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Official Enron (Ken Lay) Trial Thread

Something I did not know until this past weekend: Arthur Anderson's conviction was overturned by a unanimous Supreme Court decision.

You remember Arthur Anderson. The accounting firm that shredded literally tons of accounting documents in the wake of Enron's collapse.

http://news.bbc.co.uk/1/hi/business/2047122.stm
 
Ken Lay will claim he had no idea Fastow and Skilling did those things and he relied in good faith on subordinates and outside professionals who "lied" to him about the financial status of the company.

As the head of Enron he will claim he knew nothing...just watch.;)

schultz.jpg


"I know nothing....nnnnothing!"​
 
zenith-nadir said:
Ken Lay will claim he had no idea Fastow and Skilling did those things and he relied in good faith on subordinates and outside professionals who "lied" to him about the financial status of the company.
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Actually, it looks like he's going to stick with Skilling. But yeah, the two of them are going to say, "Everything we did was on the up and up. We had no idea what that awful Andy was doing."
 
Ken Lay will never be indicted or tried. He's one of the corporate bigwigs who have bought off the GOP. The government is beholden to the corporate sector who owns everything and the media.

Wait, you mean all the crap isn't true?
 
manny said:
Actually, it looks like he's going to stick with Skilling. But yeah, the two of them are going to say, "Everything we did was on the up and up. We had no idea what that awful Andy was doing."
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Either Ken Lay plays stupid - which he will - and "claims" he knew nothing about the company he ran for years... or he incriminates himself and goes to jail. Lay will admit "there were criminals at Enron" but he is a innocent victim, not a villain.

p.s. My ex-inlaw lost huge on the Enron collapse and instead of enjoying retirement he is back working full time to pay the bills at 78.
 
Of course, it is a documentary with all its own inherent bias, but "The Smartest Guys in the Room" is deffinitely worth watching. Very compelling...if it is only half right, they should go away for a long, long time.

The problem is going to be: clear violation of law + knowledge. Most of the case is going to rest, it seems to me, on the minutia of accounting practices and law. I.E. if they argue that the Corp. Counsel and outside Counsel told them that a scheme was legal, than they've got a defence as to intent, etc.

On the other hand, and it won't be part of the trail, if you hear the tapes of the manipulation of Califonia's energy grid, it is truly scary and obscene. Clearly, Arnold is governor today because Davis got sucker-punched by a crisis made in large part by Enron trying to drive the market and profit (not to suggest that Davis handled it well, just to suggest that his problems cascaded as a result of public anger over the whole affair -- which is funny because there are documented meetings between Lay and people like Arnold S. during the crisis urging improtrant citizens to lobby the governor to leave the energy sector unregulated).

Anyway, I highly recommend the documentary, it will leave you very sad, very troubled, and wondering more about Lay and the Bush family...funny, Gerogie can barely remember Kenny Boy, yet, in the movie a clip from a video that Geroge cut specifically to say good-by to a retiring senior Enron exec. would suggest that he at least was on failry familiar/friendly grounds with the company.
 
zenith-nadir said:
Either Ken Lay plays stupid - which he will - and "claims" he knew nothing about the company he ran for years... or he incriminates himself and goes to jail. Lay will admit "there were criminals at Enron" but he is a innocent victim, not a villain.
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Sad thing is, he just might get away with it. He's got a real "well, I believed it too -- I'm just the salesman" demeanor about him.

Skilling's strategy is a good one, and the only one available to him. He's set on convincing the jury that every thing he did was legal and he's going to make the government go through every transaction, step-by-step, and admit that Anderson allowed each of them. Don't know if that will work, but it allows Lay to look at the jury and basically say, "I don't know if all that stuff convinced you, who have the benefit of hindsight, but it sure convinced me at the time."
 
corplinx said:
Ken Lay will never be indicted or tried. He's one of the corporate bigwigs who have bought off the GOP. The government is beholden to the corporate sector who owns everything and the media.

Wait, you mean all the crap isn't true?
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Nah, that crap ain't true...

Letters from George Bush to Ken Lay and vice versa:
http://www.thesmokinggun.com/archive/0708042lay4.html

More important, however, Schwarzenegger still won’t respond to questions about why he was at the Peninsula Hotel in Beverly Hills two years ago where he, former Los Angeles Mayor Richard Riordan and junk bond king Michael Milken, met secretly with former Enron Chairman Kenneth Lay who was touting a plan for solving the state’s energy crisis. Other luminaries who were invited but didn’t attend the May 24, 2001 meeting included former Los Angeles Laker Earvin “Magic” Johnson and supermarket magnate Ron Burkle.

While Schwarzenegger, Riordan and Milken listened to Lay’s pitch, Gov. Davis pleaded with President George Bush to enact much needed price controls on electricity sold in the state, which skyrocketed to more than $200 per megawatt-hour. Davis said that Texas-based energy companies were manipulating California’s power market, charging obscene prices for power and holding consumers hostage. Bush agreed to meet with Davis at the Century Plaza Hotel in West Los Angeles on May 29, 2001, five days after Lay met with Schwarzenegger, to discuss the California power crisis.

At the meeting, Davis asked Bush for federal assistance, such as imposing federally mandated price caps, to rein in soaring energy prices. But Bush refused saying California legislators designed an electricity market that left too many regulatory restrictions in place and that’s what caused electricity prices in the state to skyrocket. It was up to the governor to fix the problem, Bush said. However, Bush’s response appears to be part of a coordinated effort launched by Lay to have Davis shoulder the blame for the crisis. It worked. According to recent polls, a majority of voters grew increasingly frustrated with the way Davis handled the power crisis. Schwarzenegger has used the energy crisis and missteps by Davis to bolster his standing with potential voters. While Davis took a beating in the press (some energy companies ran attack ads against the governor), Lay used his political clout to gather support for deregulation.
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http://www.commondreams.org/views03/0817-07.htm
 
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Luke T. said:
Something I did not know until this past weekend: Arthur Anderson's conviction was overturned by a unanimous Supreme Court decision.

You remember Arthur Anderson. The accounting firm that shredded literally tons of accounting documents in the wake of Enron's collapse.

http://news.bbc.co.uk/1/hi/business/2047122.stm
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Well, vinidcation was a little late as Anderson crashed and burned before this decision -- though, arguably, their reputation was shot before the original conviction.
 
zenith-nadir said:
Ken Lay will claim he had no idea Fastow and Skilling did those things and he relied in good faith on subordinates and outside professionals who "lied" to him about the financial status of the company.

As the head of Enron he will claim he knew nothing...just watch.;)

schultz.jpg


"I know nothing....nnnnothing!"​
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You have your tenses all wrong.

Ken Lay has claimed...
 
Oddly enough, Luke, I'll go to bat for Ken Lay. :)

zenith-nadir said:
Ken Lay will claim he had no idea Fastow and Skilling did those things and he relied in good faith on subordinates and outside professionals who "lied" to him about the financial status of the company.

As the head of Enron he will claim he knew nothing...just watch.;)
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Oh, I'm sure he will, and in some way, it's probably accurate. My impression of Ken Lay was that he didn't want to run his company, he wanted to be a massive figurehead, gladhanding Presidents and Saudi princes, and influencing elections and energy policy. He was hoping to get Commerce Secretary when GWB was elected, but Bush had already filled too many cabinet positions with Houston oilmen, so he was told. Maybe Bush did a better job of separating out the wheat from the chaff than I previously gave him credit for....

From what I've read, Lay just didn't involve himself with the daily activities of Enron. When Enron started into it downward spiral, Lay thought it was a simply a public relations problem - heck that's probably why he was selling the company's stock, even as it sliding down.

If you want a poster child for the damage magical thinking can cause, Lay is a good candidate.

Skilling, on the other hand, is probably more culpable. Nothing I've read implicates him directly, but Skilling was the man Fastow had to convince to generate those illegal structured finance schemes. The key answer in Skilling's case is whether or not he knew they were building a house of cards at the same time he was still touting the company as CEO.

Well, they should have known.
 
headscratcher4 said:
Well, vinidcation was a little late as Anderson crashed and burned before this decision -- though, arguably, their reputation was shot before the original conviction.
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I'm not sure they deserved vindication, and I wonder what technicality they got off on from the Supremes. Quite frankly, Anderson, while shredding the documents, may have not have been violating the letter of the law, they were certainly violating the spirit. The knew they would be investigated on their dealings with Enron, but decided that since it they weren't officially under investigation, they could shred documents, as long as they followed their "document retention policy." I have trouble believing that they followed any policy, if the stories of frantic shredding, purchasing new shredders, and then outsourcing what the office couldn't handle, are true.

If Anderson, as a company, really cared for their own existence, they would have shut down the Enron team and refused to audit Enron's books. They were addicted to the high consulting fees Enron paid, and couldn't see the forest for the trees.
 
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Of course, the big problem for Lay and Skilling, as it was in the Tycho trial and the Adelphia trial...is that it becomes difficult for jurors looking at people who commanded big corporations and made millions personally to believe that they "didn't know..." In short, they made their money...more than any juror will ever see...by essentially dumb luck. Given the Magazine articles and good press they got while the company was flying high..the lucky idiot senario is tough to swallow.
 
specious_reasons said:
I'm not sure they deserved vindication, and I wonder what technicality they got off on from the Supremes. Quite frankly, Anderson, while shredding the documents, may have not have been violating the letter of the law, they were certainly violating the spirit. The knew they would be investigated on their dealings with Enron, but decided that since it they weren't officially under investigation, they could shred documents, as long as they followed their "document retention policy." I have trouble believing that they followed any policy, if the stories of frantic shredding, purchasing new shredders, and then outsourcing what the office couldn't handle, are true.

If Anderson, as a company, really cared for their own existence, they would have shut down the Enron team and refused to audit their books. They were addicted to the high consulting fees Enron paid, and couldn't see the forest for the trees.
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The Supreme Court made a decision favoring major Republican allies? Wow...what are the odds of that?
 
headscratcher4 said:
Of course, the big problem for Lay and Skilling, as it was in the Tycho trial and the Adelphia trial...is that it becomes difficult for jurors looking at people who commanded big corporations and made millions personally to believe that they "didn't know..." In short, they made their money...more than any juror will ever see...by essentially dumb luck. Given the Magazine articles and good press they got while the company was flying high..the lucky idiot senario is tough to swallow.
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Or as Lay will claim at the trial:

"I really didn't know that was going on and yes, I cashed my Enron checks without ever questioning the huge sums".;)
 
In a 9-0 opinion, the justices concluded that "jury instructions at issue simply failed to convey the requisite consciousness of wrongdoing." Chief Justice William Rehnquist wrote the opinion, saying, "Indeed, it is striking how little culpability the instructions required."
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Andersen conviction overturned
 
Luke T. said:
Andersen conviction overturned
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Besides...as noted...even the vindication here does little for Anderson. It crashed and burned, its reputation shattered...so, even with the SCOTUS decision, the marketplace was going to take its toll/punishment of Anderson.

Even if there'd never been a Court case, investors all over the country would have been demanding that Anderson be jettisuned...why, after Enron, would any investors (especially the big institutional investors) ever buy a Adnerson audit or certification that an accounting practice was kosher?

In short, Anderson may have been vindicated, but they were also rightfully ruined. Justice was served..as too, apparently was the law. Not a bad end really.
 
headscratcher4 said:
On the other hand, and it won't be part of the trail, if you hear the tapes of the manipulation of Califonia's energy grid, it is truly scary and obscene.
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Some articles with excerpts from the tapes:

http://www.cbsnews.com/stories/2004/06/01/eveningnews/main620626.shtml

"They're f------g taking all the money back from you guys?" complains an Enron employee on the tapes. "All the money you guys stole from those poor grandmothers in California?"

"Yeah, grandma Millie, man"

"Yeah, now she wants her f------g money back for all the power you've charged right up, jammed right up her a------ for f------g $250 a megawatt hour."
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http://www.cbsnews.com/stories/2004/06/02/eveningnews/main620795.shtml

http://www.cbsnews.com/stories/2004/06/08/eveningnews/main621856.shtml

"What we need to do is to help in the cause of, ah, downfall of California," an employee is heard saying on the tapes. "You guys need to pull your megawatts out of California on a daily basis."

"They're on the ropes today," says another employee. "I exported like a f------g 400 megs."

"Wow,'' says another employee, "f--k 'em, right!"

Traders can be heard manipulating the market, using now-infamous schemes with names like death star, ricochet and fat boy.

One employee is heard asking, "You want to do some fat boys or, or whatever, man, you know, take advantage of it."

In fat boy, Enron traders used fake power sales to hide megawatts, shrinking the supply of energy and driving up prices. They also used the oldest trick in the book: lies.

"It's called lies. It's all how well you can weave these lies together, Shari, alright, so," an employee is heard saying.

The other employee says, "I feel like I'm being corrupted now."

The first employee adds, "No, this is marketing,"
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headscratcher4 said:
Besides...as noted...even the vindication here does little for Anderson. It crashed and burned, its reputation shattered...so, even with the SCOTUS decision, the marketplace was going to take its toll/punishment of Anderson.

Even if there'd never been a Court case, investors all over the country would have been demanding that Anderson be jettisuned...why, after Enron, would any investors (especially the big institutional investors) ever buy a Adnerson audit or certification that an accounting practice was kosher?

In short, Anderson may have been vindicated, but they were also rightfully ruined. Justice was served..as too, apparently was the law. Not a bad end really.
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But the conviction would have been helpful for further prosecutions of Enron executives. Another nail in their coffin.

At least one has changed his plea from "guilty" to "not guilty" as the result of the overturning.
 
Mr. Ramsey also noted that the government list did not include David Duncan, who had served as the lead partner for Arthur Andersen on the Enron account. He had originally pleaded guilty, but after the Supreme Court overturned Andersen's conviction last May, Mr. Duncan sought last November to change his plea to not guilty. His request is pending with the court.
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Cached internet article

Duncan would probably have been on the witness list against Lay if the Anderson conviction had not been overturned.
 
Manny, Luke - Thanks.

I've only read over the Luke T link at the moment but (from a UK perspective) whether his idiot defence would stand would be if it was shown that his direct responsibilities didn't include the areas the indictment covered. If they did then the idiot defence wouldn't stand a chance - being incompetent at your job is not a defence!
 
Ultimately, Lay was the man and what occured in his company was his responsibility. You might say that in a sexual harressment suit in a branch office he would not be directly responsible (unless he knew) but even there he bears some responsibility. In a case like this that involves the elemental business practices and well being of the company he is completely responsible. WTF is the role of a CEO in the first place.

He is fortunate that I am not on his jury.
 
Mark said:
The Supreme Court made a decision favoring major Republican allies? Wow...what are the odds of that?
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Nah, I'm more likely to believe that the jury which convicted Anderson decided that the company's case didn't pass the smell test, and that the company was guilty of what it was being accused of.

Problem is, Anderson probably didn't technically violate the law. Supposedly, it followed its document retention policy, and supposedly, people stopped shredding when informed that the SEC was investigating.

I'm willing to bet a dollar that a lay-person wouldn't understand why Anderson got the unanimous decision.
 
Ed said:
Ultimately, Lay was the man and what occured in his company was his responsibility. You might say that in a sexual harressment suit in a branch office he would not be directly responsible (unless he knew) but even there he bears some responsibility. In a case like this that involves the elemental business practices and well being of the company he is completely responsible. WTF is the role of a CEO in the first place.

He is fortunate that I am not on his jury.
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I saw an article about what some of the potential jury members had to say on their jury questionairre's for the trial. Funny stuff along the lines of "hanging's too good for 'em". I'll see if I can find it again.
 
specious_reasons said:
Nah, I'm more likely to believe that the jury which convicted Anderson decided that the company's case didn't pass the smell test, and that the company was guilty of what it was being accused of.

Problem is, Anderson probably didn't technically violate the law. Supposedly, it followed its document retention policy, and supposedly, people stopped shredding when informed that the SEC was investigating.

I'm willing to bet a dollar that a lay-person wouldn't understand why Anderson got the unanimous decision.
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You're probably right...but when one party gets to stack the court this way, is it unreasonable to be at least suspicious?
 
Here we go:

He said in court papers that potential jurors called Lay and Skilling "guilty — criminally and morally," and "guilty and personally involved in this whole mess." Some jurors called Skilling "the devil," and "a high class crook" while Lay was labeled by some as "a snake in the grass", "a selfish, greedy man" and "holier-than-thou."
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Lay, Skilling facing tough jury pool
 
Picky point of information.

It was the accounting firm called Arthur Andersen which was involved in Enron.

It's all about devious Scandinavians, not innocent Scots ;)


....edited to add....

I'm expecting a mistrial will be called when they can't find 16 people who haven't already formed an opinion of Enron
 
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Mark said:
You're probably right...but when one party gets to stack the court this way, is it unreasonable to be at least suspicious?
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It's reasonable to be suspicious, but probably not in this case, as I understand the facts of the case. Besides, it was unanimous - if I would be suspicious, I'd be suspicious that the majority of the Supremes got burned by the Andersen conviction, like Andersen did consulting for them. :)
 
The Don said:
I'm expecting a mistrial will be called when they can't find 16 people who haven't already formed an opinion of Enron
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Fortunately, my recollection is that the law generally doesn't call for potential jurrors to have "no" opinion, it calls on them to be able to rationally put that opinion and any natural predjudices aside and try to judge a case based on the law and the evidence.

A jury with no opinioins is a jury made-up of people who live in caves...or idiots. While there have been plenty of idiot jurries throughout history, fortunately, most struggle with their bias, the evidence and the law and generally come to fair conclusions.

Lay wants idiot jurrors, of course, because his defence is that his is an idiot, so he's hopping for the sympathy vote.
 
If you want some interesting reading, click here.

When Skilling quit Enron for no apparent reason, Watkins warned Lay that there were some serious accounting problems in the company in this memo.

I am incredibly nervous that we will implode in a wave of accounting scandals. My 8 years of Enron work history will be worth nothing on my resume, the business world will consider the past successes as nothing but an elaborate hox. Skilling is resigning now for 'personal reasons' but I think he wasn't having any fun, looked down the road and knew this stuff was unfixable and would rather abandon ship now than resign in shame in 2 years.
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She then suggests they do their best to hide the problems.

Watkins is a witness for the prosecution in Lay's trial. The media will probably try to make her out to be a hero, but if you read the memo, you will see she is anything but.

ETA: This is "allegedly" the memo.
 
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