June 19, 2004
Prosecutors turn towards Kenny Boy

The moment we've all been waiting for is nigh: Prosecutors seeking Lay indictment.

Federal prosecutors plan to ask a grand jury to indict Ken Lay on charges relating to the last few months he was at the helm of Enron as the company spiralled into its stunning 2001 collapse.

The indictments are expected within two weeks, according to lawyers close to the case.

For the past 2 1/2 years, the Justice Department's Enron Task Force has been investigating Lay -- the company's former chairman -- and recently the probe has picked up steam.

Over the past few weeks, witnesses about Lay have appeared before the Enron grand jury in increasing numbers. At the same time, prosecutors have been separately interviewing other witnesses and shoring up details about Lay.

Government lawyers have been playing their cards close to their vests, and lawyers for witnesses acknowledge that prosecutors could postpone the final presentation of the case.

Prosecutors are barred from speaking publicly about grand jury business, and Enron Task Force Director Andrew Weissmann would not comment for this story.

But the Houston-based grand jury has already heard five days of testimony this month, all focused on Lay. Enron Task Force prosecutors John Hemann and John Hueston, who are investigating Lay, have taken in witness after witness, including Lay's Chief of Staff Steven Kean and ex-Enron General Counsel Jim Derrick.

Topics that prosecutors have been quizzing witnesses about include:

ĚLay's receipt of three memos or e-mails warning of financial trouble and fraud at the company within weeks of Jeff Skilling's abrupt August 2001 departure as CEO.

ĚHis public statements to investors and analysts.

ĚLay's attempt to find an alternative to having to substantially write down the "goodwill" or excess price paid for assets.

ĚHis trades of company stock for millions of dollars in company cash in those last months.

Lay's Houston-based lawyer, Mike Ramsey, said Friday that while he knows there is an active investigation into his client, he will be surprised if there's an indictment.

"Indict him for what?" Ramsey said Friday. "I don't know what they could charge him with."

Lay's lawyers have noted Lay has a good defense to insider trading charges because he held on to much of his Enron stock even as the company went bankrupt. And they said most of the millions in cash he borrowed from the company and paid back with stock was used to pay off other debt created by the fall of the price of Enron stock.

Andy Fastow, Ben Glisan, and Paula Rieker are potential witnesses against him. Stay tuned, the good part is coming up.

Posted by Charles Kuffner on June 19, 2004 to Enronarama | TrackBack

Once you guys get Kenny Lay into custody, why not take the opportunity to introduce him to George W. Bush. They've never met.

Posted by: Brenda Helverson on June 19, 2004 8:20 PM