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Former Enron Chief Skilling May Be Investigators' Next Target

Jan 15, 2004 | Houston Chronicle

Former Enron chief executive Jeff Skilling is now centered in the Justice Department's cross hairs.

Defense attorneys involved in the Enron cases have expected for months that Skilling, 50, eventually would be charged. That could happen within weeks, sources close to the case say, now that prosecutors have secured the testimony of Andrew Fastow, who pleaded guilty on Wednesday.

Testimony from the former chief financial officer will help in several prosecutions but his main value is what he can say about Skilling and former Enron Chairman Ken Lay.

Though Lay will undoubtedly be vigorously investigated now that Fastow is in the government camp, insiders say it's Skilling who seems most immediately in peril.

Both Skilling and Lay have repeatedly proclaimed their innocence.

"It's clear that my client has always been in the government's sights," said Skilling lawyer Bruce Hiler on Wednesday. "The only question is whether the system is going to hold up under all the pressure. If it does and the truth is told then there shouldn't be any case to worry about."

Outside observers say prosecutors can be expected to have Fastow walk them through Enron's complex financial deals. The government will likely look to Fastow to shed new light on the documents they've already collected.

"In any financial fraud case, the CFO knows where the bodies are buried," said Robert Mintz, a Newark, N.J.-based defense lawyer and former federal prosecutor who has followed the Enron cases.

Fastow, he said, should be able to give prosecutors information that's been missing as they seek to move up the chain.

If "smoking guns" were out there, such charges would have been brought already, Mintz noted.

"His assistance will be invaluable to the government since he will be able to (help) better than anybody else sort of take them by the hand and lead them through the complex web of financial transactions that led to the company's downfall," Mintz said.

Fastow also may be able to recount conversations that he had with others and point to documents that were reviewed by others.

Generally speaking, the government may look to an insider to help stitch together circumstantial evidence, said David Crump, a law professor at the University of Houston.

Witnesses have been called before the grand jury and to give statements to agents in several different earnings management schemes that could lead to Skilling, defense attorneys have noted over the past few months.

For a trial, prosecutors would almost certainly want to corroborate whatever Fastow may say, be it from testimony of other cooperating witnesses or documents.

That's because without something backing him up, jurors might not be inclined to believe the testimony of Fastow beyond a reasonable doubt.

"The government will have to corroborate that testimony to establish Mr. Fastow's believability," said Houston's Philip Hilder, a former prosecutor who represents several witnesses in the Enron criminal cases.

The government's Enron investigation is going down several paths with several theories, Hilder said, adding it's hard to predict what any case against Skilling might look like.

The government, though, likely has a sense of what types of information Fastow could be able to testify to, Hilder said.

Skilling unexpectedly resigned as Enron's CEO in August 2001, citing family and personal reasons. He'd started the job in February of that year, after serving as Enron's president and chief operating officer.

Questions would later mount about Enron's finances and Enron would file for bankruptcy.

In a December 2001 interview with the Chronicle, Skilling said he'd done nothing wrong and that Enron's collapse left him heartbroken.

Two months later, he testified before the U.S. House Energy and Commerce Committee, telling lawmakers that when he left Enron "I absolutely, unequivocally thought the company was in good shape."

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