Enron's Lay to be indicted.
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| Sun, 06-20-2004 - 11:59am |
It's about time!
http://www.theaustralian.news.com.au/common/story_page/0,5744,9904253%255E643,00.html
ENRON founder Kenneth Lay could be indicted this month on charges stemming from the energy trader's 2001 collapse, sources close to the case said yesterday.
They said federal prosecutors were aggressively pursuing the former chairman, and witnesses with information about him had recently testified before a special grand jury probing the December 2001 collapse.
Barring any delays, federal prosecutors aimed to seek an indictment before July 4, the sources said.
It is unclear what charges will be filed against Mr Lay, a friend and contributor to US President George W. Bush. But sources said any indictment would include conspiracy charges for helping to hide Enron's true financial condition.
Former Enron CEO Jeffrey Skilling and top accountant Richard Causey are awaiting trial on charges of conspiracy, fraud and insider trading.
Mr Lay's lawyer, Michael Ramsey, said he would ask to meet the Justice Department's Enron task force this week.
"I feel very confident that Ken Lay did not commit a crime," Mr Ramsey said. (Me:
)
Justice Department spokesman Bryan Sierra declined to comment.
The sources said prosecutors were probably focusing on Mr Lay's actions and statements when he resumed as CEO upon Mr Skilling's abrupt resignation in mid-August 2001.
Days after Mr Skilling's resignation, Mr Lay privately met Sherron Watkins, then an executive on Enron finance chief Andrew Fastow's staff, who had sent him a lengthy memo warning of impending doom from Mr Fastow's schemes.
Mr Ramsey said that Mr Lay took over as CEO "with one purpose – to cure any problems that might exist, and to bring the morale of the company back up to where it should be".
Speculation about possible criminal charges against Mr Lay intensified after Mr Fastow pleaded guilty in January to two counts of conspiracy and became the most senior former Enron executive to become a co-operating witness for the government.
Mr Fastow admitted to scheming to manipulate Enron's books by hiding debt and inflating profits.


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http://www.chron.com/cs/CDA/ssistory.mpl/front/2635540
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:
·Lay'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.
·His public statements to investors and analysts.
·Lay's attempt to find an alternative to having to substantially write down the "goodwill" or excess price paid for assets.
·His 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.
In classic prosecutorial fashion, the Enron Task Force has charged underlings and worked their way up the employee food chain. Twenty-one former Enron employees have been charged along with eight other people from banks, financial firms or accounting firms that did business with Enron.
The most recent indictment was against Lay's second in command -- ex-CEO Jeff Skilling, who pleaded not guilty to 35 felony charges in February.
Though it's possible the government has no "smoking gun" witness against Lay, prosecutors will likely use a plethora of witnesses to accuse the 62-year-old.
Among the witnesses the government might use against Lay are the company's ex-Chief Financial Officer Andrew Fastow, who pleaded guilty to two charges and agreed to cooperate with prosecutors; the company's former treasurer Ben Glisan, serving a five-year prison term but who testified before the grand jury in February and March; and Paula Rieker, a former executive in investor relations who has pleaded guilty. She traveled to New York with Lay in October 2001, a trip when the Enron entourage is alleged to have made false statements to analysts about Enron's troubles.
Prosecutors now have the cooperation of 10 people who have pleaded guilty, some of whom have been re-interviewed in recent weeks, focusing on Lay and others, including ex-Chief Accounting Officer Rick Causey.
Lay is likely to be charged with some type of fraud, possibly similar to the charges against Skilling and Causey. They are charged with insider trading, securities fraud, wire fraud, conspiracy and lying on Enron financial statements.
Several of the lawyers representing witnesses in the case speculate that rather than indict Lay separately, prosecutors will add Lay to the case against Skilling and Causey, meaning the three would be tried together.
This could be done for two main reasons: The government likes the efficiency of U.S. District Judge Sim Lake, who is overseeing the existing case, and it might pressure Causey to consider a plea bargain. But Causey has pleaded not guilty to 31 charges and has shown no signs of interest in a plea bargain.
Prosecutors seem to be focusing on Lay's behavior from August 2001 to the company's bankruptcy in December 2001 and seem to be especially interested in what Lay saw, heard or said regarding events including:
·Aug. 13, 2001 -- Lay's internal credit line, where he could trade Enron stock for company cash, was expanded from a $4 million cap to a $7.5 million cap. The evidence of this largesse is a handwritten note on meeting minutes saying : "$7.5 million per Dr. LeMaistre." In January 2003, Dr. Charles LeMaistre, the retired head of University of Texas M.D. Anderson Cancer Center who ran the board's compensation committee, appeared before the Enron grand jury.
In August, September and October of 2001, Lay borrowed more than $15 million through this revolving credit line, paying it back with stock and leaving a debt of some $7 million when the company declared bankruptcy.
·Aug. 14 -- Skilling abruptly resigned, leaving Lay as both CEO and board chairman and unable to claim he was letting someone else run the company. Lay told people Skilling left for personal reasons but if he knew otherwise, even those representations might work against him.
·Aug. 15 -- Vice President Sherron Watkins sent her now-famous memo to Lay warning of impending accounting scandal and citing several problematic deals including the four accounting partnerships, called the Raptors; and Fastow's involvement in side deals.
Lay had the Vinson & Elkins law firm do a review, though Watkins suggested that firm has a conflict and outside accountants should take a look.
· Aug. 17 -- Lay's Chief of Staff Steven Kean e-mailed Lay warning about problems with accounting, overhyping of stock and a mercenary culture at Enron. E-mail was almost schizophrenic, simultaneously lauding the company while listing severe problems.
·Last week of August -- Recently laid-off employee Margaret Ceconi sent e-mail addressed to Lay and the board secretary warning of fraud in hiding Enron Energy Services losses of at least $500 million by moving them to another sector of Enron to make EES appear profitable.
·In this last quarter, Lay sought to find ways around new accounting rules that would require the company to acknowledge debt from the "goodwill" payments for assets over their market value
Prosecutors are interested in whether Lay specifically sought to improperly lessen the financial hit from Enron's Azurix asset purchases, including its overpriced acquisition of Wessex Water in the United Kingdom.
Prosecutors will also want evidence of the positive statements Lay made to employees, analysts, and investors from August until the bankruptcy.
In September 2001, for example, Lay told Enron employees that the stock is "incredibly cheap" and said "talk up the stock and talk positively about Enron to your family and friends. ... There have been all kinds of reckless and unfounded rumors about Enron and the financial condition of Enron."
I read sometime ago Lay has put his $$$ in annunities, which can't be touched. Much like OJ's victims families can't touch his pension, although they were awarded X amount in a civil court.
Ct. lost a bunch of $$$ too.
Ken Lay's Nest Egg.
http://www.motherjones.com/news/feature/2002/02/enron_insure.html
Thousands of former Enron employees saw their retirement funds disappear when the energy giant collapsed -- but Kenneth Lay has millions socked away in lawsuit-proof investments.
Late last month, the wife of former Enron chairman Kenneth Lay tearfully told a national television audience that she and her husband were struggling to avoid personal bankruptcy following the collapse of the Houston energy-trading company. What Linda Lay failed to tell viewers of NBC's Today show, however, was that she and her husband had shifted millions in personal assets to investments that are beyond the reach of creditors or legal judgments.
In February 2000, Mother Jones has learned, the Lays paid about $4 million -- an amount greater than Lay's entire salary from Enron that year -- to buy variable annuities that will, starting in 2007, guarantee the couple an annual income of about $900,000. While stocks and most other ordinary investments are open to attack by creditors, life insurance policies and annuities are protected in many states. Variable annuities of the sort purchased by the Lays are basically tax-deferred investments wrapped in insurance policies.
Six states -- including Texas, where the Lays live -- provide the maximum degree of protection to investments in variable annuities, leaving them virtually impervious to attack by creditors.
"There are a lot of people in Texas, with a lot of spouses and family around them, who are scared of having it all sued away from them," says Ben Baldwin, Jr., the president of Baldwin Financial Systems, Inc., an investment advisory firm in Northbrook, Illinois. "It may well have been the creditor protection that drove interest in the annuity. It would have been a natural -- I could see that happening very easily. Litigation is all over the place. The higher visibility a person is, the higher the likelihood of lawsuits."
Texas law stipulates that the proceeds of annuity contracts "are fully exempt from creditors and from all demands in any bankruptcy and from execution, attachment, garnishment, or other legal process unless a statutory exemption, such as fraud, is applicable."
"We tell people that whenever you do asset protection planning, the time to do it is when the seas are calm and there's not even a hint of a storm on the horizon," says David Lampe, the president of Houston Asset Management, Inc., a financial consulting and investment advisory firm. Apparently, the Lays heeded similar advice.
In her Today show appearance, Linda Lay said that she and her husband were "fighting for liquidity," adding: "It's gone. There's nothing left. Everything we had mostly was in Enron stock."
Once the annuities reach maturity in February 2007, Kenneth and Linda Lay will be guaranteed monthly payments of $43,023 and $32,643, respectively, for life.
I need to have a fireworks icon here!!!!
Enron cost $$$
News today..... Gov. Rowland is resigning.
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