A U.S. federal judge Monday rejected a plea for mercy from prosecutors and sentenced a former Enron Corp. executive who testified against Ken Lay and Jeff Skilling to 30 months in prison.
David W. Delainey, a Canadian who pleaded guilty to insider trading in 2003 and cooperated extensively with the U.S. Justice Department’s Enron Task Force, had been praised by prosecutors for his help in the case.
Enron collapsed in a tangle of fraud in 2001, causing investors to lose billions and costing employees their jobs and retirement savings. Delainey’s testimony helped convict Lay, the former Enron chairman, and Skilling, the former chief executive, last summer.
The sentence handed down by U.S. District Judge Kenneth Hoyt was less than the 33 to 41 months provided under federal sentencing guidelines, but Deputy Task Force Director Kathryn Ruemmler had sought leniency and defense lawyer John Dowd had recommended probation.
“I don’t share the government’s view or your counsel’s view that probation’s appropriate,” Hoyt told Delainey. He noted that prosecutors had still charged Delainey with insider trading.
The judge said Delainey was a top executive, not middle management, and headed two different business units at Enron.
Delainey tried to right his wrongs but has not suffered enough, Hoyt said. He has been able to work and live with his family awaiting sentence.
Delainey’s lawyer, John Dowd, said his client had forfeited more than $7 million to the government, but Hoyt assessed an additional fine of $60,000 — $2,000 to cover the cost of each month in prison — to be paid to funds to reimburse Enron victims.
Hoyt said there’s a difference between consequences of one’s acts and punishment for one’s acts. “If you’d lost every penny, that’s simply a consequence,” Hoyt said. “It’s not punishment.”
As Delainey’s wife wept and friends frowned in the gallery, Hoyt ordered Delainey to surrender immediately. When Ruemmler tried to intercede, Hoyt hushed her by saying: “I’ve already spoken.”
Dowd said he didn’t know if Delainey would appeal. He has 10 days to do so.
The sentence, Dowd said, was “a bit harsh.”
Prosecutors, who said that Delainey’s cooperation was unusually complete and crucial to the case, appeared dismayed as they left court, but declined to comment.
Hoyt also ordered Delainey to serve two years supervised release after his prison sentence. Noting Delainey is a Canadian, Hoyt said that if he is deported or leaves the United States before his supervision ends, he’ll finish it when he returns.
