Lay, Skilling guilty on nearly all counts

HOUSTON - The trial lasted nearly four months. The jury deliberated six days. And after being convicted Thursday of fraud and conspiracy in one of the biggest corporate scandals in U.S. history, former Enron executives Kenneth Lay and Jeffrey Skilling face the possibility of spending the rest of their lives in prison.

“The jury sent an unmistakable message: You can’t lie to shareholders. No matter how rich and powerful, you must play by the rules,” prosecutor Sean Berkowitz said.

As the verdicts were read, Lay slumped, sighed heavily and shook his head, his sobbing wife Linda tightly clutching his arm. Skilling looked shaken and left the courtroom quickly after U.S. District Judge Sim Lake set sentencing for Sept. 11.

Afterward, still in the courtroom, Lay and his weeping family members gathered in a circle, clasped hands and prayed.

“God’s got another plan right now,” Lay, the son of a preacher, said without tears. “We’ll all come through this stronger and more reliant on God.”

Outside the courthouse, he said the verdict had “shocked” him.

“Certainly this is not the outcome we expected,” Lay said.  “I firmly believe I am innocent of the charges against me, as I have said from Day One.”

“If I were a CEO today, I would say it sends a very dangerous message. (It) basically makes an innocent act criminal,” he said.

In a devastating verdict, Lay and Skilling were convicted of a total of 29 criminal counts, including a conspiracy to hide the failing health of the company by selling a boosterish optimism to Wall Street and the public.

Lay was convicted on all six counts of conspiracy, securities and wire fraud against him in the corporate trial and all four in the separate personal banking trial. Former chief executive Skilling was convicted on 19 of 28 counts, including one count of insider trading, and acquitted on the remaining nine.

‘I wanted very, very badly to believe’
Jurors found that the once-wealthy and powerful corporate chiefs repeatedly lied to cover up accounting tricks and business failures that led to its 2001 demise. The collapse wiped out more than $60 billion in market value, almost $2.1 billion in retirement savings and 5,600 jobs.

“I wanted very, very badly to believe what they were saying, very much so,” juror Wendy Vaughan told reporters after the verdict.

Richard Carson / Reuters Former Enron chairman Ken Lay glances up as he arrives at federal court for his fraud and conspiracy trial earlier this month.

The conspiracy conviction was a major win for the government, capping an era that has seen prosecutors win convictions against executives from WorldCom Inc. to Adelphia Communications Corp. and homemaking maven Martha Stewart. The public outrage over the string of corporate scandals led Congress to pass the Sarbanes-Oxley Act, designed to make company executives more accountable.

“The jury’s verdicts help to close a notorious chapter in the history of America’s publicly traded companies” said Rep. Michael Oxley, R-Ohio, co-author of the legislation. “Appeals aside, the end of the trial will mark the end of a dark era.”

The charges against Lay, 64, carry a maximum penalty of 45 years in prison for the corporate trial and 120 years in the personal trial. The charges against Skilling, 52, carry a maximum 185 years.

After the judge left the courtroom, Lay’s family and some friends gathered around him as the ex-chairman, red-faced and fighting back tears, hugged them and thanked them for their support.

Skilling, sitting with his brother, Mark, showed no emotion when the verdict was read.

The sentencing will come five years almost to the day after Skilling sold 500,000 shares of Enron stock for $15.5 million, for which he was convicted of insider trading.

“Obviously, I’m disappointed,” Skilling told reporters outside the courthouse. “But that’s the way the system works.”

“We’re going to stand behind him,” his lawyer, Daniel Petrocelli, said. “As I told him, we’ve just begun to fight.”

Lay attorney Mike Ramsey also promised an appeal and said, “The biggest issue is the venue issue,” meaning the trial should not have been held in Houston, where Enron was based.

Skilling’s $5 million bond, which restricts him to the continental United States, remains in effect. Lay surrendered his passport and posted a $5 million bond secured with family-owned properties at a hearing following the verdict.

The Enron founder was also ordered to stay in the Southern District of Texas or Colorado, avoid contact with any victim of the fraud and report regularly to court authorities. He also cannot own a gun or use alcohol excessively or drugs.

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