The FBI indicted him in 35 counts of fraud, insider trading, and other related crimes regarding the collapse of Enron. He pled not guilty to all of the charges. If convicted of all of them, he faces up to 325 years in prison and at least $80 million in fines, if not more. The main reason for his arrest regarded his probable knowledge of the fraudulent transactions within Enron. About a month after he quit Enron, Skilling sold almost $60 million of his shares in Enron (in blocks of 10,000 to 500,000), leading to the prosecutors believing that he sold those shares while knowing of the bankruptcy Enron was facing.

Skilling, born in Pittsburgh, Pennsylvania, received his B.S in applied science at the Southern Methodist University, and his M.B.A at Harvard College. He was a consultant at McKinsey & Company before moving to Enron (around 1987), helping the company create a forward market in natural gas.

He became the Chief Operating Officer in 1996, and when in February 2001 Ken Lay gave up the position of CEO he designated Skilling as his replacement. Skilling unexpectedly resigned on August 14 of that year, citing personal considerations, and he soon sold all of his shares in the corporation. When brought in front of congressional committees, he stated that he had "no knowledge" of the complicated chain of scandal that would eventually result in Enron's bankruptcy.

Skilling is the highest-ranking Enron official to face criminal charges. Other Enron officials mentioned in the indictment include Richard Causey (former chief accounting officer), Andrew Fastow (who pled guilty in his role as the chief financial officer), Ben Glisan (the former treasurer who was the first official to be sent to prison), and Kenneth Lay (only in title, though). Fastow (who reported directly to Skilling, along with Causey), after pleading guilty, has been cooperating with the government to make a case against other officials. He stated that Enron's top officials approved his work that eventually led to Enron's downfall.