Enron founder Kenneth Lay, with his wife Linda, makes a statement as he leaves the courthouse after being found guilty of all counts in his fraud and conspiracy and bank fraud trials Thursday, May 25, 2006 in Houston. (AP Photo/Pat Sullivan)
Posted on 05/26/2006 10:34:35 AM PDT by NormsRevenge
HOUSTON - 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."
Enron founder Kenneth Lay, with his wife Linda, makes a statement as he leaves the courthouse after being found guilty of all counts in his fraud and conspiracy and bank fraud trials Thursday, May 25, 2006 in Houston. (AP Photo/Pat Sullivan)
Enabled by Clinton.
Jailed by Bush.
Enabled by Clinton.
Jailed by Bush.
That needs to be repeated over and over again!!
That'll fit on a bumper sticker. ;-)
IIRC, much of the defense costs were paid for by directors E&O policies and other liability coverage..no longer the case after the conviction..so they'll have to decide if they each want to throw away several million on an appeal....to merely buy some more time...Since the appeals will most likely lose, at some point Skilling and Lay will havbe to decide if they want to leave something for their families..
These guys were acting like they were the government or something...
I rather imagine that they do, especially old-man Lay for whom time is now his most precious asset. Surely these creeps have millions in cash tucked away for a rainy day.
During this trial all Lay did was play the blame game...and blamed everyone else. Playing the victim is so typical of what a true blue demwit does.
Lay is shocked but not stuned, apparently.
I always thought the "there was no fraud" defense was a pretty dumb idea. Plus the reports indicate Kenny-boy did not do well on the stand. Instead of the old affable Ken, he was prickly and defensive.
My guess is Kenny is not really the nice guy he pretended to be. He might have talked himself into believing he really didn't do anything wrong - "master of the universe" types can have a very skewed view of the world.
If there was a chance for a plea bargain he should have taken it. He chose poorly.
Oh man, do you know what happens to pretty boys like Lay in jail?
"The collapse wiped out more than $60 billion in market value, almost $2.1 billion in pension plans and 5,600 jobs."
Where did it all go?
I don't know which was the best of his blames ... the day traders who dissed the company, with whom he was livid, until it was pointed out that's what his son does for a living ... or the automatic signature machine--that is, his secretary or the "SODDI" - some other dude did it - who sneaked into his office and signed checks with it.
The fact is Enron was cooking the books and Lay never knew anything whatsoever about it. **shaking my head**
Enabled by Clinton.
Jailed by Bush.
Trying to score political points on this case is a loser. If we try, we'll get hit with "Kenny Boy."
Lay was an equal-opportunity scumbag. He spread money around to any politician he thought would help him.
Better just to celebrate this as a victory for shareholders over the crooks who would lie to them.
Strictly speaking, it didn't "go" anywhere. It never existed in the first place, other than in the minds of the investors that pumped up the price of Enron stock. And, because they were given information that was untrue by the Enron, the top executives of that company are now facing prison.
Exactly...
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