Tuesday, January 31, 2006

Opening Statements—Enron

After a jury was successfully empanelled yesterday,[1] opening statements in the trial of Ken Lay and Jeffrey Skilling begin today. At 5 p.m. yesterday, after having individually questioned “the first 50 or so members of a panel of nearly 100,” District Court Judge Sim Lake seated 12 jurors and 4 alternates.[2] 10 women and six men were chosen, with 2 Hispanics and 1 Asian-American among them; 7 have college degrees.[3] From all accounts, the jury is pleasing to the defendants; Mr. Lay’s attorney, Michael Ramsey, said they “were happily surprised.”[4]

Opening statements began when Assistant US Attorney John Hueston presented the jury with its version of what he expects the federal government will be able to show. He cannot make arguments in the opening statements, and his 2-hour-long speech cannot be treated as evidence. Mr. Hueston is attempting to paint this case as “a simple case,” one that is merely “about lies and choices.”[5] The prosecution wants to keep this case as simple as they can, especially in light of the acquittal of Duke Energy defendants , or more-closely related, the lack of guilty verdicts obtained in the Enron Broadband trial last summer.

It was a high-tech presentation, making use of “a video of a presentation [Mr.] Skilling made to employees in Portland, Ore[gon], in March 2001” in which Mr. Skilling discussed Enron’s mounting problems with the Enron Broadband division.[6] He then suggested that soon after that speech, Mr. Skilling publicly made comments that the broadband division was doing just fine.[7] Mr. Hueston wrapped his statements with an “interesting little kicker. With Enron just days away from bankruptcy, Lay maxed out his line of credit at Enron and paid off his home mortgage.’ He never repaid the company, Hueston said.”[8]

Mr. Skilling’s attorney, Dan Petrocelli, began the first round of the defense’s opening statements, vowing that Mr. Skilling would testify, and that he would not be using the so-called “idiot” or “dummy” defense.[9] Instead, they seem to be arguing that this was not a case of “see no evil, hear no evil,” but rather one in that there was no evil.[10] Except for Andrew Fastow. It seems they are trying to pin the blame on Mr. Fastow, who has already pleaded guilty in exchange for his cooperation.[11] Mr. Fastow agreed to 10 years in prison, and will forfeit $23.8 million to the government at the end of this trial. [12] At the announcement of his guilty plea he said “"While CFO, I and other members of Enron's senior management fraudulently manipulated Enron's publicly reported financial results," reads the statement Fastow gave prosecutors in his plea agreement. "I also engaged in schemes to enrich myself and others at the expense of Enron's shareholders and in violation of my duty of honest services to those shareholders."[13]

Mr. Petrocelli also vowed that the accounting methods Enron used will be addressed, which the government says it does not want to do.[14]

As Ken Lay’s attorney, Mike Ramsey, began his opening statements, it is clear that his theory of the case is that Mr. Lay accepts responsibility for Enron’s failure, “but failure is not a crime.”[15] (That is an interesting choice of words, one that a plaintiffs’ attorney is likely to latch on to in preparation for the civil case which has been pending since October 2001.) Nonetheless, the theory is that driving a company into bankruptcy is not a crime, and as such, Mr. Lay should be acquitted. He is also pushing the theory that the Enron case is far more complicated than the government would like, saying that the indictment “against Lay and Skilling is so convoluted, difficult to understand and filled with gobbledygook that ‘it makes you think that whoever wrote it has a nervous disorder.’”[16] Finally, Mr. Ramsey is playing up Mr. Lay’s humble beginnings and his contributions to charity.[17]

After the opening statements are concluded, the jury can look forward to about 4 months of testimony.[18] The prosecution will present its case-in-chief, followed by the defense, if it so elects to present a case. Famously, declined to do so, and was acquitted on several counts, and received a on the remaining counts.


[1] Mary Flood et al., ”, Houston Chronicle, Jan. 31, 2006.
[2] Id.
[3] Id.
[4] Id.
[5] , Houston Chronicle, Jan. 31, 2006.
[6] Loren Steffy, , Houston Chronicle, Jan. 31, 2006.
[7] Id.
[8] Id.
[9] Mark Babineck, , Houston Chronicle, Jan. 31, 2006.
[10] Id.
[11] Id.
[12] Mary Flood, et al., , Houston Chronicle, Jan. 14, 2006.
[13] Id.
[14] Loren Steffy, , Houston Chronicle, Jan. 31 ,2006.
[15] Loren Steffy, , Houston Chronicle, Jan. 31, 2006.
[16] Mary Flood, , Houston Chronicle, Jan. 31, 2006.
[17] Loren Steffy, , Houston Chronicle, Jan. 31, 2006.
[18] , Houston Chronicle, Jan. 31, 2006.

posted by McNabb Associates, P.C. @ 3:50 PM