Jurors in the trial of Ken Lay and Jeff Skilling will be instructed to consider whether the two former Enron Corp. executives deliberately ignored accounting fraud as the energy trader fell into bankruptcy, a judge ruled Wednesday.
U.S. District Judge Sim Lake denied a motion by defense lawyers to prevent the jury from considering whether Skilling or Lay can be found guilty if either deliberately chose not to know about alleged criminal activity at Enron. At a hearing in federal court in Houston, Lake didn’t say what the precise wording of his instructions to the jury would be.
Another former top U.S. executive charged with accounting fraud, WorldCom Inc. founder Bernie Ebbers, has appealed his conviction partly on the grounds that he was unjustly convicted because of the same jury instruction.
“That is clearly the biggest issue,” said Skilling’s lawyer Daniel Petrocelli, referring to the judge’s instruction, following the hearing.
“The critical issues for the jury to decide in this case are whether the transactions and statements at issue were fraudulent and whether defendants intended them to be so – not whether defendants purposefully blinded themselves,” he said in court papers.
Lay, 64, and Skilling, 52, are accused of defrauding investors by misrepresenting the finances of what was once the seventh-biggest U.S. company by sales.
Enron had more than $68 billion in market value before it collapsed into bankruptcy in December 2001, wiping out thousands of jobs and at least $1 billion in retirement funds virtually overnight. Both men face at least 25 years in prison if convicted.
At a hearing on Ebbers’ appeal before the U.S. 2nd Circuit Court of Appeals in January, his lawyer Reid Weingarten argued that the trial judge shouldn’t have instructed the jurors that they could convict Ebbers if they found he intentionally took steps to avoid learning of an $11 billion accounting fraud at the company.
The appeals court has not ruled on the conviction.
