Houston Community News >> Jury and Judge Deliberating Case against Ken Lay

5/25/2006 HOUSTON (AP) - Former Enron Corp. chiefs Kenneth Lay and Jeffrey Skilling were convicted Thursday of conspiracy and securities and wire fraud in one of the biggest business scandals in U.S. history.

The verdict put the blame for the 2001 demise of the high-profile energy trader, once the nation's seventh-largest company, squarely on its top two executives. It came in the sixth day of deliberations following a federal criminal trial that lasted nearly four months.

Lay was also convicted of bank fraud and making false statements to banks in a separate, non-jury trial before U.S. District Judge Sim Lake related to Lay's personal banking.

The 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.

Enron's demise alone took with it more than $60 billion in market value, almost $2.1 billion in pension plans and 5,600 jobs. "The jury's verdicts help to close a notorious chapter in the history of America's publicly traded companies," said Rep. Michael Oxley. "At the same time today, I remember those who have suffered great economic loss. Today's news should encourage them as they continue to rebuild their financial security," he said.

Enron founder Lay was convicted on all six counts against him in the corporate trial. Former Chief Executive Skilling was convicted on 19 of the 28 counts, including one count of insider trading, and acquitted on the remaining nine. Lake read the verdict from the bench, intoning "Guilty" for each count.

Lay tossed his head at hearing the first "guilty" on the conspiracy count. He clutched his wife's hand as he heard the word "guilty" over and over again. Lay sat with his wife, Linda; his daughter, Elizabeth Vittor, a member of his defense team; and Linda Lay's daughter, Robyn. As Lay clutched Linda Lay's hand, the three women leaned forward and began to sob quietly.

After Lake left the courtroom, Lay's family and some friends gathered around him as the ex-chairman, red-faced and fighting back tears, hugged them and thanked them for their support. Skilling's wife, Rebecca Carter, couldn't get to the courthouse in time, but Skilling, sitting with his brother, Mark, showed no emotion. He occasionally raised his eyebrows when whispering with Mark or his lead attorney, Daniel Petrocelli, who affectionately straightened his client's purple tie before Lake read the verdicts.

The sentencing will come five years, almost to the day, that Skilling sold 500,000 shares of Enron stock for $15.5 million, for which he was convicted of insider trading. Skilling's $5 million bond remains in effect. Lay's children and family have to help put up a $5 million cash bond for him, which will be addressed at a 2 p.m. CDT hearing. Lake ordered Lay to stay in the courthouse until his passport was surrendered and until the conclusion the hearing. "Obviously, I'm disappointed," Skilling told reporters outside the courthouse. "But that's the way the system works."

Lake set sentencing for Sept. 11. The charges for which Lay was convicted carry a maximum penalty in prison of 45 years in the corporate trial and 120 years in the personal banking trial. The charges for which Skilling was convicted carry a maximum penalty of 185 years in prison. Jurors found through their verdict that both men had repeatedly lied to cover a vast web of unsustainable accounting tricks and failing ventures at Enron.

The panel rejected Skilling's insistence that no fraud occurred at Enron other than that committed by a few executives skimming millions in secret side deals, and that bad press and poor market confidence combined to sink the company. "I wanted very, very badly to believe what they were saying, very much so, and there were pieces in the testimony where i felt their character was questioned," juror Wendy Vaughan said after the verdict was announced.

(Associated Press)