HIS SHORT HEIR OOPS! LAY'S SON BET AGAINST ENRON STOCK
By JANET WHITMAN
April 28, 2006 -- Looking to deflate Enron founder Kenneth Lay's claim that a cabal of short-sellers was behind the energy giant's downfall, a federal prosecutor delivered a zinger in court yesterday, showing Lay evidence that his own son was among those selling the stock short.
Lay - who is accused of leading a scheme to hide Enron's worsening financial health - was ruffled by the surprise appearance of the trading statements, which revealed that his son Mark Lay, a former Enron vice president, had sold shares of Enron short four times in March 2001.
The sales, made with borrowed stock, were essentially a bet that Enron's stock price would fall and he could then profit by buying the shares back later at a cheaper price.
Lay and his co-defendant ex-Enron Chief Executive Jeffrey Skilling have centered their defense on the theory that short-sellers at hedge funds conspired to bring about the collapse of the company.
Prosecutor John Hueston played a tape of Lay explaining that belief to Enron employees back in October 2001, telling them, "Just like America's under attack by terrorists, I think we're under attack." Hueston also reminded Lay that his lawyer had called short-sellers "vultures" during his opening statement.
Hueston then informed Lay of his son's short-selling history.
"He wasn't a vulture, was he?" Hueston asked Lay. "He wasn't trying to kill Enron in 2001, was he?"
"I would think not," Lay replied.
Lay, 64, and Skilling, 52, are accused of painting a rosy picture of Enron, when in truth, the business was near implosion.
After many months of assuring Wall Street that all was well, Enron in December 2001 filed for bankruptcy protection, zapped by revelations it relied on accounting shenanigans to hide its massive debt and inflate its earnings.
The judge on the case, now in its 13th week, has expressed his frustration over the trial's length, with the cross-examination of Lay expected to extend into Monday.
To shorten the length of the trial, jurors agreed yesterday to start their day a half-hour earlier, at 8 a.m., rather than the other options of staying later or on Fridays.
janet.whitman@nypost.com |
