| Topic: |
Politics > Politics-USA |
| User: |
"J. Hyderman" |
| Date: |
07 Jan 2006 02:36:29 PM |
| Object: |
Enron to Use "Idiot" Defense |
The Enron Corp. trial opening Jan. 30 in Houston is shaping up to be the
biggest test yet of the so-called idiot defense.
Former Enron chief Kenneth Lay has vowed to tell jurors from the witness
stand that he knew nothing about crimes committed at the energy company.
And while last Wednesday's plea bargain by co-defendant Richard Causey, a
former top Enron accountant, is a blow to the defense, it is unlikely to
change a defense strategy that boils down to a simple theme: Blame Fastow.
In a campaign of public appearances since his indictment last year, Lay has
conceded only that he erred in trusting Andrew Fastow, the ex-Enron chief
financial officer who is cooperating with the government against him.
No chief executive "knows everything going on in his company," Lay said in
one of his speeches, so no one should expect him to take responsibility for
the crimes of an executive he portrays as Enron's chief villain. "I did not
know what he was doing."
It's a risky approach, legal experts say. In the crackdown on corporate
fraud, claiming innocence by virtue of ignorance has a checkered history.
Also known as the "dummy" or "ostrich" defense, it has led to the
convictions of such high-profile corporate criminals as Adelphia's John
Rigas and WorldCom's Bernard Ebbers.
It worked, however, for HealthSouth's Richard Scrushy, who was found not
guilty in a jury trial last year even after a slew of former insiders
pointed the finger at him.
Though the seven conspiracy and fraud counts against Lay are much narrower
than the 35 charges faced by his co-defendant, former Enron executive
Jeffrey Skilling, Lay by his own admission faces a high hurdle of
skepticism.
In a 2004 news conference, Lay lamented that finding a fair-minded jury
would be difficult in Enron's hometown of Houston, where his trial is being
held, because "so many people" had made up their minds against him.
Last week's plea by Causey could rekindle the public's bad memories, and
defense attorneys are expected to renew calls for a change of venue, given
the negative publicity on the eve of jury selection.
Yet even with Causey available to corroborate parts of Fastow's testimony,
the case against Lay will be no slam-dunk for the prosecution.
The government must prove decisively that Lay knew what was going on in the
months leading up to Enron's failure, said Greg Jones of Chicago's Grippo &
Elden, a former federal prosecutor not involved in the case.
"Saying, 'It was obvious,' and 'He had to know' isn't going to do it. You
want Fastow to say Lay knew of this stuff and authorized it. You want a
direct, dirty conversation," Jones said.
That might be impossible to achieve. The case against Lay focuses on public
statements he made as the company collapsed in autumn 2001, after he took
back the CEO post that he had briefly relinquished to Skilling, whose
charges cover a considerably longer time period.
What Lay knew and when he knew it is the crucial element in the coverup he
is accused of leading.
In September 2001, the indictment alleges, Lay knew he had sold $24 million
in Enron stock through private transactions, but he told Enron employees
that he and other top officers were snapping up the supposedly
bargain-priced shares.
In October 2001, Lay knew that Enron's water business was failing but
claimed it was growing to avoid the financial consequences of the truth, the
indictment alleges.
Later in October, Lay described a huge operating loss as an unusual,
one-time event, and an overvalued Brazilian power plant as "a good asset."
He touted an energy-services unit riddled with hidden losses, and he grossly
inflated the value of Enron's international portfolio.
Addressing Wall Street analysts as Enron stock plunged, Lay knowingly
concealed "numerous dire facts," while claiming to be "disclosing
everything," the indictment alleges. According to the indictment, on that
same day he lied to his 28,000 employees again, telling them the sinking
company had plenty of cash. In the end, thousands of employees lost their
jobs and retirement benefits based on worthless Enron stock.
Finally, on Nov. 12, Lay told analysts that Enron had nothing to hide though
he knew its financial problems were much bigger than disclosed.
Lay has said Enron was a solid company until Fastow's thieving drove it
under.
Unlike Fastow, who has admitted to diverting Enron's money to himself, Lay
is not accused of benefiting directly from the fraud. He did, however, reap
more than $200 million in profits from stock sales and almost $20 million in
salary and bonuses between 1998 and Enron's 2001 bankruptcy, the indictment
says.
"You could simply say, 'I relied on other people for this information, and
they lied to me,' or 'I just didn't understand these statements were
misleading,'" said David Ruder, Northwestern University law school professor
and a former Securities and Exchange Commission chairman. "The burden is on
the government in these cases to show knowledge."
Given the need to establish the defendant's state of mind and the
complexities of the transactions involved, jury selection will be critical,
said David Berg, a Houston trial lawyer. In the HealthSouth criminal trial,
Scrushy benefited from years of charity to the African-American community in
Birmingham, Ala., Berg said. "That was all about choosing the right jury."
Lay's philanthropy in Houston could help him overcome the notoriety of his
case, Berg said. "There is a reservoir of support here."
But Lay is likely to face a more sophisticated panel in Houston than did
Scrushy in Alabama, he added. "There will be some businesspeople on that
jury."
Clark said directions given at the end of the trial could be critical,
especially if U.S. District Judge Sim Lake provides an "ostrich
instruction," telling jurors to convict if the defendants attempted to avoid
knowing the obvious. That sort of "reckless indifference" could be a real
issue for Lay, Clark said.
At the same time, the length of the trial - an estimated four to six
months - could work in Lay's favor. Over a long period, Clark said, jurors
tend to "focus on the individual rather than the crime" and "begin to resent
their lives are being disrupted."
Copyright © 2006. Associated Press
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Why not? Bush is an Idiot.
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| User: "laura bush - VEHICULAR HOMICIDE" |
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| Title: Re: Enron to Use "Idiot" Defense |
08 Jan 2006 10:24:46 AM |
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On Sat, 07 Jan 2006 20:36:29 GMT, "J. Hyderman" <uuu@ert.net> wrote:
The Enron Corp. trial opening Jan. 30 in Houston is shaping up to be the
biggest test yet of the so-called idiot defense.
Former Enron chief Kenneth Lay has vowed to tell jurors from the witness
stand that he knew nothing about crimes committed at the energy company.
And while last Wednesday's plea bargain by co-defendant Richard Causey, a
former top Enron accountant, is a blow to the defense, it is unlikely to
change a defense strategy that boils down to a simple theme: Blame Fastow.
All Enron has to do is buy off one juror and get a hung jury. Of
course the defendants could be tried again but they probably won't be.
Our legal system is as corrupt as our political system.
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