Ex-Enron Chief Ken Lay to Face Two Criminal Trials
By Mary Flood
Wednesday 20 October 2004
Ex-Enron Chairman Ken Lay is now scheduled to face two separate criminal trials - one with ex-Chief Executive Jeff Skilling and former top accountant Rick Causey and another by himself.
U.S. District Judge Sim Lake Tuesday refused to separate Lay, Skilling and Causey into three discrete trials as they had requested.
But Lake did find that Lay's four criminal charges relating to his personal banking should be tried separately from the Enron -related charges against the three former executives.
"This is Ken Lay's worst nightmare. The government gets two bites at the apple," said Jacob Frenkel , a Washington, D.C.-based former federal prosecutor and Securities and Exchange Commission lawyer who has been following the case.
"First, it's much easier to point fingers at people who aren't sitting next to you in the courtroom and second, if he's convicted in one case and then faces the second it becomes harder still for Lay,"Frenkel said.
Judge Lake looked at how the charges against the trio are related and noted "when all the defendants named in an indictment are alleged to have participated in an overarching conspiracy that encompasses the substantive offense charged the defendants are properly joined."
But Judge Lake found the personal banking charges against Lay were not sufficiently related to the conspiracy at Enron, despite prosecutors argument that they were part of Lay's continuing schemes.
"The Government's own description of the banking charges asserted against Lay demonstrates that the facts required to prove those charges are not the same facts required to prove any or the other charges asserted in the (indictment)," the judge wrote.
Causey and Skilling are each accused of 35 or more counts of conspiracy, fraud and insider trading in a scheme to manipulate the earnings of Enron to enrich themselves.
Lay is accused of far fewer charges - only seven charges relating to fraud and conspiracy at Enron and four charges of fraud in his personal banking.
Mike Ramsey, Lay's Houston lawyer, said that he'd "always prefer a trial where the jury gets clarity about the charges against an individual and, in my mind they won't get clarity with them all tried together."
Ramsey also said he is still disappointed that prosecutors did not want to go to trial against Lay separately and immediately and he thinks the government passed up "an opportunity."
David Berg, a Houston lawyer who has followed the case, said "on balance it's bad news for Lay." Berg said Lay will now be contaminated by his co-defendants when he has far fewer Enron charges than they do.
But he said the bank charges, similar to many he tried in the 1990s savings and loan cases, "can be very dangerous and easy to prove" so Lay should be happy they are pulled out.
Berg said he suspects the judge will save the Lay banking charges for after the Enron case and they will never be tried either way. He said if Lay is acquitted, the government will likely not bother with the banking charges. Berg guessed that if Lay is convicted, the government will likely plead them out.
Enron Task Force Director Andrew Weissmann would not comment on the ruling Tuesday.
Lay, Skilling and Causey had all requested that they be separated for a variety of reasons including that they could be prejudiced by the complaints against their co-defendants, the charges were distinguishable from each other and they could have antagonistic defenses.
It is common for conspiracy defendants like these to ask to be separated and it is also common for judges to deny the request.
"Whether we're in it alone or with Mr. Lay and Mr. Causey, we are looking forward to our day in court when Mr. Skilling will be completely exonerated from these wrongful charges against him," was the only reaction Tuesday afternoon from Daniel Petrocelli, Skilling lead trial lawyers.
Causey's lawyers could not be reached for comment.
Judge Lake did not rule Tuesday on Lay's request to be tried immediately. But that speedy trial request may now be largely moot since his codefendants want as much time as possible before trial to continue preparing their case.
Lay wanted to be tried last month. Prosecutors have asked Lake to set the Enron trial in March 2005. Skilling and Causey requested a March 2006 trial. Court watchers expect the judge may schedule the three-defendnat case in the summer or fall of 2005.