Already having engaged in intimidation of witnesses and dubious plea-bargaining tactics, the Enron Task Force is showing signs of becoming desperate regarding its legacy case.

The Enron Task Force has now done a 180 in regard to its position toward Arthur Andersen and its former partners in connection with its legacy case against former Enron executives Ken Lay, Jeff Skilling and Richard Causey.

After having demonized the firm, prosecuted it out of business, and alleged that its partners were co-conspirators in a number of Enron-related prosecutions, the Task Force is now embracing several former Andersen partners as prosecution witnesses in the Lay, Skilling, Causey case and justifying that reliance on the Task Force’s apparently recent realization that Enron duped Andersen just like everyone else. For Andersen, the Task Force’s revisionist position regarding the firm falls squarely in the “better late than never” department.

Now, this John Emshwiller/Wall Street Journal ($) article and this Chronicle/John Roper article reveal further signs of strain in the Task Force’s case against Mr. Lay.

Although the Task Force’s filing has not yet been uploaded on the public docket of the case (the Task Force, as a part of its propaganda campaign in Enron-related prosecutions, often leaks its filings to reporters before they are filed publicly), Mr. Emshwiller reports that the Task Force filing advises the court and the parties that it intends to go into Mr. Lay’s knowledge of potential losses relating to a trading scandal in the late 1980’s that could have brought the much-smaller Enron down at the time.

Inasmuch as the indictment against Mr. Lay contends that he tried in the latter part of 2001 to cover up Enron’s growing financial problems, the Task Force is contending that Mr. Lay’s alleged similar conduct in regard to the trading scandal 14 years earlier is probative evidence of his guilt.

U.S. District Judge Sim Lake has not yet ruled whether he is going to allow the Task Force to go down that bunny trail during the trial.

Meanwhile, a perusal of the case docket reflects that the Lay-Skilling-Causey team is preparing to present an impressive array of expert witnesses in defense of the Task Force’s amorphous allegations of wrongdoing in regard to Enron’s accounting, structured finance transactions, earnings management and related matters that form the basis of the Task Force’s indictment against Messrs. Lay, Skilling and Causey.

On the other hand, other than an SEC representative and the Andersen partners who the Task Force demonized earlier, there is little indication from the docket on how the Task Force plans to establish its core theory that Enron’s legitimate business operations were a sham that Messrs. Lay, Skilling and Causey misrepresented to the investing public.

Messrs. Lay, Skilling and Causey will never win their criminal case in the court of public opinion that has been polluted by the slanted public statements of the Task Force and the mostly one-sided mainstream media accounts of the Enron scandal. However, assuming that a fair jury panel can be found, the foregoing developments represent clear signals that these men have a much better chance of winning their case in the courtroom.

It is currently the calm before the storm that will be the trial of the legacy case of the Enron Task Force — that is, the criminal trial of former Enron executives Ken Lay, Jeff Skilling, and Richard Causey that is scheduled to begin in mid-January, 2006.
In that connection, this Washington Post article discusses the extensive questionnaire that was recently sent to prospective jurors in the Lay-Skilling-Causey trial, which has taken on added importance because of the extensive evidence of jury pool bias against all things related to Enron that the Lay-Skilling-Causey defense team has submitted to U.S. District Judge Sim Lake. Judge Lake declined to grant the defense’s motion to change the venue of the trial out of Houston, but he has supported the defense’s desire to have a more extensive questionnaire than the Task Force desired.
Meanwhile, in this the Conglomerate blog post, David Zaring addresses the important question of how does one make a case as complex as the one against Messrs. Lay, Skilling and Causey understandable to a jury? The Task Force already stumbled badly on that score in the trial of Enron Broadband case, and recent indications are that the Task Force is having similar problems in the preparation of its case against Messrs. Lay, Skilling and Causey. A reflection of that is the recent change that the Task Force has taken in regard to Arthur Andersen. Not only did the Task Force previously demonize Andersen in connection with prosecuting the firm out of business, the Task Force named Andersen as a co-conspirator in connection with various Enron criminal cases. However, the Task Force is changing its tune toward Andersen in regard to the Lay-Skilling-Causey prosecution, as prosecutors now recognize that relying on the testimony of admitted criminals such as Andy Fastow and Ben Glisan may not be particularly persuasive to a jury. So, the Task Force is currently listing several former Andersen partners as prosecution witnesses and, in so doing, contending that Andersen was duped by Enron and not really a co-conspirator with Enron, after all. It remains to be seen whether the Task Force can explain to a jury why it prosecuted Andersen out of business at an earlier stage of the Enron case when it is now contending that the firm was simply duped by Enron like everyone else.

When Don Corleone wanted to intimidate someone, he would “make them an offer that they could not refuse.”

Taking a page from the Don’s book, when the Enron Task Force wants to intimidate a favorable defense witness from testifying in an Enron-related criminal case, the Task Force simply “informs” the witness that he or she is a co-conspirator with an Enron criminal defendant and might be indicted if they assist the defense of that defendant.

That’s certainly the impression one gets from this Mary Flood/Houston Chronicle article that reports on the Task Force’s response to the earlier motion of former key Enron executives Kenneth Lay, Jeff Skilling, and Richard Causey to dismiss the criminal case against them because of the Task Force’s misconduct in intimidating prospective defense witnesses.

The Task Force apparently gave a copy of its response to Ms. Flood before they filed it on the electronic docket of the case, so a copy of the pleading is not yet available to the general public. I will post a copy when it becomes available.

According to Ms. Flood’s review of the Task Force’s response, the Task Force concentrates on the fact that the defendants’ motion relies to a substantial degree on hearsay statements of attorneys who are representing the prospective defense witnesses who the Task Force has threatened.

Of course, the fact that the lawyers for intimidated witnesses will only disclose such threats on a confidential basis is not particularly surprising, given the risk of Task Force retribution if the lawyers were to implicate their clients publicly.

Nevertheless, it’s reasonably certain from prior testimony of two witnesses (here and here) and the Task Force’s unprecedented fingering of 114 co-conspirators in the case that witness intimidation is taking place, so U.S. District Judge Sim Lake clearly has a problem confronting him and he is struggling to figure out how to deal with it.

Ms. Flood’s article does note additional information about a documented incident of intimidation that was referred to in the Lay-Skilling-Causey motion, but much of the information was redacted in the motion.

The incident referred to in the Lay-Skilling-Causey motion involved an email from a Task Force prosecutor to a defense attorney for a cooperating government witness in one of the Enron cases that told the lawyer for the cooperating witness to direct his co-counsel to stop talking to Mr. Skilling’s lawyer or that he should “get rid” of him. The Lay-Skilling-Causey motion does not name the identity of the Task Force member who sent the email or the attorney to whom it was sent.

Ms. Flood reports that the Task Force’s response provides that information. Former Enron Task Force director Andrew Weissmann sent the email to “a Washington, D.C., area lawyer for former Enron official Ken Rice.” The docket of Mr. Rice’s case reflects that attorney to be William Dolan, but the more interesting revelation is Mr. Dolan’s co-counsel in defending Mr. Rice — i.e., Houston-based criminal defense Dan Cogdell.

H’mm, isn’t that a coincidence. Mr. Cogdell happens to be the attorney who successfully defended the only defendant in the Nigerian Barge case — former Enron accountant Sheila Kahanek — who was acquitted in the trial of that case.

Mr. Rice is the former Enron Broadband executive who testified falsely during the trial of the Enron Broadband case after copping a plea with the Task Force in the face of an almost certain conviction on insider trading charges that are unrelated to either the Broadband case or the Lay-Skilling-Causey case.

Mr. Rice — whose plea bargain allows the Task Force to withdraw its support for a light sentence if fails to “cooperate” with the Task Force in various Enron-related criminal trials — is expected to be a key prosecution witness in the upcoming trial of the Lay-Skilling-Causey case.

Accordingly, Mr. Weissmann’s email during the early stages of the Enron Broadband trial appears to be a clear attempt at least to remind — if not outright threaten — Rice’s counsel that Rice’s plea deal could be at risk unless Cogdell quit talking with Mr. Skilling’s counsel. Even more telling is that Weissman’s threatening email to Rice’s counsel was sent almost immediately after the Enron Broadband defense had caught Rice providing false testimony on behalf of the prosecution during the Enron Broadband trial.

Thus, rather than seeking the truth of whether the defendants committed crimes at Enron, the Task Force suppresses exculpatory testimony for the defendants by fingering over a hundred alleged co-conspirators, threatens defense witnesses, and threatens a cooperating witness with breach of his plea bargain if his counsel even chats with defense counsel for Mr. Skilling.

Does anyone really believe that Messrs. Lay, Skilling and Causey — already facing a highly anti-Enron environment that the prosecution has helped fuel — can receive a fair trial under these circumstances? And is this really the way that we want our Justice Department to be operating?

In a hearing yesterday afternoon in Houston federal court, U.S. District Judge Sim Lake continued to grapple with strong evidence that the Enron Task Force has engaged in a systematic campaign of intimidating witnesses in the upcoming trial of former Enron chairman Ken Lay, former CEO Jeff Skilling, and chief accountant Richard Causey from conferring with or testifying with the defendants and their counsel. As noted in earlier posts here, here and here, in each of the three criminal trials that the Enron Task Force has prosecuted to date — the Andersen case, the Nigerian Barge case, and the Enron Broadband case — the Task Force threatened numerous material witnesses with indictment who would have testified favorably for the defense in each case but for such intimidation. Particularly in the Andersen case and the Nigerian Barge case, the Task Force was able to use the intimidation tactics to turn weak cases into convictions by preventing the jury in each case from hearing key testimony from dozens of witnesses who would have been favorable for the defense. The Task Force has continued its witness intimidation tactics in the Lay-Skilling-Causey case, as reflected by the prosecution’s fingering of the record-setting number of 114 alleged co-conspirators in the case.

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As noted in earlier posts here and here, the longstanding suspicions that the Enron Task Force has been engaging in witness tampering in the Enron-related criminal cases is now in full public view. This Mary Flood article reports on the filing of the redacted version of Ken Lay, Jeff Skilling and Richard Causey’s motion to dismiss the Task Force’s indictment against them on grounds of prosecutorial misconduct and, according to Ms. Flood’s article, the motion is a damning indictment of the Task Force’s handling of the criminal investigation of Enron. Go to this link to download a copy of the Lay-Skilling-Causey motion, and here is a Washington Post article on the motion.
The motion and accompanying affidavit from law professor Michael Tigar are stunning in many ways. For example, counsel for the defendants note that they have sought to confer with over 100 witnesses and only four have agreed to do so after the Task Force earlier took the extraordinary step of naming 114 unindicted co-conspirators in the case. Mr. Tigar’s affidavit states that “this level of silence is not normal” from witnesses and that “I have never seen defendants in a major public trial, especially a white-collar trial, so completely ostracized by witnesses with pertinent information.” Mr. Tigar concludes:

“. . . I have seen prosecutorial misconduct and litigated about it. However, in all my years handling criminal cases, and in all my experience teaching and working with other lawyers, I have never seen all of these unfair pressures brought to bear on the adversary system in a single case.”

Similarly, the motion makes reference to a potentially explosive email from a Task Force prosecutor to a defense attorney for a cooperating government witness in one of the Enron cases. Although it is a bit difficult to surmise what’s in the email because it has been redacted from the version of the motion that has been filed publicly, it appears from the motion that the e-mail told the lawyer for the cooperating witness to direct his co-counsel for the cooperating witness to stop talking to Mr. Skilling’s lawyer or that he should “get rid” of him. The motion does not name the identity of the Task Force member who made that threat, but I have my suspicions.
Unfortunately, the public exposure of the Enron Task Force’s misconduct comes too late to help the defendants in the Nigerian Barge case, whose defense was also undermined by the Task Force’s designation of dozens of key defense witnesses as unindicted co-conspirators in the case. Here’s hoping that U.S. District Judge Sim Lake puts a halt to this transparent abuse of governmental power and — at very least — provides each of the co-conspirators named in the Lay-Skilling-Causey case immunity from prosecution for their testimony in that case. It’s about time that the truth about Enron be told, not some piecemeal prosecution version based on the dubious statements of witnesses who have been bludgeoned into plea bargains.
Meanwhile, one notable critic of the government’s criminalization of Enron wonders whether the government will take the same approach with regard to its own actions in the debacle of New Orleans?

Following on this post from earlier this summer, U.S. District Judge Sim Lake gave his strongest indication to date that he is prepared to take action against the Enron Task Force’s strategy to deny former Enron chairman Ken Lay, former CEO Jeff Skilling and former chief accountant Richard Causey as many defense witnesses as possible in their upcoming corporate and securities fraud trial.
After attorneys for Messrs. Lay and Skilling filed another motion under seal with Judge Lake alleging prosecutorial misconduct in the Task Force threatening potential defense witnesses, Judge Lake on Thursday ordered another hearing next week after stating on the record that he believed the defense assertions that many witnesses had at least a perceived threat from the Task Force. Although careful to state that he had not yet concluded that prosecutorial misconduct had taken place, Judge Lake directed defense lawyers to provide to the Task Force a list of witnesses who have declined to talk to the Lay-Skilling defense team. The Task Force has named 114 unindicted co-conspirators in its legacy case against Messrs. Lay, Skilling and Causey, which is a far larger number of co-conspirators than has ever been alleged in any other federal white collar criminal case.

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When the Task Force fingered the record number of 114 co-conspirators in their legacy case against former Enron chairman Ken Lay, former CEO Jeff Skilling and former chief accountant Richard Causey, the Task Force effectively ensured that most defense witnesses would be chilled from testifying during the upcoming trial out of fear that their testimony would result in a retributive Task Force indictment. Moreover, when a targeted witness (Lawrence Ciscon) decided to testify on behalf of the defendants anyway during the recent Enron Broadband trial, the Task Force threatened him in an attempt to induce him not to testify. Rumors have been circulating in Houston for months of similar incidents involving other defense witnesses in regard to Enron-related trials, but the threatened witnesses are relunctant to describe such threats on the record out of fear of Task Force reprisal.
However, the lengths to which the Enron Task Force will go to suppress testimony in Enron-related cases reached truly absurd levels this past week when the Task Force filed this motion in the main Enron securities fraud class action attempting to postpone the testimony of the one witness who may talked more about Enron publicly than any other person — Sherron Watkins.

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I was at the Federal Courthouse yesterday for a late morning hearing and decided to stick around and pop into an early afternoon status conference in the government’s biggest Enron-related criminal case — that is, the case against former Enron chairman Ken Lay, former Enron CEO Jeff Skilling and former Enron chief accountant Richard Causey. As with my decision to attend this earlier hearing, I’m glad I decided to stick around. What appeared to be a routine status conference turned out to be anything but.

Midway through the conference, U.S. District Judge Sim Lake announced from the bench that he had received an ex parte motion from the defendants that had been filed under seal. Without revealing the contents of the motion, Judge Lake stated that he had concluded that the defendants had established a prima facie case of entitlement to the relief that they were requesting in the motion, which he disclosed was the right to subpoena under Fed. R. Crim. P. 17(c) all evidence relating to communications between the Enron Task Force and the 15 former Enron employees who have pled guilty under plea arrangements with the Enron Task Force.

Judge Lake stated that he would first review all documents and records produced in camera and then turn over to both defendants and the prosecution copies of all documents and records that are relevant to the issues raised by the motion.

As a clearly unsettled Enron Task Force prosecution team looked on, Judge Lake went on to authorize the defendants specifically to issue subpoenas for evidence of all communications with the Task Force to the 19 attorneys who have represented the 15 former employees in negotiating their plea arrangements with the Task Force.

When the Task Force prosecutor raised a flustered objection to the ruling and requested an opportunity to respond to the defendants’ ex parte motion, Judge Lake summarily overruled the objection and stated that he was persuaded by the defendants’ motion that the relief was justified. Chronicle Enron reporter Mary Flood’s article on the status conference is here.

So, the $64,000 question is this — what on earth is in the ex parte motion of Messrs. Skilling, Lay and Causey that would prompt Judge Lake to grant this rather extraordinary relief without so much as a response from the Enron Task Force?

Although the motion remains under seal and is not available for public review, my speculation is that the motion is focused on the Enron Task Force’s dual tactics of threatening potential defense witnesses in the Enron-related criminal trials with indictment if they testify and bludgeoning former Enron employees to enter into plea arrangements under which they would provide favorable but false testimony in prosecutions of other Enron-related defendants.

That speculation is supported by recent revelations in connection with Enron-related criminal cases. First, several key defense witnesses in the Nigerian Barge case declined to testify on Fifth Amendment grounds because the Task Force had fingered them as targets of the Enron criminal investigation. Then, former Enron Broadband engineer Lawrence Ciscon dramatically testified earlier in the ongoing Enron Broadband trial that Enron Task Force prosecutors had repeatedly threatened him and had fingered him as a target of an indictment in attempting to dissuade him from testifying on behalf of the five Enron Broadband defendants.

Moreover, former Enron Broadband co-CEO Ken Rice testified falsely during the prosecution’s case-in-chief in the Broadband trial after entering into a plea arrangement with the Task Force, and that false testimony was followed by testimony from another witness that she felt threatened by the Task Force in connection with her testimony regarding Rice’s false testimony.

Finally, the Task Force has set a dubious record by naming 114 co-conspirators in the Skilling-Lay-Causey case, which is just another transparent attempt to chill potential defense witnesses from testifying during the upcoming trial in that case.

Consequently, watch this development closely. The Enron Task Force has been quite successful in the court of public relations in painting anyone having anything to do with Enron as a criminal.

However, in actually having to prove its allegations in court (as Professor Ribstein notes in this post from yesterday), the Task Force has been far less successful and now it appears that at least one federal judge is openly skeptical of the tactics that the Task Force has been using to deter defense witnesses from testifying and to generate dubious testimony under plea arrangements.

That government prosecutors believe that they cannot prevail in their prosecutions of Enron-related criminal defendants without engaging in such troubling tactics is more strong evidence that the government’s policy of criminalizing business transactions has gone seriously awry.

In what appears to be a questionable ruling, former Enron CEO and COO Jeff Skilling was required to leave the courtroom on Friday morning during the ongoing trial of the Enron Broadband trial.
Normally, at the commencement of most trials, counsel for either or both parties will invoke “the rule,” which simply means that fact witnesses cannot listen to the testimony of any other witnesses during the trial. The rule was apparently invoked at the start of the Enron Broadband case.
However, prior to the commencement of the trial, one of Mr. Skilling’s lawyers — Daniel Petrocelli — had been advised that Mr. Skilling would not be called as a witness during the trial. So, on Friday morning, Mr. Skilling walked into the courtroom gallery to attend the trial, probably in anticipation of the testimony of former president of Enron Broadband Services and close Skilling confidant, Ken Rice, who has copped a plea bargain and began his testimony yesterday afternoon on behalf of the prosecution.
When the prosecution realized that Mr. Skilling was in the courtroom, the prosecutors raised an objection to U.S. District Judge Vanessa Gilmore based on “the rule.” Mr. Skilling was asked to leave the courtroom and did so without incident.
If Mr. Skilling had indeed been taken off the witness lists for Broadband trial, then it was more than a minor mistake to exclude him from attending the testimony of Mr. Rice. Inasmuch as Mr. Rice’s testimony on behalf of the prosecution is going to be detrimental to, and disputed by, Mr. Skilling in his trial next January, Mr. Skilling is absolutely entitled to be present in the courtroom during that testimony so long as he is not going to be called as a witness during the trial.
If a witness is not telling the truth in his testimony, then often it is much harder to prevaricate in the presence of someone who knows that the witness is lying. Inasmuch as the truth of Mr. Rice’s testimony is a key issue in the Broadband trial, the jury in the Broadband trial ought to be allowed to view Mr. Rice’s demeanor while testifying in front of his former boss who, if Mr. Rice’s testimony is false, would know it.