Enron's Lay May Face Hostile Jury in Houston, His Lawyer Says
Jan. 30 (Bloomberg)
The lawyer defending former Enron Corp. Chairman Kenneth Lay on fraud charges said he will win or lose the case based on who is selected for the jury.
Lay and co-defendant Jeffrey Skilling, the company's former chief executive officer, have told the judge in charge of the case that they won't get a fair trial in Houston, Enron's hometown, because local media coverage has ``demonized'' them. U.S. District Judge Sim Lake denied their request last week to move the trial to another state.
``The only thing that has ever troubled me about this case is picking a jury,'' said Michael Ramsey, who is defending Lay on charges he and Skilling lied to investors and regulators about Enron's income and debt, driving it into bankruptcy.
A victory by the prosecutors would improve the record of the task force set up after the Enron collapse to probe the fraud that led to the nation's second-largest bankruptcy. Some prosecutions involving lower-level executives resulted in acquittals and mistrials. Lake, 61, said he would personally question potential jurors from a pool of 150 candidates to assure that Lay, 63, and Skilling, 52, get an impartial panel to judge them. Jury selection begins today. Lake, appointed to the bench by President Ronald Reagan in 1988, said he wants to pick a jury by the end of the day.
``It will be difficult to find jurors in Houston whose lives were not affected or who didn't have friends or relatives whose lives were affected by Enron,'' said Robert Mintz, a former federal prosecutor who is a partner at McCarter & English in Newark, New Jersey.
`High-Class Crook'
Fewer than 7 percent of potential jurors summoned in the case could be fair, based on responses given by people who were considered for the jury pool, said Edward Bronson, an expert hired by the defense to examine their questionnaires. One referred to Lay as the ``biggest lying crook of all.'' Skilling was also described as a ``thief'' and a ``high-class crook.'' Lay and Skilling, who pleaded not guilty to all charges, face potential prison sentences of more than 30 years, said Kirby Behre, a former federal prosecutor and author of a book on U.S. sentencing guidelines. Their trial, which will be covered by hundreds of U.S. and foreign journalists, will last at least 18 weeks, prosecutors and defense lawyers estimated. Lake, a graduate of the University of Texas Law School, has a reputation for moving cases along quickly, sometimes timing lawyers' arguments.
Enron collapsed in December 2001 and filed for the largest bankruptcy after WorldCom Inc. The company fired more than 5,000 people. Investors claim in a lawsuit that they lost $30 billion as Enron stock plummeted following disclosures of improper accounting. Employees allege they lost $1 billion on Enron shares in retirement funds.
CEOs Convicted
A government crackdown on corporate crime after Enron's bankruptcy led to the prosecutions of the CEOs of WorldCom, HealthSouth Corp., Adelphia Communications Corp., Tyco International Ltd. and Rite Aid Corp. All the CEOs were convicted of fraud except HealthSouth founder Richard Scrushy, who now faces bribery charges in an unrelated case. The demise of Enron led to the Sarbanes-Oxley Act, the broadest revision of U.S. securities laws in seven decades. The 2002 law strengthened auditing standards and forced companies to enhance financial controls. CEOs and top financial officers must now sign financial statements, certifying their accuracy.
One Enron Victim
Angie Lorio was laid off when Enron, once the world's largest energy trader, went bankrupt. She lost $500,000 in retirement savings as Enron's stock plummeted. She's still out of work, has had to sell her Houston home and ran up $30,000 on credit cards to pay medical bills. ``I want to see them stripped of everything just like we are,'' said Lorio, 60, who lost an administrative job. ``Then, they can spend the rest of their lives in jail.''
The government accuses Lay and Skilling of overseeing ``a wide-ranging financial fraud'' that led to the meltdown of Enron. Skilling is charged with 31 counts of fraud, conspiracy and lying to auditors in a scheme to inflate Enron's earnings, partly by hiding billions in debt in off-the-books partnerships. Lay, who helped found Enron in 1985, is charged with seven counts of fraud and conspiracy for taking control of the effort to deceive investors after Skilling left Enron in August 2001.
Former Enron shareholder Tony Lentini, vice president of Houston-based oil and gas exploration company Apache Corp., said he knows the $10,000 he invested in Enron stock is gone forever. ``The only satisfaction I can get now is if they are convicted and get some serious jail time,'' said Lentini, whose company was involved in natural gas transactions with Enron. Lentini's stock ownership may make him eligible to collect damages in an investor class-action suit.
$68 Billion Lost
Enron wiped out $68 billion in market value from its share- price high in August 2000. Investors have recovered about $7 billion of their claims through settlements with some of Enron's bankers, including Citigroup Inc. and JPMorgan Chase & Co., and with the company's auditor, Arthur Andersen LLP, after accusing them of roles in the fraud. Lay and Skilling were also sued. Enron prosecutors have secured convictions against lower- level executives in a fraud case involving Nigerian energy barges and against Arthur Andersen. The Andersen conviction for obstructing the investigation of Enron was tossed out by the U.S. Supreme Court. A trial involving the broadband division resulted in acquittals and mistrials.
Sixteen former Enron officials, including Chief Financial Officer Andrew Fastow and Chief Accounting Officer Richard Causey, have pleaded guilty to criminal charges stemming from the fraud and agreed to cooperate with prosecutors. Causey had been slated to go on trial with Skilling and Lay before his plea. Fastow, who prosecutors say reaped more than $60 million from off-the-books partnerships, will be the government's star witness. Ramsey and Skilling's lawyer Daniel Petrocelli have painted Fastow as a rogue executive. Lay and Skilling say they relied on the expert advice of lawyers and accountants who signed off on the legality of those entities.
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Didn't Citigroup basically bankroll and encourage the whole WorldCom debacle as well? God they're evil. And yet they're basically immune from prosectuion always ((empty) testimony for immunity). Must be good to be a banker. (almost typo'd 'god', which might not be far off.) How they can enable and perpetuate these scandals, rake in a fortune, and then completely escape scrutiny or retribution is beyond me. I HATE Citigroup/CitiBank/CitiEvil - far more so than the now-defunct corporate shells they'd used to make their immoral gains. I really think these mega-banks are making out like bandits in these scandals - I can't understand why nobody seems to care about their complicity in one corporate scandal after another.
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