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Skilling's Indictment Turns Focus To Ken Lay

Feb 20, 2004 | Houston Chronicle

And then there was one.

With Jeff Skilling's indictment and Andrew Fastow's plea deal, a key question looms: What's next for Ken Lay?

At this point, no one can say. Prosecutors are still investigating Lay and haven't yet decided whether to bring charges. What's more, that investigation is likely to continue for months.

Lay's lawyers didn't speak Thursday, but they have steadfastly maintained his innocence. A spokeswoman for Lay, 61, said only that his attorneys were reviewing the indictment against Skilling, who served as Enron's chief operating officer and then its chief executive officer.

Some legal experts said if Lay's reputation as a more hands-off CEO turns out to be true, it could make it more difficult to bring criminal charges against him.

But, they also said, prosecutors could consider whether Lay acted in a "willfully blind" manner, that is whether he deliberately chose to ignore obvious signs of wrongdoing.

Skilling, who had been Enron's chief operating officer, took Lay's job as CEO in early 2001. Lay remained chairman and resumed the role of CEO when Skilling unexpectedly resigned in August of that year.

James Comey, U.S. deputy attorney general, spoke to reporters in Washington about Skilling's indictment, but said he couldn't comment specifically on Lay.

"The government is still a long way from bringing an indictment again Ken Lay," said Robert Mintz, a former federal prosecutor in New Jersey.

He added: "The government's approach here is to take these one defendant at a time and I think right now all of their efforts are going to be devoted to making these charges against Jeff Skilling stick and any charges against Ken Lay are very much an open question."

If Lay's reputation of being a hands-off manager is true "that makes it much more difficult to pin any criminal liability on him," Mintz added.

Houston defense lawyer David Berg said prosecutors are likely considering the concept of willful blindness, reviewing whether Lay buried his head in the sand, refused to do anything about what he knew was going on at Enron and benefited from it.

Something likely to figure into how prosecutors view Lay is the now-famous memo Sherron Watkins sent him after Skilling resigned that warned of accounting problems at the company. The government, Berg said, is likely to be looking at the kind of the public statements Lay made about Enron after he got that memo.

Lay attorney Mike Ramsey has defended Lay's handling of Watkins' allegations of accounting irregularities, saying Lay properly forwarded them to the chief legal counsel. They were then shifted to outside counsel.

Ramsey has also said that Lay never sold one share of Enron stock that was not a forced sale by banks or creditors.

Several former Enron employees said Thursday that Lay should have known what was going on at the company.

"I always thought Ken Lay was innocent in a way because Skilling was coming up with all the schemes, so then I think he probably didn't know," said Bryan Lari, a former data analyst. "But as CEO of a company, it's his responsibility to know. If he didn't know, he should have. I feel bad for him, because I truly think he probably was innocent, but because of this job he should have known."


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