Skilling, Lay fates now up to jury

Each could get 25 years

government rests case, saying evidence shows they tried to cook books

May 18, 2006|By GREG BURNS | GREG BURNS,CHICAGO TRIBUNE

HOUSTON -- The criminal case against Enron Corp.'s Kenneth L. Lay and Jeffrey K. Skilling went to the jury yesterday, after federal prosecutors made a final push for the top figures in the era's biggest business scandal to spend time behind bars.

"We have presented overwhelming evidence of a conspiracy at Enron to cook the books and present it to the public as something other than it was," lead prosecutor Sean M. Berkowitz told the jury in a final argument attacking the defendants' credibility. "They lied to their investors."

The eight-woman, four-man panel can send a message that hiding the truth and putting personal interests ahead of everything else "is not all right," Berkowitz said.

Lay, Enron's founder, former chairman and chief executive, and Skilling, his successor as CEO, each face at least 25 years in prison if convicted of charges that they used off-the-books partnerships to manipulate the company's finances. The government contends they pumped up Enron stock so they could sell their own shares at inflated prices.

"This isn't Hollywood. We didn't weave together a story." Berkowitz said at one point. "We followed where the evidence led us, and it led us to these two men," he argued later. His presentation followed six hours of closing arguments Tuesday, in which attorneys for Lay and Skilling insisted the pair did nothing wrong and attacked the government for overreaching.

After Berkowitz concluded his remarks, jurors filed out of the courtroom to begin deliberations without glancing at the defendants or prosecutors.

Besides determining the fates of Lay and Skilling, the outcome of this trial also stands to influence the conduct of future corporate fraud cases.

In contrast to earlier prosecutions that dealt with complex accounting, this one focused more narrowly on whether the defendants had lied about the company's financial condition.

Prosecutors sought to keep it simple and lean, building their case bit by bit, particularly in the absence of "smoking gun" evidence or a blockbuster witness tying the defendants to the fraud.

Lay and Skilling mounted an aggressive defense, calling more witnesses than the government, and emphatically denying any wrongdoing.

They blamed others for Enron's 2001 bankruptcy and accused prosecutors of coercing false testimony from former Enron executives who settled charges and agreed to cooperate.

After a trial stretching from late January to mid-May, the outcome is hard to predict, given the lack of an incriminating paper trail and the "he-said, she-said" nature of the testimony.

Yet the pace of the trial appeared to favor the prosecution. From the one-day jury selection on Jan. 30 to the mere 12 hours allotted for closing arguments this week, U.S. District Judge Simeon T. Lake III never allowed the proceeding to stray off course.

"Confusion is the prosecutor's worst enemy," noted Robert A. Mintz, a former prosecutor now in private practice who has followed the case.

"You have to like how this trial played out. Things were very orderly. That all helps the prosecutor."

Lake refused to allow distracting lines of inquiry, permitted few objections or other interruptions and prodded lawyers on both sides to maintain a rapid pace.

In addition, Lake denied defense requests to move the trial from Houston, where anti-Enron sentiment runs strong.

The venue could make a big difference, said Sheldon T. Zenner, a veteran trial attorney at Katten Muchin Rosenman LLC of Chicago.

"So many people lost their jobs and the economic impact on that town was so significant. That's a huge hurdle to overcome," Zenner said.

Asked outside the courthouse Tuesday whether he could get a fair trial in the city where Enron rose and fell, Lay smiled and replied, "Sure hope so."

Despite the disadvantages, the defense stayed mostly in synch, pounding home the message that prosecutors were going all out to turn "normal" business practices into crimes.

Under pressure to secure convictions because of Enron's notoriety, the government prevented key witnesses from testifying and stooped to irrelevant side issues in an effort to muddy the case, they maintained.

Greg Burns writes for the Chicago Tribune. Bloomberg News contributed to this article.

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