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Enron Trial of Lay and Skilling Begins

The widely-watch trial of former Enron executives Kenneth Lay and Jeffrey Skilling got underway yesterday in Houston with U.S. District Judge Simeon T. Lake III swearing in a in a panel of 12 jurors and four alternates, selected from a pool of 100 that had packed his courtroom at the beginning of the day. Judge Lake set the tone for the trial, promising prospective jurors that "this will be one of the most interesting and important cases ever tried," but admonishing them that "we are not looking for people who want to right a wrong or provide remedies for those who suffered in the collapse of Enron." The Wall Street Journal article “Enron Judge Can Face Down Outsized Egos” written by Nathan Koppel continues:

With opening arguments set to begin this morning anyone involved in what could be a long trial may already be convinced that Judge Lake will move quickly. "He is known to [hold] hearings at 5:00 p.m. on a Friday," says Houston criminal defense attorney Rusty Hardin. Stanley Schneider, a Houston criminal defense lawyer, recalls that he once told Judge Lake he would have a hard time making an 8:30 a.m. hearing because of car pool duties. The judge's response, according to Mr. Schneider: "Have your wife drive car pool."
Mr. Lay, 63, and Mr. Skilling, 52, are accused of masterminding one of the biggest accounting frauds in U.S. corporate history. They are accused of lying about Enron's financial health before the company filed for bankruptcy in December 2001 in the wake of revelations of inflated profits and an intricately complicated alleged fraud that prosecutors say involved the cover-up of hundreds of millions of dollars of debt.
Defense lawyers for both Mr. Lay and Mr. Skilling, who are being tried jointly, blame Enron's woes on others, including Andrew Fastow, the company's former chief financial officer, who is now a key government witness. Mr. Fastow pleaded guilty to conspiracy charges in 2004 and faces up to ten years in prison. Fifteen other former Enron executives have pleaded guilty in the accounting scandal, which along with other corporate scandals in the last five years has led to stiffened penalties for corporate criminals.
Judge Lake has been seated at the defense table himself. After graduating at the top of his University of Texas Law School class, he served as a military lawyer in Vietnam. He then practiced corporate law at Fulbright & Jaworski LLP, one of Houston's top law firms. He defended insurance companies in tort suits and energy companies in environmental contamination cases. The judge may have a lighter side, but even as a young lawyer, he didn't often show it, says Fulbright partner James Sales. "Some people have described him as totally humorless," Mr. Sales says, adding that the judge shows a dry wit when among friends.
In the Enron case, Judge Lake already has taken what defense lawyers consider a hard line. Last week, he ruled for the second time against Messrs. Lay and Skilling, whose lawyers have asked for the trial to be moved out of Houston. Those rulings have prompted the defendants to appeal the issue to the Fifth Circuit. Both men have pleaded not guilty.

The Houston Chronicle has extensive coverage of the trial including an article from January 27, 2006 written by Mary Flood entitled “Only two defendants, but many accused” which goes into some detail about the nearly 100 ‘unindicted co-conspirators’ in the main Enron case. Businessweek has an interesting article entitled “I survived Enron” which details how six rank-and-file employees moved on from the mess that was Enron.

Toomre Capital Markets recommends a couple of other blogs regarding the Lay and Skilling Enron trial:

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