Enron Prosecutor Says Case Is Based on Pattern of Deceit
By ALEXEI BARRIONUEVO and VIKAS BAJAJ
The New York Times
January 31, 2006
HOUSTON — The government's case against the two central figures at Enron will be based on a pattern of deceit, not arcane financial transactions, a federal prosecutor told jurors in opening arguments being held here today.
"This is a simple case," the prosecutor, John Hueston, said. "It is not about accounting, it is about lies and choices."
In the first hours of arguments in the trial of Enron's former chief executives, Kenneth L. Lay and Jeffrey K. Skilling, the government made it clear that it would not get bogged down in the kind of mundane details that, legal experts say, have cost prosecutors convictions in other recent high-profile white-collar criminal trials.
Mr. Hueston's opening argument dwelt heavily on the "choices about what to say and what to do" that Mr. Lay and Mr. Skilling made in the months before Enron, the energy company, declared bankruptcy in late 2001. The prosecutor also said that there were sharp distinctions between what the executives told investors and financial analysts about Enron's financial health and what they told employees and how they acted in private.
The jury of eight women and four men, which was selected from a pool of almost 100 on Monday, listened attentively; several jurors took notes and others held their heads in their hands as they followed a presentation on an overhead projector. The group includes three people who work in the oil and gas industry and few in accounting.
The trial of Mr. Skilling and Mr. Lay, the two men most directly responsible for Enron's meteoric rise from a stodgy pipeline company into an energy-trading powerhouse, is the culmination of four years of investigation by the government's Enron Task Force into the company's bankruptcy filing in December 2001.
Mr. Lay and Mr. Skilling are accused of participating in a suspected conspiracy to defraud Enron and mislead investors about the true health of the company's businesses. Mr. Skilling, 52, is charged with 31 counts of conspiracy, fraud and insider trading. Mr. Lay, 63, is charged with seven counts of conspiracy and fraud.
The prosecution and defense will each have two hours to make their opening arguments today in a trial that is expected to last for four months. Each side is expected to call dozens of witnesses.
Mr. Hueston identified a couple of the key witnesses the government plans to call, many of whom are cooperating in plea deals and in exchange for reduced sentences. They include Andrew S. Fastow, Enron's former chief financial officer; Mark E. Koenig, who headed investor relations and is expected to be the lead witness for the government; Paula H. Rieker, his deputy; and David W. Delainey, who headed the company's retail energy business.
The government said the witnesses will recount how Mr. Lay and Mr. Skilling kept the public in the dark about the myriad financial problems at Enron. All the while, Mr. Hueston said, the executives were taking home large compensation packages and seeing the value of their Enron shares soar. He noted that Mr. Lay's compensation totaled $220 million from 1999 to 2001, and Mr. Skilling netted $150 million in the same time.
"But inside the doors of Enron, something was terribly wrong," Mr. Hueston said.
He said the evidence would show that Mr. Skilling, for instance, knew when he left the company in mid-August in 2001 that Enron was in trouble but continued to assure investors that the energy company was doing fine. Mr. Hueston said Mr. Skilling sold 500,000 shares of Enron stock after the Sept. 11 terrorist attacks, up from the 200,000 shares he had tried to sell just a few months before.
Though in testimony given to the Securities and Exchange Commission, Mr. Skilling said he "absolutely agonized" over the sale, Mr. Hueston said a taped conversation between the executive and his broker would show that Mr. Skilling was lying.
Defense lawyers from Mr. Skilling and Mr. Lay are expected to argue that the executives did nothing illegal and that Mr. Fastow and his subordinates were responsible for the frauds at the company, particularly those involving off-balance sheet enterprises meant to hide losses.
To make their case, the defense will try to discredit the testimony of Mr. Fastow and other former officials and explain why specific complex transactions were legal. The defense has listed 199 potential witness, including some prominent Houston business and religious leaders who are expected to testify as character witnesses for the executives.
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Alexei Barrionuevo reported for this article from Houston, and Vikas Bajaj from New York. |
