Enron Verdict: Lay and Skilling Guilty (Updated)
The jury in the Enron case has reached a verdict, and the decision in the corporate fraud case will be announced at noon, a court clerk announced today. The jury of eight women and four men reached their verdict on the sixth day of deliberations in the case of Enron founder Kenneth Lay and former CEO Jeffrey Skilling, who were charged with conspiring to hide the financial losses that brought down what was once the nation’s seventh-biggest company.
AP adds:
Skilling faces 28 counts of fraud, conspiracy, insider trading and lying to auditors, and a maximum of 275 years in prison if convicted on all counts. Lay faces six counts of fraud and conspiracy, with a combined maximum punishment of 45 years. Both are accused of repeatedly lying to investors and employees about Enron’s health before its December 2001 collapse into bankruptcy proceedings, when they allegedly knew accounting tricks masked losses and failing ventures. The defendants deny any wrongdoing and attribute Enron’s failure to bad publicity and lost market confidence.
Lay also is awaiting a verdict in a bank fraud case that was tried before Lake without a jury during the first three full days of deliberations in the conspiracy case. Lake has said he will announce his verdict in the bank case after the conspiracy jury renders its decision. Lay faces one count of bank fraud and three counts of making false statements to banks regarding his use of personal loans to buy stock. Each count carries a maximum penalty of 30 years in prison.
Stay tuned.
UPDATE: GUILTY
Former Enron Corp. chiefs Kenneth Lay and Jeffrey Skilling were convicted Thursday of conspiracy to commit securities and wire fraud in a case born from one of the biggest business scandals in U.S. history. The verdict put the blame for the demise of what was once the nation’s seventh-largest company squarely on its top two executives. It came in the sixth day of deliberations following a trial that lasted nearly four months. Lay was also convicted of bank fraud and making false statements to banks in a separate trial related to his personal banking.
The former corporate titans are now convicted felons facing years in prison when the panel found them guilty of running an elaborate fraud that gave the nation’s onetime seventh-largest company a glamorous illusion of success. Jurors declared through their verdict that both men repeatedly lied to cover a vast web of unsustainable accounting tricks and failing ventures that shoved Enron into bankruptcy protection in December 2001.
The conviction was a major win for the government, serving almost as a bookend in an era that has seen prosecutors win convictions against executives from WorldCom Inc. to Adelphia Communications Corp. and homemaking maven
Martha Stewart
Not surprising. Jurors are composed of ordinary people who hold corporate titans in very low esteem. Unlike pop culture figures like singers and athletes, who tend to get a break from jurors awed by their celebrity, people hate CEOs.
Further, the complicated nature of these cases actually works in the government’s favor here. Oftentimes, weeks of evidence and confusing procedure work in the favor of defendants and their quest to establish reasonable doubt. When there’s malfeasance at a company, as their assuredly was at Enron, the public wants to blame someone. The people at the top are the obvious choices.
Update: Steve Bainbridge provides commentary and a roundup of reactions from other law bloggers. Particularly noteworthy is that Skilling was acquitted on several insider trading charges but not on the more serious fraud charges. Those results seem contradictory.
Update: In a follow-up post, Bainbridge explains why, from a legal standpoint, the results aren’t all that contradictory.
Or maybe it was because they were you know, guilty.
Jurors and composed of “Ordinary people who hold corporate titans in very low esteem”
That’s because there are a large number of “Corporate Titans” who are as crooked as Lay and Skilling. If there is anyone out there who don’t think that, then they are very naive and have no experience in dealing with the “Corporate Titans”.
These guys will get everything they deserve with the rest of their lives in prison. They stole the life savings of many, many Americans, to satisfy their greed and egos.
I’m sure glad this trial was not held in California, if it were, they would be walking the street by now and laughing all the way to spend their stolen fortunes.
I dunno, Herb. Part of their particular evil was manufacturing California’s energy crisis awhile back… they might’ve found themselves on the wrong end of a lynching if the trial had been there…
Not that I’d shed real tears, mind you…
As they should be.
So, what are we saying here, fellow commentors? That this jury issued a refferendum on socialist ideals?
A friend of mine was one of the prosecutors. He is not the kind of guy who would have spent so much time on this case except to see justice served.
I wonder…
If the television images of orange jump-suit clad energy executives being frog-marched off to federal prison will cause a knot to form in the stomachs of all the other oil and energy executives that have recently come under investigation for illegally manipulating prices.
Muhahaha.
Uh, Mac, would those be the same executives that the FTC just found weren’t manipulating prices?
Look, I know folks really want a conspiracy to be responsible for higher gas prices, problem is, we, the consumers and voters, are the conspiracy. Here’s how we did it:
1. Buy fuel inefficient cars and trucks (it ain’t just SUVs folks, its all those sports cars and high performance sedans that drink the gas too).
2. Limit drilling for known reserves (ANWR, both the Atlantic and Pacific coasts and the entire coast of Florida).
3. Put tight restrictions on new refineries so none have been built for decades, thus causing refining capacity to fall behind demand.
4. Insist on an oxygenate (ethanol)that’s expensive to make, and that can’t be shipped by pipeline, only by tanker truck or car, thus reducing capacity even more.
It’s a perfectly rational choice to want to protect wildlife and beaches, have cleaner burning fuel, and drive vehicles with big, roaring engines, but the price is high fuel costs. It’s like the old engineer’s motto, your project can be any two of these three, Right, Cheap, Quick.
James can you clarify if you believe this verdict was correct or not?
TUA: Honestly, I’m not sure. I didn’t follow it that closely during the trial phase.
Skilling, especially, and Lay are quite possibly guilty. I merely note that this is an extraordinarily complicated set of charges and the nature of corporate span of control is such that it’s possible that top level people didn’t know everything that was going on.
Good to see justice finally being served. I have one observation/question: Jeff Skilling was senior partner at McKinsey & Company, which is probably the most powerful behind-the-scenes entity in the corporate world; he was the lead person for the Enron account before he left to join Enron.
McKinsey is full of incredibly smart out-of-the-box thinkers and I wonder if anyone at McKinsey was involved in devising some of the ingenious (albeit illegal) schemes at Enron and why this question has never been asked…
I agree that justice may have been served, but these two men had a huge responsibility on their shoulders. I think in a way its unfair to heap this on them so heavily as if we think about it, Enron was successful once and this led to the expectancy of success from the media, the political arena and the employees that worked there.
I believe that they started off as well intentioned.
I don’t think these two men should go to prison for the rest of their lives for trying to live up to the “American Dream”. Deep down, we all know they are not really guilty, but acted in a manner that made them do all to control an out of control situation with a company where there were too many decision makers in the ranks and too many bright ideas that needed to be turned into profit for fear of job loss.
It could have happened to any of us. Success and appearing to do well when we are not are part of many of peoples lives today. Enron was no exception.
cool; now their victims can starve in peace?