Prison May Await Lay, Skilling After Enron Convictions

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A federal court jury in Houston convicts Enron founder Ken Lay and former chief executive Jeff Skilling of conspiracy and fraud. They will be sentenced on Sept. 11, and face lengthy prison terms. Both men intend to appeal the verdicts.


It's MORNING EDITION from NPR News. I'm Renee Montagne. Good morning.

Enron founder Ken Lay and former Chief Executive Jeff Skilling have been convicted in one of the biggest accounting frauds in U.S. history. A federal court jury in Houston yesterday convicted the two men of conspiracy and fraud after deliberating for six days. In a moment, what the jurors were thinking.

First, the aftermath of the verdict from NPR's Jim Zarroli.

JIM ZARROLI reporting:

Federal Judge Simeon Lake asked the two defendants to stand and then read the verdicts one by one. Ken Lay was convicted on all counts, including fraud and conspiracy. Skilling was acquitted of most of the insider trading charges, but convicted on 19 of the 28 counts he faced. For federal prosecutors, it was a sweet victory. Enron was the first of the big accounting scandals that have occurred in recent years, and Justice Department officials were criticized for taking so long to build their case. Yesterday, Federal Prosecutor Sean Berkowitz could finally do a victory lap.

Mr. SEAN BERKOWITZ (Federal Prosecutor): The jury has spoken and they have sent an unmistakable message to boardrooms across the country: you can't lie to shareholders; you can't put yourselves in front of your employees' interests. No matter how rich and powerful you are, you have to play by the rules.

ZARROLI: For Ken Lay, in particular, the convictions marked a spectacular fall from grace. Enron was once lauded as a supremely innovative and aggressive company. Lay was a leading figure in Houston's business and social worlds, a major philanthropist on close terms with the Bush family.

After the verdicts, the 64-year-old Lay stood in the sweltering Texas heat and briefly addressed reporters, his wife Linda by his side.

Mr. KEN LAY (Enron Founder): Certainly we're surprised; I think, probably more appropriately to say, were shocked. I firmly believe I'm innocent of the charges against me. But despite what happened today, I'm still a very blessed man.

ZARROLI: As Lay spoke, the sidewalk outside the courthouse was jammed with reporters, but also with former Enron employees and investors, many of whom lost much of their savings when the company's stock price collapsed. Some jeered as the defendants left, and one person called out to Skilling, where's your smirk now? Among those watching was former shareholder Tricia Fernandez(ph).

Ms. TRICIA FERNANDEZ: Well, I think that they came to the right verdict. I think that they were probably all heroes in doing that. Lay and Skilling affected the lives of many, many people who've lost a lot from their actions, and I think that they should have been prosecuted.

ZARROLI: Not far away stood Deborah DeForge. Until the bankruptcy, she worked for Enron Energy Services and she once hoped she'd be retiring soon. But with her savings mostly gone, she's had to begin a second career as a real estate broker. DeForge said she was satisfied that justice had been done, but wasn't sure the verdicts would do much to stop future scandals.

Ms. DEBORAH DEFORGE: I would like to think that it would, but my guess is probably not. I think people are going to have to make the top leaders more accountable, ask the right questions. Hopefully, it'll give people a little more ammunition for that.

ZARROLI: The verdicts could also send a message to corporate executives, like WorldCom's Bernard Ebbers, Lay claim he never knew about the fraud taking place under his watch. Attorney Philip Hilder, who represents Enron whistleblower Sherron Watkins, says that kind of defense just doesn't work.

Mr. PHILIP HILDER (Former Counsel, Enron whistleblower Sherron Watkins): Those that are running companies better know what's going on below them and take steps accordingly, because I think juries just frankly do not buy the ostrich defense.

ZARROLI: Lay and Skilling also share something else with Bernie Ebbers, and with Tyco's Dennis Kozlowski - they will almost certainly face prison terms, perhaps lengthy ones. Lay and Skilling will be sentenced on September 11th. They will be free on bail until then. Both men said they would appeal the verdicts.

Jim Zarroli, NPR News, Houston.

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