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Non-Tech : The Enron Scandal - Unmoderated -- Ignore unavailable to you. Want to Upgrade?

To: Raymond Duray who wrote (1986)	4/5/2002 10:48:03 PM
From: stockman_scott	Read Replies (2) \| Respond to of 3602

Ken Lay Probed for Alleged Insider Trades By Jeff Franks Friday April 5, 7:34 pm Eastern Time HOUSTON (Reuters) - The FBI's investigation into former Enron Chairman Ken Lay is focusing on allegations he illegally sold stock after learning his company's finances were unraveling, sources close to the case said on Friday. The close examination of Lay's stock dealings is part of an overall federal investigation into Enron's former management team for possible misconduct and fraud, the sources said. But in Lay's case, the stock dealings are seen as the most promising avenue for investigators looking for potential crimes, they said. A Justice Department spokesman and a lead prosecutor in the Lay inquiry declined to comment. The sources said special Justice Department prosecutors and representatives from the U.S. Securities and Exchange Commission are helping conduct the probe and were expected to be in Houston next week talking to potential targets and witnesses. Enron, once the nation's largest energy trader, filed for bankruptcy in December in a financial scandal centered on off-the-balance sheet partnerships that hid billions of dollars in debt and inflated profits. According to civil lawsuits filed since the company's collapse, Lay sold $100 million worth of Enron stock between February 1999 and July 2001. He has also been accused of dumping stock after an August 2001 meeting with Enron Vice President Sherron Watkins in which she warned him that off-the-balance sheet partnerships threatened to engulf the energy trading giant in a wave of scandals. Lay spokeswoman Kelly Kimberly could not confirm that Lay was being investigated for insider trading, but said he ``firmly denied'' any allegations of wrongdoing. His stock transactions after the Watkins meeting were simply to raise cash to repay personal loans from Enron, not an expression of bad faith in the company, she said. ``He was allowed to borrow money under his contract and repay in stock. That is not an insider trading,'' Kimberly said. On Monday, attorneys for the University of California board of regents are expected to filed an amended version of their key civil lawsuit in which they allegedly will describe much more extensive insider trading by Enron executives than was previously known. A source close to the case said the amount of Lay's stock sales may actually be closer to $184 million. A special federal grand jury was impaneled in Houston last week to spearhead the investigation. Others accused of controversial insider trading include former Enron Chief Executive Jeff Skilling, former Chief Financial Officer Andrew Fastow and former Vice Chairman Cliff Baxter, who committed suicide in January. Skilling has denied any wrongdoing in two appearances before Congress. Fastow, through lawyers, has also denied wrongdoing.