An unusually high number of the prospective jury pool for the upcoming trial of former key Enron executives Ken Lay and Jeff Skilling already have concluded that the two men are guilty of various business crimes merely because of their connection with the social pariah, Enron. Although such widespread bias against the two defendants would seem to be great source of comfort for Enron Task Force prosecutors, there are increasing signs that the Task Force is not sanguine about its case against Messrs. Lay and Skilling. As Larry Ribstein points out, that’s part of the conunbrum of the lottery-style system of criminalizing agency costs in the first place.
The Wall Street Journal’s John Emshwiller, who has as good an information pipeline into the Task Force as any reporter covering the Enron case, has a couple of W$J articles today (here and here) in which he reports that the Task Force — less than a month before trial — has made a new allegation of wrongdoing against Skilling relating to the former Enron CEO’s December 6, 2001 SEC deposition testimony. The gist of the new allegations are that the Task Force contends that Skilling lied when he testified that he sold over $15 million of Enron stock on September 17, 2001 because of concerns over the impact of the 9/11 attacks on the stock market (Skilling resigned from Enron in August, 2001). The Task Force contends that Skilling lied about the reason for that September 17 stock sale and that evidence of the lie is that he failed to inform the SEC during the deposition that he had inquired with a broker on September 6th about selling less than half as much Enron stock as he sold on September 17th.
H’mm, cranking up a new allegation of wrongdoing less than a month before trial based on those dubious facts? Sure looks like a bunny trail to me.
Meanwhile, as I speculated in this earlier post, this Emshwiller article confirms that, even though Richard Causey’s plea bargain last week simplifies the Task Force’s case against Lay and Skilling, the Task Force’s post-plea bargain debriefing of Causey has apparently left prosecutors undecided on whether even to use the former Enron chief accountant as a witness against Lay and Skilling.
Last minute preparations for a big trial are usually somewhat chaotic and often involve minor alterations in strategy. However, adding new allegations of misconduct and wondering whether even to use a key witness involved in the allegations are not the type of strategy decisions that one normally wants to be making less than a month before trial. As with the Task Force’s schizophrenic approach to Arthur Andersen, the latest revelations about the Task Force’s preparations for the Lay-Skilling trial do not reflect that the Task Force is particularly confident about its case. Although the Task Force has already won the public relations battle regarding the Enron scandal, winning its legacy case in the courtroom may prove to be far more difficult.