Defense puts Enron prosecution on trial

HOUSTON - At times Tuesday, it almost seemed easy to forget who was on trial — the one-time corporate chieftains Kenneth Lay and Jeffrey Skilling or the federal government’s own Enron Task Force.

As lawyers for Lay and Skilling laid out their closing arguments in the former Enron Corp. chief executives’ fraud trial, they shifted the focus squarely to prosecutors, painting them as bent on convicting the pair when they did nothing wrong.

In the day’s waning minutes in court, one of Lay’s lawyers even motioned to John Hueston, a task force prosecutor normally based in Los Angeles, and boomed: “Don’t come to Houston, Texas, and lie to us.”

The remark drew brief applause from Skilling and from members of Lay’s family watching in the courtroom.

Skewering the Enron Task Force was the theme of the day in six hours of defense arguments. Skilling lawyer Daniel Petrocelli suggested prosecutors had described Enron executives as “lieutenants” to raise a comparison between Enron and the Mafia.

Petrocelli portrayed the prosecutors as puppet masters, accusing them of seeking to win convictions by criminalizing innocent comments, honest mistakes and normal business practices.

The defense has contended all along that it was not a massive fraud that sank Enron in 2001 — rather that it was a lethal mix of negative press, lesser crimes by Enron Chief Financial Officer Andrew Fastow, short-sellers and the post-Sept. 11 bear market.

Prosecutors say Lay, the Enron founder, and Skilling, who served as CEO for six months in 2001, lied to investors and employees by touting Enron’s financial health when they knew accounting trickery hid failing ventures.

The government will have about two hours this morning to make its final argument to the eight-woman, four-man jury, and then jurors will begin deliberations. Lay and Skilling could face decades in prison if convicted.

Tuesday, defense lawyers appeared to be pinning their hopes on shattering the credibility of the eight former Enron executives who pleaded guilty and testified for the government against Lay and Skilling — or at least raising doubt in jurors’ minds.

Petrocelli said the former executives were “robbed of their free will” by the task force and pleaded guilty to crimes they didn’t commit out of fear of prison terms and expensive legal battles.

Skilling faces 28 counts of fraud, conspiracy, insider trading and lying to auditors related to his activities from 1999 to August 2001. Lay faces six counts of fraud and conspiracy, stemming mostly from the period after he resumed as CEO in August 2001.

On Thursday, Lay will go on trial again — before U.S. District Judge Sim Lake but without a jury — in a case related to his personal banking.

In that case, the government contends he obtained $75 million in loans from three banks from 1999 through 2001 and reneged on agreements not to use the money to carry or buy margin stock.

He is charged with one count of bank fraud and three counts of making false statements to banks in the case. Lake plans to issue his verdict in the banking case, which is expected to last several days, after jurors in the conspiracy case give theirs.

THE ASSOCIATED PRESS