Ken Lay and Jeffrey Skilling carried on like game show contestants when their trial began in a Houston courtroom on Jan. 30.
The former top Enron executives did not hide from cameras. They backslapped and glad-handed reporters and spectators during breaks. They hugged friends and family members – and even smiled during the tedious proceedings.
Nine weeks and 22 government witnesses later, “the smartest guys in the room” still appear undaunted. They will begin their defense Monday in a trial expected to last another two months.
Government prosecutors rested their case on Tuesday with no smoking gun. They relied mainly on witnesses, videotapes of employee meetings and audiotapes of conference calls with analysts.
There were no e-mails or memos tying either defendant to a crime. But prosecutors were able to portray a consistent pattern – that of Lay and Skilling selling their stock, keeping a cheery front to investors and hiding billions in losses as the energy company collapsed.
At halftime in the Enron trial, the outcome is difficult to call. But here are some of highlights that don’t bode well for Lay and Skilling:
During jury selection, one man who made it onto the 16-member panel (including four alternates) said he thought the pay that Lay, 63, and Skilling, 52, received was “obscene.” Skilling made about $152 million from 1999 to 2001, the time span of the indictment, and Lay bagged about $223 million. The company filed for bankruptcy protection in December 2001.
Johnnie Nelson, 46, an Enron employee who used to patrol gas pipelines in New Mexico and Arizona, testified that he put his retirement account entirely in Enron stock in late 2000 after hearing co-workers brag about their gains. After Enron’s stock began its nose dive in the fall of 2001, Nelson said he chose not to sell upon advice from Lay. Lay told employees in an Oct. 23, 2001, videotaped meeting that Enron’s businesses were “as strong as they’ve ever been.”
Upon cross-examination, one of Lay’s attorneys told Nelson that Lay had lost hundreds of millions of dollars.
“I’m heartbroken,” Nelson said.
Several former executives, including chief financial officer Andrew Fastow, gave consistent testimony that Lay and Skilling knew about illicit deals. Fastow, now serving 10 years for stealing as much as $60 million from Enron, said he and Skilling “committed crimes together.”
What defendant would want former HealthSouth Corp. CEO Richard Scrushy at their trial? Last year, Scrushy was acquitted on fraud charges regarding HealthSouth, but now he is fighting criminal charges in a government bribery case. Scrushy told reporters he was just passing through and decided to drop in. “I wouldn’t believe anything that man says,” Scrushy said of Fastow. “He’s a thief.” Somehow, I don’t think Scrushy will be called as a character witness.
It doesn’t look like many former Enron folks want to support their former bosses. Earlier this week, Skilling attorney Daniel Petrocelli claimed prosecutors are scaring away potential witnesses with threats of more indictments. “People have been unwilling to risk their families and lives to take a position not in concert with the government’s,” he told reporters outside the courthouse. “It perverts our system of justice when witnesses with facts don’t come forward.”
Both Skilling and Lay have promised to testify in their own defense. The case may turn on how well they do this. Last year, WorldCom’s former CEO Bernie Ebbers all but indicted himself, blathering nonsense like “don’t know technology, don’t know finance and accounting, but … actually, I always thought I was a pretty good coach.” Skilling and Lay are expected to argue that Enron collapsed because of external market forces.
Prosecutors may have saved the best witness for last: Enron’s former chief accounting officer Richard Causey. Just days before the trial, Causey struck a plea deal with prosecutors. Now, Lay and Skilling will have to be cautious on the stand, knowing their former colleague could be called as a rebuttal witness.
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Al Lewis’ column appears Sunday, Tuesday and Friday. Respond to Lewis at , 303-820-1967, or alewis@denverpost.com.
