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SEC Seeks Documents From Ex-Enron Chief

Sep 29, 2003 | AP

The Securities and Exchange Commission asked a federal judge Monday to force former Enron Corp. chairman Kenneth L. Lay to turn over documents sought for an SEC investigation of the bankrupt Houston energy company.

The SEC said Lay was wrong to contend that surrendering the documents would violate his constitutional right against self-incrimination.

The agency asked U.S. District Judge Royce Lamberth of Washington to order Lay to produce the documents so that the judge could determine whether they were, as the SEC contends, corporate documents and not personal papers.

In its court filing, the SEC said Lay had told the agency the documents in dispute included copies of Enron memoranda and other documents that included Lay's handwriting as well as copies of letters, position papers and drafts of speeches.

Through his attorneys, Lay had refused to produce the documents on the self-incrimination claim.

"The documents withheld by Lay, generated during his tenure at Enron, are corporate records," the SEC said in Monday's court filing. The agency said that there was no Fifth Amendment protection for the corporate records, and they must be turned over "even when the records might tend to incriminate the individual personally."

Attorneys for Lay and Lay spokeswoman Kelly Kimberly did not return phone calls seeking comment.

Enron spiraled into bankruptcy in late 2001, the first of a wave of corporate accounting scandals that engulfed not only Enron but such other big corporate names as WorldCom, Global Crossing and Adelphia Communications.

The fallout from those reverberated from Wall Street to Congress, which responded to the public outcry by passing a far-reaching corporate responsibility law last year, the Sarbanes-Oxley Act.

Legal analysts said fallout from those cases was continuing with the government pursuing a tougher line in trying to build civil and criminal cases.

"Enron was the first of an enormous wave of corporate accounting scandals, and that wave has prompted the government to push for more criminal prosecutions," said Dan Small, a former federal prosecutor now with the law firm of Broad and Cassel.

Robert Mintz, another former federal prosecutor, said the SEC was trying to build a civil case against Lay to make sure it has a fallback position if Justice Department prosecutors should fail in current efforts to develop a criminal case.

"At this point it is an open question whether criminal charges will ever come together for the government against Ken Lay, so the SEC is lining up a civil case as a backup," Mintz said.

The highest-ranking Enron executive charged to date is former chief financial officer Andrew Fastow, who faces close to 100 criminal charges including fraud, money laundering, conspiracy and obstruction of justice. Fastow has pleaded innocent and is free on $5 million bond as he awaits trial next April.

In August, Michael Kopper, managing director under Fastow of Enron Global Finance, pleaded guilty to money laundering and conspiracy and agreed to cooperate with federal prosecutors in what one called a substantial breakthrough in the investigation.

Fastow has been accused of masterminding the schemes that led Enron into bankruptcy in 2001 amid devastating disclosures of inflated profits, hidden debt and questionable accounting.

While the government has not filed criminal charges against Lay, the former chairman, or Jeffrey Skilling, the company's former chief executive, the two were named in a civil lawsuit filed in June against Enron and several former executives and directors.

The civil suit filed by the Labor Department seeks to recover hundreds of millions of dollars in retirement money that Enron employees lost when the company went into bankruptcy.

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