Markets & Finance

Guilty Verdicts for Enron Brass


It was the white-collar trial of the century, and now the verdicts are in: On May 25, former Enron honchos Kenneth Lay and Jeffrey Skilling were found guilty on charges of fraud and conspiracy. The eight-woman, four-man panel found Skilling guilty on 19 of 28 counts, while Lay was convicted on all six counts leveled against him. Skilling was spared on charges of insider trading. They each face decades behind bars at their sentencing, scheduled for mid-September.

Standing at the federal courthouse after the verdicts were read, Skilling seemed to be fighting back tears when he said: "We fought the good fight. Some things work. Some things don't." Lay also made a brief statement outside the courthouse: "Despite what happened today, I'm still a very blessed man. And, most of all, I believe God, in fact, is in control and that, indeed, God works all things good for all who love the Lord."

Skilling's attorney Daniel Petrocelli said his client plans a full and vigorous appeal. "We're going to take a look at everything," Petrocelli said. "I know there are a number of issues we litigated hard and lost even before the trial." Lay did not indicate if he plans to appeal.

At a press conference minutes later, the Enron jurors revealed their thoughts behind the verdict and answered some of the questions that had been mulled by observers since well before the 16-week trial began: How credible were the witnesses? How did Lay and Skilling do on the witness stand? How believable were their arguments of innocence?

UNIFIED TESTIMONY. A recurring theme of the defense was that many of the witnesses called by the prosecution had reached plea agreements with the government -- in a sense saving their own necks in exchange for their damning testimony. Jurors said the number of prosecution witnesses and the continuity of their messages resonated with them.

"They all had a common goal," said juror Donald Martin. "It was hard not to lend credibility to their testimony. We weighed all of the stuff, and it all pointed in the same direction. It was unified." Of the star witness, former Chief Financial Officer Andrew Fastow, Martin said: "We knew where he was coming from. We kind of discounted some testimony."

Jurors singled out the testimony of former Enron Treasurer Ben Glisan and former investor relations chief Mark Koenig as very credible. They expressed surprise that Richard Causey, the company's former chief accounting officer who had reached a plea agreement just before the start of the trial, was not called to testify.

"He was sort of the missing link," said juror Doug Baggett. "We're not sure why he never showed. Had he been there we might have finished quicker."

Although reached in just five days of deliberation, the verdicts were not easy ones, according to the jurors. "It took an awful lot to convince some of us," said Nancy Thomas, a retiree who cares for her stroke-ridden husband.

HANDS ON THE WHEEL. Added Baggett, who manages a legal department: "I'd go home one night swayed in one direction. We all felt like a ping-pong ball. I hadn't made up my mind one way or another until we came into deliberations."

A key defense in many white-collar criminal cases is that the executives at the top don't necessarily know what their underlings are doing. Attorneys for Skilling and Lay both argued that Fastow was a bad apple who stole from the company without the bosses' knowledge. Jurors said they didn't buy that.

"How could they rely on others to tell you what was going on with everything?" asked juror Amanda Perry, a 23-year-old single mother from suburban Baytown, Texas.

"Both defendants had their hands on the wheel," said juror Freddy Delgado, an elementary school principal. "To say you didn't know what was going in your own company was not the right thing."

CHARACTER ISSUES. Jurors said Lay's and Skilling's testimony worked against them. "I wanted very much to believe what they said," said juror Wendy Vaughn, who owns two businesses, one in roofing sales and the other a fitness company. "There were parts of their testimony [in which] I believe their character was questioned."

Lay, a minister's son who had become a pillar of the Houston community, was expected before the trial to do particularly well on the stand. But that didn't appear to be the case.

"He seemed very much wanting to be in control, he kind of commanded the room when he answered questions," a juror said. "He had a little bit of a chip on his shoulder. It made me question his character."

Jurors said evidence relating to Lay's stock sales was particularly damning. "That was very much the character of person," Delgado said. "He cashed out before employees." Added Baggett: "It defined the word 'intent.' "

WELL EXPLAINED. Jurors said they felt Enron's top brass had a duty to their employees to be more vigilant. "We did our jobs," said juror Carolyn Kuchera, a payroll manager. "We did it on weekends and holidays. We were accountable. We were responsible. Those employees deserved that."

A big issue in white-collar cases that was particularly true with Enron is that it is very difficult to explain complex financial and accounting matters to jurors. While many such cases involve math, Enron, it's been said, was high calculus. Jurors credited attorneys on both sides with making their cases understandable.

"There was a lot of confusion," said alternate juror Gary Creakbaum, a human resources director. "They did an excellent job bringing it down to a level everyone could understand."

Jurors said they focused solely on the Enron case but hoped their decision sends a message to corporate executives everywhere.

LIGHTER MOMENTS. "I hope they change some laws and the SEC (Securities and Exchange Commission) takes a look so that protections are there for investors," said Thomas. "Those in charge have responsibility. There's a lot of losers in this. Companies must be conscientious in all the endeavors they carry out."

There were some light times too as jurors said they had become like family to each other and would likely keep in touch. Some of the jurors received summonses to appear in other trials, duty from which the judge got them released. Jurors said they believed attorney Petrocelli did a good job defending Skilling, despite the loss.

"I'd hire him," said one. "If you had the money," another added.

One juror even adopted a bichon frisé puppy during the trial. Its name: "Enron."


Steve Ballmer, Power Forward
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