Former Enron chief executive Jeffrey Skilling (search) pleaded not guilty Thursday to charges of fraud, insider trading and lying to auditors.
"I plead not guilty to all counts," Skilling told U.S. Magistrate Judge Frances Stacy. Skilling was released on $5 million bond.
The federal indictment, which was unsealed and read in federal court in Houston, also includes new charges against former Enron chief accounting officer Rick Causey (search), who pleaded not guilty to six fraud counts last month.
Skilling and Causey are named in the indictment as the "chief architects" in "a massive conspiracy to cook the books of Enron (search) and to create the illusion ... that it was a robust company," Deputy Attorney General James Comey, head of the Justice Department's corporate fraud task force, said during a Thursday press conference.
"In truth," Comey added, "Enron was an increasingly troubled business kept afloat by a lifeline of gimmicks and maneuvers."
Shortly before the government made its statements to the press, Skilling and one of his attorneys also held a news conference Thursday to deny the charges.
"Jeff Skilling has nothing to hide," said Dan Petrocelli (search), one of his lawyers. "He did not steal, he did not lie, he did not take anyone's money."
Skilling appeared by Petrocelli's side but didn't answer any questions.
Prosecutors said Skilling faced a maximum total of 325 years in prison and over $80 million in fines if convicted of all the counts. Another court appearance for Skilling was set for March 11.
Comey said the indictment shows that "no executive is too prominent or too powerful … to avoid the long arm of the law."
Comey said Skilling and Causey paid "little attention" to how Enron's various businesses were doing and those businesses "repeatedly failed."
The lengthy indictment maintains that the two execs manufactured and manipulated earnings to meet quarterly gains expectations, artificially improved Enron's balance sheet and concealed large losses. The government says the pair repeatedly lied to analysts and auditors to cover up their scheme.
But Petrocelli said the feds won't be able to prove that Skilling is guilty of any wrongdoing and said his client is merely a scapegoat in the expansive investigation. He said prosecutors "were making a grave mistake" in pursuing Skilling "but they have decided to turn a blind eye."
"The government knows they don't have a case," Skilling's lawyer said. "He is a victim."
Skilling passed a lie-detector test "with flying colors," Petrocelli added.
Flanked by a pair of his attorneys, Skilling, 50, surrendered to the FBI in Houston just before daybreak Thursday morning, then was taken away in handcuffs to a federal courthouse to face the charges related to his former company's collapse and post-implosion accounting scandals.
"Jeff Skilling has lived up to his responsibility," Petrocelli said Thursday. "He has fully cooperated with the investigation."
Skilling is the 28th person — and one of the most anticipated in the Justice Department's investigation into the implosion of the energy company — to face charges.
"Under the circumstances, he is doing extraordinarily well," Petrocelli said after Skilling turned himself in.
Skilling was named in 36 of the 42 counts, 10 of them specifically accusing him of insider trading that generated $62.6 million from stock sold from April 2000 through September 2001, which was about a month after he quit Houston-based Enron.
During that time, according to the indictment, he sold shares in blocks ranging from 10,000 to 500,000. In that time, Enron stock sold as high as $87 in September 2000 down to $31 a year later.
The Securities and Exchange Commission also filed civil charges against Skilling on Thursday, accusing him of fraud and seeking restitution.
Other former Enron executives invoked their Fifth Amendment rights when brought before Congress to testify.
Skilling is the highest-profile former Enron executive to date to face criminal charges.
But all the top executives, including Skilling, pocketed millions of dollars from sales of stock prosecutors allege was inflated. Enron shares hit a high of $90 in August 2000.
Skilling's only real rival on the notoriety scale — Enron founder and former chairman Kenneth Lay (search) — has not been charged, and the sources said it was unclear when or if he would join his former protégé as a defendant.
Enron was the nation's largest energy trader and a political power with close links to President Bush before it unraveled in 2001 amid disclosures that off-the-books deals had been used to inflate profits and hide billions of dollars of debt. The company filed for bankruptcy in December 2001.
The indictment alleges that before the company's demise, Skilling and Causey engaged in insider trading that helped net them profits of $89 million and $5 million, respectively.
Both men have staunchly maintained their innocence of any wrongdoing since Enron collapsed and went bankrupt in December 2001.
The indictment comes just a month after former Enron finance chief Andrew Fastow (search) pleaded guilty to two counts of conspiracy and agreed to tell all to prosecutors and help them pursue other cases.
Fastow is free on $5 million bail until his formal sentencing, set for April.
Prosecutors broadly hinted Fastow's information would lead to charges against Skilling and Lay.
Skilling's indictment mentions Fastow and former treasurer Ben Glisan (search), who pleaded guilty to conspiracy and became the first former Enron executive put behind bars.
The indictment makes no mention of Lay, either by name or by title.
Skilling in 2002 spoke for himself, insisting during testimony before two congressional panels in February 2002 that he believed Enron was financially healthy when he abruptly quit after only six months as CEO, citing personal reasons he has not explained. Other former executives, including Lay, declined to testify at all.
Skilling has been publicly silent since 2002.
Fastow was one of Skilling's first hires shortly after Skilling joined Enron in 1990. In his guilty plea, Fastow admitted that he and others manipulated Enron's books so the company would appear successful while using various partnerships to enrich himself, his family and chosen colleagues.
Fastow's lawyers said when he was indicted on nearly 100 counts in October 2002 that he was hired to do off-the-books financing and that Enron's top officers and directors approved and praised his work.
Causey's indictment said he gained more than $14 million from selling Enron stock and stock options — netting a profit in excess of $5 million — and earned more than $3 million in salary and bonuses from 1998 through late 2001.
The main action in a conglomerate of federal shareholder lawsuits in Houston alleges Skilling gained more than $70 million from selling 1.3 million shares of stock — about 43 percent of his holdings — from June 1996 through November 2001. Skilling also received $13.2 million in bonuses from 1997 through 2001.
When Skilling resigned, he did not take a $20 million severance package. He has said his stock sales were part of an ongoing program to sell a certain amount each month, and he didn't dump shares for fear of Enron going under.
Skilling was born in Pittsburgh, but grew up and attended public schools in New Jersey and Aurora, Ill. He graduated from Southern Methodist University, earned an MBA from Harvard Business School and joined consulting firm McKinsey & Co. in Houston in 1986, where his theory of applying finance principles to trading in the newly deregulated natural gas business prompted Lay to hire him.
Enron's trading operations grew under Skilling's leadership, prompting other energy companies to imitate the company's purported success. In 1997, Skilling became chief operating officer and moved into an 8,000 square foot Mediterranean-style mansion in Houston's wealthiest neighborhood. He stepped into the CEO position in February 2001 and resigned in August of that year.
He has three children — two teenage sons and a 20-year-old daughter in her second year at SMU — from his first marriage, which ended in divorce in 1997. In March 2002, he married Rebecca Carter, a former vice president for board communications and board secretary at Enron.
Fox News' Catherine Donaldson-Evans, Anna Stolley, The Associated Press and Reuters contributed to this report.