Posted on 05/26/2006 11:17:50 AM PDT by Anti-Bubba182
Kenneth Lay and Jeffrey Skilling were known as visionaries, hands-on executives, corporate titans directing the high-flying ship at Wall Street darling Enron Corp. Add another title: convicted felons.
"Certainly we're surprised," a shaken Lay said Thursday after a jury capped a four-month-long fraud and conspiracy trial and in its sixth day of deliberations returned guilty verdicts against him and Skilling. "I think it's more appropriate to say we're shocked. This is not the outcome we expected."
Besides all six counts in the main trial, Lay, Enron's founder, also was convicted of four charges of bank fraud and making false statements to banks in a separate non-jury trial before U.S. District Judge Sim Lake related to his personal finances.
Skilling was convicted of 19 counts of fraud, conspiracy and insider trading at a trial spawned by one of the biggest business scandals in U.S. history, the toppling of a high-profile energy trader that once was the nation's seventh-largest company.
"Obviously, I'm disappointed," the former Enron chief executive said. "But that's the way the system works."
Lake set Sept. 11 as sentencing date for Skilling and Lay. Legal experts, while not questioning the pair eventually would be spending time behind bars, predicted another fierce courtroom battle over the duration of their likely prison time.
Skilling faces a maximum of 185 years in prison. For Lay, the fraud and conspiracy convictions carry a combined maximum punishment of 45 years. The bank fraud case adds 120 years, 30 years on each of the four counts.
While the reality is the sentences will be considerably less under federal sentencing guidelines, for Lay, 64, a likely double-digit term could be the equivalent of a life sentence, said Kirby Behre, a former federal prosecutor in Washington who wrote the government's white- collar sentencing guide.
"They're both facing 20-plus years," he said. "You do 20 years, and that's entirely conceivable, you're looking at life. And people don't age well in prison.
"Lay may catch a break, but Skilling doesn't have that. He's looking well north of 20 years."
"They'll each be in a prison uniform," agreed Douglas Young, a San Francisco-based white collar defense lawyer who's followed the case. "But I don't think 100 years or 50 years."
Whatever their incarceration, he said, it could be stalled for a year or more.
"They have excellent defense lawyers," Young said. "I think they performed extremely well. They tried a heck of a good case. Sometimes it works. Sometimes it doesn't. That same quality is going to go into post-trial motions, advocacy motions.
"Expect the same level of intensity."
The common practice will be for lawyers to ask the judge to allow them to self report, giving them time to get their affairs in order and show up on their own.
"Whether the judge lets them depends on the strength of post-trial motions," Young said.
He said one avenue for appeal could be Lake's instruction to jurors that Lay and Skilling could be found guilty even if they did not know about the fraud if the facts showed they should have known and were willfully ignorant of it.
"Chances are very slight," Behre said of appellate success. "You need a total screwup and that would have been something you heard about, some outrage from the trial.
"Nothing has jumped out from what I've seen that would make it appear there's some very good appellate issues."
Jurors found the men, who received tens of millions in pay and stock options, repeatedly lied to cover up accounting tricks and business failures that led to the company's 2001 demise. The collapse wiped out more than $60 billion in market value, almost $2.1 billion in pension plans and 5,600 jobs.
The conspiracy conviction was a major win for the government, serving almost as a bookend to an era that has seen prosecutors win convictions against executives from WorldCom Inc. to Adelphia Communications Corp. and homemaking maven Martha Stewart. The public outrage over the string of corporate scandals led Congress to pass the Sarbanes-Oxley act, designed to make company executives more accountable.
"There's a lot of losers in this," Kathy Harrison, one of the Lay- Skilling jurors said. "There was obviously a winning side but there's too much hurt here."
She said she hoped companies would look at the verdict and "be more aware."
"They must be more conscientious in all the endeavors they carry out," she said.
"I did have admiration for both men, just what they accomplished in their careers," another juror, Wendy Vaughan, said. "It was sad to see that at end it wasn't accomplished in a respectful manner, having to hurt so many people to get there."
She worried, however, whether the panel's verdict and justice will "really prevail or will the almighty dollar be the winner again."
The pair's sentencing will come five years almost to the day after Skilling sold 500,000 shares of Enron stock for $15.5 million, for which he was convicted of insider trading. He was acquitted on the remaining nine insider trading charges.
Skilling remains free on $5 million bond, which restricts him to the continental U.S. Lay, whose friendship decades earlier with the family of former President George H.W. Bush earned him the nickname Kenny Boy from the future President George W. Bush, surrendered his passport and posted a $5 million bond secured with property at a hearing following Thursday's verdict.
The Enron founder also was ordered to stay in the Southern District of Texas or Colorado.
The government's victory caps a 4 1/2-year investigation that resulted in 16 guilty pleas from ex-Enron executives, including former Chief Financial Officer Andrew Fastow and former Chief Accounting Officer Richard Causey.
All are awaiting sentencing later this year except for two, who either finished or are still serving prison terms.
"You can't lie to shareholders, you can't put yourselves in front of your employees' interests," prosecutor Sean Berkowitz said outside the courthouse. "No matter how rich and powerful you are, you have to play by the rules."
I'm shocked, I tell you, just shocked!
Old Sparky isn't the most comfortable seat in the house.
I'm still hoping Gray Davis will be charged with something.
You think if this guy were a member of the Kennedy clan, that he'd be convicted??
Proof it's all a game to lawyers.
Social Security makes Enron look like change in a mayonnaise jar.
They will raise taxes, print money or whatever else they have to do to keep SS running and save their asses.
To be safe, no more than 3% to 5% of anyone's assets should be invested in any one company, especially if they also work for that company.
They got it..and the naysayers, who always relate
court proceedings to the OJ trial, can analyze and
digest this justice for a while...there are smart
and ordinary people who serve om juries and abide
by the evidence presented..the OJ trial did more to
show the bias that exists in this country, than any
other signle event. Jake
Why didn't they take them to jail right away?
"Proof, it's all a game to the lawyers."
I doubt it's a game to the people who lost their pensions and/or life savings. They must be grimly happy.
A little over the top don't you think. Can't believe you didn't notice the bias in the country until the OJ trail.
Really? Then you're the only ones.
Enron's over now it's time to start on a trial on Global Crossing and former DNC Terry McAuliffe's $18 million ill-gotten gains.
if you are stupid enough to put your whole retirement nest egg into one company - not one fund, one company - you have a huge degree of culpability, and you're a moron - worthy of a re re-peat.
So in order words, he's not just a thief, he's either a liar or a sociopath to boot.
The company match in Enron's 401k was made in Enron stock, and the rules did not allow the employees to sell it within the plan.
I assume, but don't know, that the employee contributions to the 401k could be put into a different investment, but there wasn't a single Enron employee who was NOT overinvested in Enron stock through no fault of their own.
When natural gas was going through the roof, I checked out Enron, that being the main game, and found that it was similar to meeting people in a dark alley out behind a warehouse at 3 AM. Not that there is anything wrong with that.
Oh, they think they were just "ahead of their time." Blue sky or pie-in-the-sky doesn't mean a thing to them.
I will be glad when we can put up signs at the city limits:
WELCOME TO HOUSTON
ENRON DOESN'T LIVE HERE ANYMORE
(NO KATRINA PEOPLE, EITHER)
If I'm not mistaken, the company match was in stock and the employees couldn't sell it. The part they deferred they had a choice of where to invest.
Certain company-provided ESOP funds and some company-provided matching 401(k) funds can be (and were) locked up in company stock, at least for people below their 50's. However, a lot of people foolishly invested their own 401(k) contributions in company stock when they didn't have to -- it's a very risky move that can yield very large returns, or disaster. When disaster strikes, these people need to take part of the blame for their choices.
Most people are horrible investors -- it's a real disappointment to me but I don't know the solution. Better education in school would help.
Yeah, that's my understanding. It's a fairly common arrangement.
After disaster strikes, employees would like to claim they had no choice about any of their retirement investments -- but that claim isn't accurate.
(Denny Crane: "Every one should carry a gun strapped to their waist. We need more - not less guns.")
They only do that to the little people.
I think because Ken Lay gave lots to charity in Houston the jury would forgive him for the cooked books at Enron.
I think the OJ trial showed the incompitence of LA's prosecutors at that time. They blew a number of high profile cases then (remember it took them two tries to convict the Menendez brothers). In the OJ trial they relied on the very new DNA evidence and bored the jury to death explaining it all, and never presented any of the easy quick evidence which would have lead to an easy conviction (like the money and disguise in the Bronco, or the statistics on murdered women who were abused by a spouse). Then the final blow was to forget that leather gloves mutate their shape and size when they get really wet, allowing OJ to actually try on that glove rather than an identical glove that hadn't been soaked in blood was the final idiocy by a bunch of lawyers who were playing to the camera and working on their memoirs instead of trying a case.
Oh puhleeze. The only way Lay could have been shocked about this was if he had been catatonic over the last few years.
would it be mean to send him a gift of the dvd set of Oz?
He'll really be shocked when he meets his cell mate "Looney" Louie who hasn't been with a woman since l989.
Since Enron, WorldCom, etc., many companies are easing the restrictions on how the company match is invested.
Somehow the prison system seems to be able to protect these big shots from most of the lurid action prison can offer. Whether they additionally retain enough resources and connections to bribe or finagle prison safety is another question.
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