The Wall Street Journal just reported that the US Supreme Court has agreed to hear an appeal from Enron Corp.’s former CEO, Jeffrey Skilling. Skilling was convicted of fraud and a bunch of other stuff in 2006 and sentenced to 24 years in prison and fines of $45 million following what  the Journal called the “spectacular collapse” of Enron following the discovery of widespread accounting deception at the huge energy company.

The prosecution based its case on a novel theory that he committed fraud because the company was denied his “honest services.” Skilling points out that at no time did the government suggest that he did anything for personal gain. It appears the Supremes want to rule on whether the “honest services” theory holds up. An appeals court has already confirmed Skilling’s conviction but did say that his sentence was not correct and needed to be recalculated.

The Enron scandal, followed by a similar set of problems at WorldCom, Adelphia and others led to the sweeping securities law reform in the Sarbanes-Oxley Act of 2002. It showed that big frauds can happen in big companies, even when the best auditors in the country are on the job. The Enron scandal even resulted in the collapse of Arthur Andersen, one of the five biggest worldwide accounting firms.

Why do we care what happens to the guy whose apparent misdeeds killed a company and many thousands of jobs now 7 years after the scandal? For quite awhile he was the fall guy, with many feeling sorry for the out of touch “outside man” Chairman Ken Lay, who died of a heart attack waiting for his sentencing awhile back.

Were the “off balance sheet” arrangements arranged with Skilling’s blessing, in which underperforming assets were moved to “hidden” outside entities, truly horrible? Was the failure to disclose these arrangements in fact illegal or fraudulent? Now it would be, as Sarbanes closed the loop and now requires all such arrangements to be disclosed. Was Skilling railroaded into a conviction with a tainted Houston jury and a lynch mob mentality throughout the nation at the time?

Hopefully you know me by now, faithful blogees. I do not have the answers to these questions. Just hope to get you to think about it a little. Skilling must have known that failure to disclose these arrangements was not very nice, but illegal at the time? Just not clear, which probably explains the difficulty the prosecution had in fashioning a proper cause of action against him.

Yesterday federal prosecutors told the judge they would like a 145 year sentence for 59-year old admitted swindler old Marc Dreier. As with the 150 year sentence for Madoff, obviously the intention is to ensure that he spends the balance of his life in jail for stealing $400 million from hedge funds and others. The prosecutors told U.S. District Judge Jed Rakoff that Dreier has dishonored the legal profession, according to Reuters.

He was presumably doing well enough running a 250 lawyer firm, but decided to pursue this fraud. Only he has the explanation for this. One also assumes, as with Madoff, that others assisted him, and it is not clear who those folks are yet. Dreier’s lawyer thinks 10-12 years would be sufficient. He acknowledged in a letter to the judge that he deserved a significant sentence. Does he deserve the same as Madoff? I’m not sure how one compares these frankly.

Back in the early 2000s to defraud people out of $2.8 billion was quite a lot of money indeed. Now of course it pales in comparison to the $50 billion plus that Bernie Madoff has admitted to. But in the craziness of major accounting scandals at Enron, WorldCom, Tyco and yes HealthSouth, we learned that even big companies can pull off massive schemes to steal very large amounts of money from their companies for their own benefit, direct or indirect.

Richard Scrushy, then CEO of HealthSouth, was acquitted of criminal fraud charges in connection with the major accounting scandal at his company. But in a form of irony, he was jailed (and still sits there) for seven years for bribing then-Gov. Don Siegelman for a seat on a state health care policy board, according to the Birmingham Business Journal. He was taken from there to testify in his criminal fraud trial.

Shareholders did not give up and brought civil fraud charges against him. Much like in the OJ Simpson case, where the higher standards of proof in a criminal case did not receive a guilty verdit, the lower standards in civil charges did. A judge has now ordered Scrushy to pay $2.8 billion back to the shareholders, still a whopping amount.  By the way he had also paid the SEC $81 million to settle charges with them. The big question: will he simply declare bankruptcy or does he have this kind of money? Unclear. But let’s hope the HS shareholders at long last receive some justice for what was done to them.