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April 4, 2005

The Enron law of unintended consequences

Ken Lay.jpgRemember that motion that former Enron chairman and CEO Ken Lay filed last fall in which he requested a separate trial from his Enron co-defendants Jeff Skilling and Richard Causey?

You know, the one in which U.S. District Judge Sim Lake delivered a body blow to the Lay defense team when he granted Mr. Lay a separate trial on the bank fraud counts that are specific toward him, but ruled that he would also have to stand trial with Messrs. Skilling and Causey in regard to the securities fraud and related criminal counts that are common to all three of the former Enron executives.

Well, the effect of that ruling is reverberating through Houston's Federal Courthouse today. The Chronicle's Mary Flood is reporting that the Enron Task Force has filed a motion in which it requests that Judge Lake schedule the trial of Mr. Lay's bank fraud charges in May or June of this year before the trial of the larger case against Messrs. Lay, Skilling, and Causey that is currently scheduled to begin on January 17, 2006. Apparently, in support of its motion, the Task Force is relying upon Mr. Lay's prior pleadings and public statements to the effect he wanted a speedy trial of all criminal charges against him.

Of course, Mr. Lay made those statements in the context of seeking a separate trial altogether from Messrs. Skilling and Lay, and quickly waived his speedy trial right when Judge Lake ruled that he would be tried with Messrs. Skilling and Causey on the common charges relating to all three. Thus, the Task Force is taking Mr. Lay's request for a speedy trial out of context in using those statements to support its request for a quick trial on the bank fraud charges. Mr. Lay has suggested that the separate bank fraud trial commence within 60 days after the conclusion of the multi-defendant trial.

Judge Lake probably will not want to risk the prejudicial publicity of having Mr. Lay tried on the smaller bank fraud case before the larger multi-party case, so my sense is that he will deny the Task Force's request for an earlier trial of the bank fraud charges against him. But the results of Mr. Lay's seemingly innocuous motion seeking a separate trial in this case will prompt defense attorneys to think twice (and maybe three times) before filing such a motion in future multi-defendant cases.

Posted by Tom at April 4, 2005 4:36 PM |

Comments

I am curious if anyone has any information concerning the status, or outcome if any, of Federal charges filed against the Enron Board members on board during Jeff Skillings and Ken Lay's tenure at Enron? One board member was former Senator Phil Gramm's wife, Wendy. The Senator did not run for office again right at the time Enron was in the news. In addition, Ms. Gramm was the Director or a Federal agency with regulatory jurisictions over Enron type industries. She and the Senator, while he was still in office, pushed for federal de-regulation of Enron energy type insustries and were sucessful in having such legislation passed during the late Ragean years. Shortly there after, Ms. Gramm left her Federal post and became an Enron Board member with a hefty salary over $500,000 during her board tenure.

We know the rest of the Enron story but nothing has been mentioned about the Board membership legal status in this trial or other news accounts. Would love to hear from anyone who has any information or leads where to seek information. Thanks

Posted by: Joe at April 26, 2006 8:54 AM

Joe, none of the independent Enron board members were charged with crimes. However, they were all sued in the class action securities fraud litigation related to Enron. The independent board members, including Ms. Gramm, settled their involvement in that litigation last year. You can read about the settlement here.

By the way, Ms. Gramm never made anywhere close to $500,000 salary during her tenure as an Enron board member.

Posted by: Tom K. at April 26, 2006 9:30 AM

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