Lay, Skilling Found Guilty in Enron Fraud Case

Former Enron Corp. executives Kenneth Lay and Jeffrey Skilling were convicted Thursday of conspiracy to commit securities and wire fraud in one of the biggest business scandals in U.S. history. The verdict put the blame for the demise of what was once the nation's seventh-largest company squarely on its top two executives.

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ALEX CHADWICK, host:

First the lead. A verdict in the Enron trial today was the sixth day of deliberations in the trial of former Enron executives Kenneth Lay and Jeffrey Skilling. Outside the courthouse after the guilty verdicts, Jeffrey Skilling spoke to reporters.

Mr. JEFFREY SKILLING (Former Enron executive): Obviously I'm disappointed, but that's the way the system works.

CHADWICK: Jeffrey Skilling. His attorney, Daniel Petrocelli also spoke about the verdict.

Mr. DANIEL PETROCELLI (Attorney): We had a trial. Obviously, it did not come out the way we had hoped. Doesn't change our view of what happened at Enron and certainly doesn't change our view of Jeff Skilling's innocence.

CHADWICK: Jim Zarolli is at the courthouse in Houston. We spoke a short time ago.

JIM ZAROLLI reporting:

Jeffrey Skilling, who was the former chief executive of Enron, was convicted on 19 counts and found not guilty on nine counts. They mostly had to do with insider trading. Ken Lay was convicted of all the counts, six counts against him. He was also convicted of four counts of bank fraud. There was a separate bench trial immediately after the main trial in which the judge rendered a verdict and he also found Ken Lay guilty.

CHADWICK: So what happened in the courtroom as the verdicts were read?

ZAROLLI: You know, it's kind of hard - we were actually in the auxiliary courtroom watching on a screen. It was sort of hard to say. I mean the judge asked them to stand. Both men stood, listened to the verdict and then sat down. In the courtroom, where I was, the auxiliary courtroom where a lot of people - there was a lot of media but also some members of the public came in. There was sort of a cheer that went up when the convictions were announced. I mean, obviously there are a lot people here in Houston who lost a lot of money when Enron went down. And there's some very strong feelings about what happened there. I think a lot of people were very glad to see these guilty verdicts announced.

CHADWICK: It may be too soon but is there any indication of what it was that jurors found most compelling in this trial, that is, what led to the actual convictions?

ZAROLLI: No, the judge has told the jurors that they can speak to the press. We're still waiting to see whether any of them are going to. So when, obviously, if they talk, we'll know a lot more. It was really hard to read the jury during the deliberations. They didn't ask for a lot more material. They made very few requests, so it was difficult to know what was going through their minds. I have to say that just, there was a pretty widespread view among the reporters and other people following the trial that these convictions were going to come down, that the prosecution had a very strong case. You had a number of executives from the company who were given immunity deals to testify. They came in, they testified that both Skilling and Lay, Ken Lay knew about what was going on, and even condoned the use of these accounting gimmicks to cover up the losses.

I mean it was very strong testimony. You had the former treasurer, Ben Gleason, saying, yes, Jeffrey Skilling clearly understood what these special purpose entities were suppose to do. You had investor relations executives Mark Kanick(ph) and Paula Reeker(ph) saying Skilling told them to change wording in the earnings release in 2001, or 2000. They had just a parade of witnesses like that.

Skilling and Lay took the stand themselves and tried to rebut it, but I think they came off as a little maybe combative and defensive. So what the jury, you know, is thinking, was thinking when it made, when it convicted them, is hard to say at this point. But it's reasonable to guess that they were impressed by that evidence.

CHADWICK: We'll get more as the day goes on, Jim, but can you tell us what are the possible sentences that Mr. Skilling and Mr. Lay now face?

ZAROLLI: Well, that is always a difficult thing to say at this point. Jeffrey Skilling could've gotten as much as 275 years, Ken Lay as much as 165. Obviously, Skilling was acquitted on some of the counts against him, so we don't really know. You know, there's some questions now, legal questions about the federal sentencing guidelines, how they apply here. The judge basically said that he was going to, you know, take the next few months to decide what was going on.

CHADWICK: All right, Jim Zarolli in Houston. Jim, thank you, and we'll follow the story throughout the day.

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