities and Exchange Commission will disqualify Kenneth Ray from holding management positions in any future public companies.
The situation for Kenneth Ray's wife, Linda, was further complicated because Linda sold Enron's shares between 30 and 10 minutes before news of Enron's collapse was announced to the public on November 28, 2001. The company bought 500,000 shares of Enron stock, which was obviously not good for Enron's executives because they knew the company was about to collapse as early as a year ago. However, the proceeds from her subsequent stock sales were donated to a family-run charitable fund, with all proceeds from the fund going to charity. At the same time, because of the marital privacy rights involved, the Kenneths cannot be forced to disclose how they communicated with each other about Enron matters. Therefore, a third-party witness was needed to prove that Linda had knowledge of Enron's inside information. Both points pose obstacles to prosecution.
Paula Ricker, Enron's former investment communications manager, pleaded guilty to insider trading. Rick has agreed not to hold any management positions in any public company. Because Rick was responsible for Enron's disclosures to analysts, she was also an important witness in the case.
On May 25, the jury responsible for the Enron scandal found Kenneth Ray and Jeffrey Skilling guilty of fraud and various other crimes. [3] On October 6, the U.S. District Court in Houston issued a verdict and Paula Rick was sentenced to 10 years in prison and two years of probation for insider trading. [4] On October 17, the U.S. District Court in Houston dismissed multiple criminal charges against Kenneth Ray on the grounds that he was dead. [It is reported that since 1990, Enron has given away more than $6 million to U.S. and British dignitaries. Meanwhile, organizations previously implicated in Enron were also affected. Arthur Andersen, one of the five major international accounting firms that had worked for Enron, was indicted for obstruction of justice and collapsed. This led to a scandal at another telecommunications giant, WorldCom, which subsequently declared bankruptcy and replaced Enron as the company. The largest failed company in history. Citigroup, JPMorgan Chase and Bank of America also paid $2 billion, $2.2 billion and $69 million, respectively, to victims of the Enron collapse for alleged financial fraud.
On November 1, 2002, Andrew Fastow, the mastermind of the Enron fraud and former chief financial officer, was indicted by a federal grand jury on 78 counts of fraud, money laundering and other charges. His wife, former assistant cashier Lea Fastow, pleaded guilty on January 14, and Andrew himself was sentenced to 10 years in prison plus a $23.8 million fine; Lea agreed to serve as a tainted witness He was sentenced to 5 months in prison and one year of probation.
Former Enron cashier Ben Glisan Jr. was the first person to be imprisoned in connection with the collapse of Enron, pleading guilty to conspiracy to commit securities fraud and mail fraud .
John Forney, the energy trader who proposed the "Death Star" trading strategy, was also indicted for fraud in the Enron case, and his boss has now become a tainted witness in the case.
The Enron case led to the introduction of the Sarbanes-Oxley Act, which is considered the most important change in U.S. securities law since the 1930s.
With the bankruptcy of Enron, the pension plan of the company's employees also became a problem, and the American Pension Insurance Company launched a rescue plan.