Posted on 05/21/2006 11:47:44 AM PDT by NormsRevenge
HOUSTON - Yet another clash of Enron trial titans is on the horizon, but it may be less explosive than the first.
While jurors deliberate the outcome of the fraud and conspiracy trial of Enron Corp. founder Kenneth Lay and former Chief Executive Jeffrey Skilling, Lay is on trial again without a jury on charges stemming from his personal banking.
The 64-year-old former chairman spent six days on the witness stand during the conspiracy trial, often combative and contentious with federal prosecutor John Hueston, who secured the indictment against Lay nearly two years ago.
Lay is expected to square off with Hueston again late Monday in the ongoing bench trial before U.S. District Judge Sim Lake, who presided over the conspiracy case. The bench trial began Thursday, the conspiracy jury's first full day of deliberations, which also will continue Monday.
"I had so much fun before, I'm going to do it again," Lay said outside of court last week about his second stint in the witness chair.
The first faceoff between Lay and Hueston featured plenty of fireworks. But Lake has repeatedly told lawyers in the banking case to keep a brisk pace. With no jurors to engage and a seasoned judge who sat through a painstaking examination of Lay's personal finances in the conspiracy case, the second matchup will be shorter and likely more matter-of-fact.
"There's a high degree of fatigue at this point on the part of everybody," said Sam Buell, a former prosecutor with the Justice Department's Enron Task Force who is a visiting professor at the University of Texas School of Law. "Also, (Lake) is pushing very strongly in the direction of making this quick."
The bank trial could wrap up as early as Tuesday.
"There's very little to be done in the way of bringing the judge up to speed, so you can get right down to the issues," Buell said.
The larger case against Lay and Skilling was the government's marquee trial to emerge from its investigation of Enron's December 2001 descent into bankruptcy protection in one of the biggest corporate scandals in U.S. history.
Skilling faces 28 counts of fraud, conspiracy, insider trading and lying to auditors and a maximum of 275 years in prison if convicted on all counts. Lay faces six counts of fraud and conspiracy with a combined maximum punishment of 45 years.
Both are accused of repeatedly lying for telling investors and employees Enron was robust when they knew that financial health was propped up by accounting tricks that hid losses and flailing ventures. The two men counter that their optimism was genuine and attribute Enron's failure to bad publicity coupled with lost market confidence rather than fraudulent inner workings that crumbled.
In the banking case, Lay faces one count of bank fraud and three counts of making false statements to banks. Each count carries a maximum penalty of 30 years in prison.
The government contends in the banking case that beginning in 1999, Lay obtained $75 million in loans from three banks and then reneged on documented agreements with the lenders that he wouldn't use the money to carry or buy margin stock.
The only Enron connection is that Lay collateralized the loans with his Enron stock. Lenders issued margin calls as Enron's share price fell throughout 2001, and Lay tapped the company for cash to meet those margin calls. He repaid the energy giant with Enron stock.
Last week Lay lawyer Ken Carroll's questioning and objections revealed Lay's defense is a combination of lack of criminal intent and that the bank documents were signed with an automatic signature machine rather than by Lay personally.
The crowds that packed Lake's courtroom for parts of the conspiracy trial and its dozen hours of closing arguments last week before deliberations began have largely dissipated except for media and lawyers awaiting the outcome.
Skilling and most of his legal team kill time in their so-called "war room" in a building across the street from the federal courthouse in Houston, according to his lead lawyer, Daniel Petrocelli. All of Lay's lawyers remain at his side in the banking case.
Lake aims to announce his verdict in the banking case after the conspiracy jury renders its decision.
Another much lower-profile Enron trial next door to Lake's courtroom also is winding down. Closing arguments are slated for Monday in the case of two former executives of Enron's defunct broadband unit.
Kevin Howard, former finance chief of the unit, and Michael Krautz, former in-house accountant, are accused of manufacturing earnings for the flailing division in late 2000 by selling an interest in future revenue of a video-on-demand venture that flopped.
They are the first of five broadband unit executives to be retried in separate cases on fewer criminal counts after their first combined case ended with a hung jury last year.
Howard and Krautz's retrial began May 2. Both testified, as they did last year that they did nothing wrong and the deal in question was legitimate.
Both face five counts of conspiracy, fraud and falsifying records. Of the other three defendants to be retried, two face trial in September and the third has no trial scheduled pending an appeal to dismiss remaining charges.
_____
Associated Press Writer Michael Graczyk contributed to this story.
Enron founder Kenneth Lay, center, leaves for the day from the federal courthouse in Houston, Thursday, May 18, 2006. As 12 jurors began their first full day of deliberations in a fraud and conspiracy case against him, Lay was in court at a new trial in a separate case where he's accused of fraud stemming from his personal banking. (AP Photo/Ric Feld)
I hope Ken Lay gets life in prison and has to share a cell with Big Bubba who hasn't been with a woman in 10 years.
There were several shareholders' actions against the corporate officers responsible for inflating IPOs, against financial advisors for touting some over inflated issues and changes in the law (eg: Sarbanes-Oxley Act). The dive shown in your graph was induced by hype, betting on dot coms to do miraculous things (like the tulip hype in the Europe of 17th Century)--but, ony a few were unlawful. It was an emotional wave financed by debt and fueled by public irrational greed and wishful anticipation.
While I do not disagree with your take, much of the same can be said about Enron. If the dotcoms were gone over with a fine tooth comb like Enron, I'm sure you would find quite the same actions and practices. Those however, could not be construed as "oil companies".
Neither could Enron. (Be construed as an oil company.)
Overexuberance and/or bad publicity can't make or break a sound company. Enron was not a sound company for several years.
Enron was not a sound company for several years.
Their massive expansion into any and all things energy related should have been a red flag, but it was ignored.
And your point is???
I do wonder though why they had to institute new banking/accounting regulations and laws if what was done was actually so "illegal".
Tha changes in law revolved primarily around others involved in the process of corporate finance, investment and advice, and those who are between the public and the corporation. What Lay is charged with regarding his banking and loan guaranty practices have been illegal for a long time. Making false statements on loan application or execution documents is fraud. Of course, fraud is something with which those Enron buccaners are well acquainted.
All my life, I've always heard "ignorance of the law is no defense." Hasn't everybody?
And yet, Kenlay tells the judge today that he "doesn't walk around with a Regulation II under his arm" to know what he can and can't buy with his loan money.
Aaacck. He was CEO of a "major" corporation and doesn't know this basic rule? That's sort of like borrowing money for a down payment on a house!
Everyone knows you don't put up stock for collateral on a loan and then use the proceeds to buy more stock. Your loan collateral could be worthless in an instant and your loan called in! In fact, that's exactly what did happen.
And get this - the defense lawyer is saying, it's just a regulation, breaking it isn't a crime! Yikey yike yikes, these people try my patience.
As my evidence professor said: ''Well, you've got to offer some argument in defense.'' Ken Lay is going to be floor manager of a license plate making shop at some federal lock-up.
Let's hope so. We could all learn from him, "Breaking the law isn't a crime!"
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.