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Enron Executives Finish Closing Arguments

May 17, 2006 at 5:35 PM EST
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JEFFREY BROWN: After 16 weeks and 56 witnesses, lawyers in the trial of former Enron executives Jeffrey Skilling and Kenneth Lay finished their closing arguments today, and the jury began deliberations.

Jeffrey Skilling faces 28 charges of fraud, conspiracy and insider trading. Ken Lay faces six charges of fraud and conspiracy.

Thomas Mulligan of the Los Angeles Times has been covering the trial in Houston and joins us now.

And welcome to you.

THOMAS MULLIGAN, Los Angeles Times: Thanks, Jeff.

JEFFREY BROWN: As always at the end of the trial, we’re offered two conflicting visions or stories. Why don’t you start with the defense which went yesterday? What was its key argument?

THOMAS MULLIGAN: The basic defense argument is, aside from the relatively small-scale thievery of the former chief financial officer, Andrew Fastow, there was no crime at Enron.

Enron was also healthy in the months before it collapsed and, in fact, just gave way to what defense attorneys referred to as a crisis of confidence brought on by negative newspaper articles and the machinations, they say, of short-sellers who profit by betting against a stock such as Enron’s.

JEFFREY BROWN: I read that defense attorney Daniel Petrocelli kept harping on this idea of bankruptcy is not a crime, failure is not a crime. So he’s saying things go bad, but that doesn’t necessarily mean that somebody committed some felony.

THOMAS MULLIGAN: That’s right. The biggest philosophical argument that the defense is trying to bring out here is that, in their opinion, there’s a move towards criminalization of what are standard business practices. They believe that the government had an object in mind, the prosecution — or, rather, the conviction of Lay and Skilling, the top people at Enron, and that, in Petrocelli’s words, they reverse-engineered their case after picking their targets.

There were dramatic last statements

JEFFREY BROWN: So,in making their case, I gather that things got rather theatrical at times, including one defense attorney named Chip Lewis. Tell us about that.

THOMAS MULLIGAN: Chip Lewis is one of four lawyers who spoke to the jury on behalf of Ken Lay Tuesday afternoon. Chip is also the largest guy in the room. He is well over six feet, well put together, looks like a linebacker, and has a black goatee.

He stepped up to the prosecution table and leaned over towards John Hueston, the prosecutor who cross-examined Mr. Lay, and said, "Don't come to Houston, Texas, and lie to us."

JEFFREY BROWN: So I guess that got a lot of attention?

THOMAS MULLIGAN: It certainly did. The jurors couldn't -- it was hard to read the jurors. They were certainly paying attention, but they didn't seem to react, at least to me. On the other hand, Ken Lay's wife, Linda, and her daughter, Robin, briefly burst into applause.

JEFFREY BROWN: Today, the prosecutors had their chance to respond, so what was their main argument?

THOMAS MULLIGAN: Sean Berkowitz, who has taken the lead role in the prosecution, had just two hours to work with, and he really sped through the case this morning. He tried to hit on every point the defense raised.

But predominantly he worked to rebut their argument that the government was trying to tarnish people with things that weren't listed in the indictment. For instance, there was a lot of questioning of Jeff Skilling, because of his investment in a company run by a former girlfriend of his, a company that did most of its business with Enron.

What Sean Berkowitz tried to emphasize today is that, although not listed in the indictment, those charges had a lot of bearing on the credibility of the two defendants.

Against Mr. Lay, he pointed out that Ken Lay had sold quietly $70 million worth of Enron stock back to the company during the year 2001, and that, at the same time, he was letting people believe that he was a buyer of Enron stock and was encouraging people to do the same.

What does the jury have to decide?

JEFFREY BROWN: So what are the experts there saying about how complicated all of this is now? What exactly does the jury have to decide?

THOMAS MULLIGAN: Well, the jury -- if you listen to the defense, the jury has a rather tough task, because a conspiracy is supposed to be a difficult thing to prove. They have to work through thousands of pages of documents. It's up to them how much or little of that they read, but there were 15 weeks of testimony, more than four dozen witnesses, so that's a lot to consider.

And both defense lawyers and prosecutors were estimating that this at least will take them some days to ponder.

How much potential prison time?

JEFFREY BROWN: And remind us the stakes here. How much potential prison time are they looking at?

THOMAS MULLIGAN: Many decades, technically speaking, but I think, if convicted of all charges, Lay and Skilling would probably do something more than 20 years in prison.

JEFFREY BROWN: Now, in the meantime, I understand there's another Enron-related case starting tomorrow involving Mr. Lay. What's that about?

There is another Enron case?

THOMAS MULLIGAN: That was a part of the original indictment but got split off during the back-and-forth before the trial, and it's an unusual little rump session. The judge himself will hear the case and act as jury, by agreement of all the parties.

This is a bank fraud case. It involves violations of the terms under which Mr. Lay borrowed money from some banks. It was a part of the original indictment. There are legal experts in this town who believe that had these charges been the only things the government had against Mr. Lay, they might have not pursued the case.

JEFFREY BROWN: All right, Thomas Mulligan of the Los Angeles Times, thanks very much.

THOMAS MULLIGAN: My pleasure.