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February 14th, 2003:

Clueless or criminal?

I’ve given my share of beatings to Kenny Boy Lay for his role in the Enron implosion. One of the main reasons why people like me have believed in Lay’s culpability was his steady selloff of Enron stock in 2001, even while telling employees that it was never a better time to buy. What else could this be but sheer criminality?

Well, it could be utter, pathetic cluelessness, as this NYT article suggests. Ken Lay was selling off Enron stock because it was pretty much the only liquid asset he had, and he was in past his neck:

• When the falling stock price left him with too little collateral for his loans, he took several steps to delay selling Enron shares, like selling other investments and persuading a bank to accept an illiquid investment as collateral.

• That summer, Mr. Lay converted more than 200,000 Enron options into stock, but did not sell the shares. A result was a tax liability of several million dollars for an investment that proved worthless.

• That July 31, Mr. Lay stopped daily sales of Enron shares begun the year before under a Securities and Exchange Commission program for corporate insiders. A financial adviser said Mr. Lay believed the stock price was too low.

• In late September, before the crisis hit, Mr. Lay used a $10 million incentive payment to pay down some bank loans, essentially using cash to forestall the further forced sale of Enron shares.

• About the same time, Mr. Lay began to sell and even abandon private equity investments that required him to post additional cash — money he could have raised by selling Enron shares.

All told, experts said, the records indicate that Mr. Lay believed what he said when he told employees the stock was a good buy in August 2001.

“That trading pattern is consistent with Ken Lay sincerely believing that Enron stock had reached a trough and had nowhere to go but up,” said Kevin J. Murphy, who specializes in executive compensation at the Marshall School of Business of the University of Southern California.

How did he get himself into this position in the first place? His portfolio had way too much Enron stock:

The records show that in 1997, Enron shares made up more than 90 percent of his liquid assets. Even his largest illiquid asset — a family partnership, in which he owned an interest then valued at $47.9 million — was largely invested in Enron.

His advisers said they pressed Mr. Lay to diversify, and in late 1999, he did so, largely with borrowed money.

Virtually all of Mr. Lay’s marketable investments were pledged as collateral to back margin loans from institutions like PaineWebber, First Union and Compass Bank, a regional bank. He had multiple lines of credit at Bank of America, including a $40 million line for him and his wife, $10 million for a family partnership and $11.7 million to allow him to buy 2.5 percent of what became the Houston Texans football team.

Throughout 2000, those credit lines underwrote the purchase of new investments. Following his strategists’ advice, Mr. Lay placed millions with money managers, including Goldman, Sachs; Cypress Asset Management: the TCW Group; and Fayez Sarofim & Company in Houston. Millions more went to mutual funds and other public investments.

And as Enron’s stock price fell, he was subjected to more and more margin calls. To raise the cash to pay them off, he sold more shares of Enron stock.

So Kenny Boy had neverending faith that each day would be the day that Enron’s stock price would bounce back, and he and his company would be back in clover. I guess this will ultimately lead to the conclusion that he really was out of touch, and not actively malicious. I’m not sure that this is better for his reputation than a conviction would have been.

By the way, it sure would’ve been nice to have known some of this while Lay was advising Dick Cheney on energy policy, wouldn’t it? Not that we’ll ever know what Lay actually advised Cheney to do, other than to keep his head down while addressing the ball and to order the cabernet with the pheasant.

Via Kevin Whited.

Sharon Keller hits the trifecta

I recently introduced you to Justice Sharon Keller of the state Court of Criminal Appeals. She was in the news recently for suggesting that funds earmarked for legal representation of death row inmates be returned to the state to help alleviate the budget crunch. Before that, she was probably best known for her refusal to acccept exculpatory evidence in the case of Roy Criner.

Well, she’s back in the news now that three of her court colleagues have criticized the full panel for allowing an inmate to be executed despite clear evidence that his court-appointed attorney was utterly incompetent. From the Chron story:

After upholding [Leonard] Rojas’ conviction on his automatic direct appeal, the Court of Criminal Appeals in 1997 appointed a Fort Worth lawyer to file a habeas appeal. A habeas appeal is designed to raise claims not based solely on the trial record, and habeas counsel is required by law to conduct a thorough investigation.

The lawyer admitted in an affidavit he did no independent investigation beyond speaking with Rojas one time, reading the trial record and talking to one of the trial attorneys.

The lawyer also failed to take action that might have preserved Rojas’ right to federal habeas review and did not even inform Rojas that his state habeas petition had been denied.

The attorney had received two probated suspensions from the State Bar of Texas. Two weeks after the Court of Criminal Appeals appointed him to represent Rojas, he received another probated suspension for failing to take care of his clients.

Last year, in a widely criticized opinion, the court ruled that habeas lawyers must be competent when appointed but need not represent the client competently. Price, Holcomb and Johnson also dissented in that case, with Price writing that competent counsel “ought to require more than a law license and a pulse.”

The Austin American-Statesman article notes further that the attorney in question had never handled a capital case before and was having “personal and professional problems” at the time.

You really have to love the logic of “habeas lawyers must be competent when appointed but need not represent the client competently”. I guess by that standard if you can drive a new car home, the dealership is off the hook forever, even if the car never starts again.

None of this bothers Keller, who’s more upset that her colleagues aired dirty laundry than with the idea that justice is a process rather than a fill-in-the-blank form:

Keller, joined by Judges Mike Keasler and Cathy Cochran, took a swipe at her colleagues for releasing the dissent, noting that “any jurisdiction this Court might have arguably had over (Rojas’) claims expired upon his execution.”

Yes, God forbid we should ever look back at our actions and reconsider whether they really were the right ones to take. The next time I’m called in for an after-action review of a project at work, I’ll just say that any jurisdiction my manager may have over me in this matter expired upon completion of my work. I’m sure they’ll understand.

You may note that I haven’t mentioned anything about Leonard Rojas or the crimes for which he was executed. Well, if these stories are accurate there’s little doubt that he’s guilty and unremorseful – in short, someone for whom little sympathy is warranted. That’s not the point. The point is that death is, you know, final. If some enterprising law student were to come along and review Leonard Rojas’ case, it wouldn’t make any difference if she were to find a glaring procedural error, the kind of error that would normally force a new trial or even outright dismissal of the charges. That’s because Leonard Rojas is now dead. The Court of Criminal Appeals allowed him to be executed without knowing or apparently caring if he really should be. If we can’t be confident that every death row inmate has had a fair and full chance to appeal his verdict, then we can’t be confident that only the guilty get executed. The fact that Rojas made it to the gurney without a real review of his case should be cause for consternation, not ass-covering.

The excuses that some of our state judges give as to why an incompetently represented defendant doesn’t deserve any better – “Hey, he was competent when we appointed him, it’s not my fault if he turned out to be a goober” – “OK, so his lawyer slept through parts of the trial, but how do you know they were important parts of the trial?” – are just pathetic. If we gave half as much consideration to ensuring fair representation as we do to coming up with these excuses, we wouldn’t need the excuses.

If there’s one good thing to come out of this, it’s that some legislators are working to remove the task of appointing attorneys for these cases from the Court of Appeals. They’ve clearly shown they can’t handle the responsibility.

Thanks to reader darms for the tip.

Valentine’s Day isn’t happy for everyone

Today is the day that Robert Chambers, the so-called “Preppy Killer”, gets out of jail after serving all 15 years of his plea-bargained sentence for the murder of Jennifer Levin in 1986.

Chambers confessed in 1988 to strangling 18-year-old Jennifer Levin two years earlier. He claimed it was an accident while they were allegedly having rough sex; prosecutors said he killed her in a rage.

Wearing a red sweater and green pants, Chambers ignored a phalanx of reporters as he walked out of Auburn Correctional Facility at 7:15 a.m., got into a van and rode off.

On the eve of his release, Chambers issued a statement of regret through his lawyer.

“There has not been a day since Jennifer Levin’s death that I have not regretted my actions on that day,” the one-paragraph statement said. “I know that the Levin family continues to suffer her loss, and I am deeply sorry for the grief I have caused them.”

You can take his remorse with a grain of salt, for he clearly felt none in previous years, even when appearing before the parole board:

[H]e has never shown any public remorse for what he has done. At a 1995 parole hearing, he made the curious statement: “I guess I could also give you the party line and say I have learned my lesson, I will never do this again, but that’s not how I feel at the moment.”

That quote comes from Court TV’s Crime Library, which has all of the details of this case. Don’t read it if your blood pressure is already elevated. I generally have little use for the victims’ rights groups today, but it’s useful to remember that there was a need for them in those days. The treatment of Jennifer Levin by the media and Chambers’ defense team was nothing short of atrocious. Years later, the New York Post is still using headlines like KINKY SEX, EARLY DEATH and saying things like this:

ON a balmy summer evening in 1986, two boozed-up teens strolled into Central Park for a frenzied sexual tryst.

Only one of them left the park alive.

It gets worse from there.

My heart goes out to Jennifer’s parents. May they someday find peace.

Happy Valentine’s Day

I’m still under the weather and thus low on blog energy, so this is as good a time as any to rerun My Favorite Valentine’s Day Story. Happy reading.