As noted earlier here, the clear drift over the past several weeks of the Enron Task Force’s case against former key Enron executives Ken Lay and Jeff Skilling has been toward the charges relating to alleged misleading disclosure of material facts relating to Enron’s business and away from the more technical charges pertaining to alleged fraud in Enron’s accounting and structured finance transactions.
Well, this Mary Flood/Chronicle article provides even more confirmation that the Task Force has chosen to make the Lay-Skilling trial a material non-disclosure case. As Ms. Flood notes, the Task Force last week quietly arranged for Mark Koenig, the former head of Enron’s investor relations section, to alter the statement that he made in connection with an August 2004 cooperation agreement with the Task Force under which Koenig pled guilty to a single count of aiding and abetting securities fraud. Koenig faces a possible 10 year sentence on the charge, but he clearly expects to receive a lesser sentence through his cooperation with the Task Force. A copy of Koenig’s explanation of his revised statement is here, a copy of his revised statement is here and a copy of the transcript of the hearing in which Koenig agreed to his plea deal can be downloaded here.
The gist of Koenig’s revised plea bargain statement is that he misrepresented in his initial statement what occurred during a July 12 2001 conference call between Enron executives and securities analysts. In his initial statement, Koenig confessed to telling analysts during that call that Enron Energy Services was reorganized “to get some more efficiency” when the true purpose of the reorganization was simply to conceal losses. You may recall that EES also figured prominently in former Enron chief accountant Richard Causey’s statement in connection with his plea deal.
In his revised statement, Koenig now contends that — based on a recent review of an audiotape of the July 12 2001 conference call — it was Skilling who made the “get some more efficiency” representation to analysts and not Koenig, after all. Koenig’s revised plea statement clearly is intended to head off the type of impeachment that occurred with regard to the testimony of key prosecution witness Ken Rice during last year’s Enron Broadband trial.
Nevertheless, Koenig’s revised statement raises almost as many questions as it answers, not the least of which is why Koenig — who was under treatment and medication for depression at the time of his plea deal — agreed to a relatively harsh plea deal and admitted to making the key false statement in the charge against him in the first place when, in fact, he didn’t make the statement? Similarly, how did Koenig’s lawyer miss such a key error in the original plea deal?
Meanwhile, Ms. Flood also reports that the Lay-Skilling defense team filed a pleading yesterday that could certainly liven up the examination of witnesses during the upcoming trial. The pleading requests that U.S. District Judge Sim Lake allow the defense to attempt to impeach the credibility of certain government witnesses during the trial by allowing the defense to cross-exam those witnesses regarding such matters as their use of pornography, unlawful drug use, solicitation of prostitutes and/or extramarital affairs. This Carrie Johnson/Washington Post article reports that the defense motion is pointed particularly toward former Enron CFO, Andrew Fastow:

One unnamed witness, described by a source familiar with the case as former finance chief Andrew S. Fastow, had “pornography habits, which were so extensive that when his computer files were seized they were submitted to the FBI for criminal investigation,” defense lawyers claimed in court filings.

Looks as if at least the defense wants to avoid what occurred during a large portion of the trial of the Enron Broadband case last year.