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October 19, 2004

Lay's bid for a separate trial backfires

U.S. District Judge Sim Lake >ruled unexpectedly on Tuesday that former Enron Chairman and CEO Ken Lay will face two separate criminal trials -- one with former Enron CEO Jeff Skilling and former chief Enron accountant Richard Causey, and another one in which he will be the sole defendant.

To put it mildly, this is not the result that Lay's lawyers expected.

Judge Lake refused to separate Lay, Skilling and Causey into three discrete trials as all three had requested. But Lake did separate the government's four criminal charges against Lay relating to his personal banking into a second trial that would be tried separately from the Enron-related charges against the three former executives.

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 only 11 charges, seven of which relate to fraud and conspiracy at Enron and four of which relate to his personal banking.

In all likelihood, unless Lay presses the issue, the trial of the banking charges against Lay will be postponed until after the trial of the three former executives takes place, which means that they likely will never be tried. Regardless of the outcome of the first trial as to Lay, the government will likely cut some type of deal with Lay on the banking charges. My best guess at this point is that the trial against Lay, Skilling and Causey will crank up in mid-2005.

In another Enron-related development, the ongoing trial of the Nigerian Barge criminal case has been postponed for the rest of the week because U.S. District Judge Ewing Werlein became ill. Assuming the trial begins again next Monday, there is a good chance that the trial will conclude by the end of next week.

Posted by Tom at October 19, 2004 9:32 PM |

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