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Ken Lay doesn’t wear dark glasses, hats or disguises to avoid being recognized in public, says his criminal-defense lawyer Michael Ramsey. Even though the word “Enron” has become widely accepted shorthand in the media for corporate corruption, Lay, the former chairman of Enron Corp. in Houston, finds that people on the street people “treat him decently,” says Ramsey, a Houston solo. “He has not had one quarrel in a public setting.” Lay, who has consistently denied the government’s voluminous allegations against him, continues to work on his private business concerns, Ramsey says, and he remains extremely optimistic and busy. “He is the only client whom I have to make an appointment to see,” Ramsey says. The defense lawyer says he even approves of Lay socializing with other Enron defendants and former company employees. However, Ramsey says he told Lay not to discuss any specifics of Enron-related cases unless lawyers are present. But asked about how his client is holding up overall under the pressure of the Enron prosecution, Michael Ramsey resorts to an antiquated military lexicon. “In the Civil War, the soldiers who had seen battle would call it “the elephant’ and they used to say, “Unless you’ve actually seen the elephant, you cannot understand it.’ Well, being an Enron defendant is like that. You cannot understand unless you’ve actually lived it,” Ramsey says. Lay, who faces a multiple-count indictment in which the government alleges he conspired to commit securities and wire fraud, among other offenses, could return to the front lines sooner rather than later. Lay is set to go to trial on the fraud charges in January 2006 alongside co-defendants Jeff Skilling, former Enron chief executive officer, and Richard Causey, former Enron chief accounting officer. Lay, Skilling and Causey deny the government’s allegations in United States v. Richard A. Causey, et al. But Enron Task Force prosecutors filed a motion on April 4 asking U.S. District Judge Sim Lake of Houston to set a trial for May or June for Lay on some bank charges that Lake earlier severed from the big Enron trial. The prosecutors say in the motion that the bank fraud trial should start no later than June 2005 “because Lay has repeatedly stated to the Court and the public that he is prepared for trial and seeks a speedy trial.” In a response filed on April 13, Lay requested a bench-trial on the severed bank fraud charges � not this summer, but instead while the jury deliberates in the trial scheduled for January 2006 in United States v. Richard A. Causey, et al. “This approach minimizes . . . the very palpable risk of intensifying in advance of the main trial already inflamed jury prejudices . . . ,” Lay states in his response. With a hearing scheduled on April 21 in which Lake will consider the proposal to bump up Lay’s bank fraud trial, and an April 18 trial scheduled for five other former Enron executives, a dozen defense lawyers who represent Enron defendants spoke recently with Texas Lawyer about the formidable and expensive challenges peculiar to representing defendants in Enron-related cases. Many of the 12 Enron defense lawyers Texas Lawyer talked to requested anonymity. Overwhelmingly, the defense lawyers say, their clients must contend with a reluctant witness pool, an overwhelming stack of documents to sift through (estimated at 80 million pages), and negative public sentiment that envelopes every Enron defendant and leads to a de facto presumption of guilt for their clients. Chronicled in headlines, best-selling books and a soon-to-be widely released film documentary titled “Enron: The Smartest Guys in the Room,” the Enron scandal has so dominated the news since the company declared bankruptcy in December 2001 that defense lawyers contend it’s hard to find an unbiased jury. Their point was underscored on April 11 when U.S. District Judge Vanessa Gilmore said instead of just questioning jurors from the bench, which is typical in federal cases, she would allow defense attorneys and prosecutors scheduled to appear in the upcoming trial of Enron Broadband Services executives � United States v. Joseph Hirko, et al. � to have an hour apiece to question prospective jurors � an unusually long time because of concerns that Houstonians may have biases against Enron defendants. Both sides in Hirko already have agreed that nearly 100 prospective jurors who responded to a survey mailed to their homes needed to be excused because of conflicts or bias. “Hardly a disparaging adjective (opulent, greedy, lying, disgusting, revolting), incendiary characterization (rapist, crook, axe-murderer, terrorist, child molester), comparison to a notorious villain (Satan, Al Qaeda, Hitler, Darth Vader . . . or analogy to a local or national tragedy (1980s oil bust, September 11, the Kennedy Assassination) has been spared when describing Enron [defendants] . . . and the collapse of the company they built,” Skilling states in his Memorandum in Support of a Joint Motion to Transfer Venue in Causey. Judge Lake denied a hearing on that motion on Jan. 19. “Fundamentally Wrong” Unlike Lay, Skilling has been involved in public scuffling. In May 2004, U.S. District Judge Frances Stacy of Houston ordered Skilling to seek alcohol counseling and get a job or do volunteer work. Prosecutors previously had told Judge Lake that Skilling had been picked up by New York police at 4 a.m. a month earlier for allegedly acting erratically. According to the Houston Chronicle’s account of the hearing, Skilling’s defense lawyers said he was a victim in the incident. In response, Stacy told Skilling, “Personally, I can’t imagine what good thing can happen outside of your home between the hours of midnight and 6 a.m.” Dan Petrocelli, a partner in Los Angeles’ O’Melveny & Myers who is Skilling’s lawyer, told Stacy that Skilling was working full time on his defense. But Stacy ordered the former Enron CEO to do at least a couple of hours of community service per week anyway. Petrocelli did not return a telephone call before presstime on April 14 seeking comment about any volunteer work Skilling may be doing. But in general, Petrocelli stands out as the most outspoken among the Enron defense lawyers in condemning prosecutors for allegedly promoting the presumption of guilt. Causey’s lawyers, Mark Hulkower and Reid Weingarten, partners in Washington, D.C.’s Steptoe & Johnson, decline to comment for this article. “These prosecutions are fundamentally wrong. They are proceeding from a premise that the highest officials of Enron should be prosecuted and convicted of crimes whether or not they are guilty. The creation of the task force is a political response to the public outcry for retribution. This is a classic political witch hunt,” Petrocelli says. Given that Enron defendants have not persuaded any judges to try their cases outside of Houston, defense lawyers say the widespread impression of wrongdoing associated with the once high-flying energy company means that any defendant linked to Enron must not just puncture the government’s allegations with doubt � the objective in most criminal cases � but also must make it abundantly clear that they are innocent. “Oftentimes a jury in a white-collar criminal case will acquit if they are confused. But with Enron you have to make the jury understand the case, because there is a strong presumption of guilt,” says Dan Cogdell, who represented Sheila Kahanek, a former Enron accountant and senior director. Kahanek, initially charged by the government with conspiracy and fraud, was the only one of six defendants to win acquittal on Nov. 3, 2004, in United States v. Dan Bayly, et al. The so-called Nigerian barge trial, over which U.S. District Judge Ewing Werlein of Houston presided, was named after a centerpiece transaction for the government’s case � the December 1999 sale of electricity-producing Nigerian barges to Merrill Lynch & Co. from Enron. The government’s indictment alleged that Enron parked the barge assets with Merrill, promising to buy them back within six months at a profit for Merrill and to “enhance fraudulently” Enron’s 1999 financial reports. Kahanek, who saved money by working side-by-side with her lawyer to prepare her defense, testified in court that she never knew of any verbal agreement for Enron to buy back the barges. Kahanek believes that Enron defendants facing future trials should devote all of their time to their cases. “If I was Skilling, Lay or Causey,” she says, “my sole reason for existing now would be to know the evidence and help my attorneys focus in the right direction. I would walk them through every piece of evidence. That’s how I would go about it.” In her unique position as the sole acquitted Enron defendant, Kahanek says she gets her telephone calls returned immediately, because people recognize her name. New acquaintances always want to hear about her experience, and they’re amazed that she endured. Meanwhile on the street, she goes about unnoticed. “I wear my hair pulled back, and I’m in jeans,” she says. “I don’t look like an Enron defendant.” Not nearly as recognized as higher profile former Enron employees, Kahanek says she hasn’t felt any ostracism in public. Now that a jury has acquitted her, she is even game enough, she says, to plan to attend the April 19 Houston premier of “Enron: The Smartest Guys in the Room.” Kahanek, evaluating her next career move, feels she lost a year of her life to her defense and identifies “practicing forgiveness” as her biggest challenge as an Enron defendant. “I am heartbroken by my government’s actions against me,” she says. “Imagine how that feels.” Neither Cogdell nor Ramsey think Kahanek’s acquittal came easily. Enron defendants, including Kahanek, always face a tougher task at trial than most criminal defendants, who are supposed to be presumed innocent, Ramsey says. “We have the burden of proof.” More Indictments to Come? There are more than 40 attorneys nationwide identified publicly as representing Enron defendants. [See the chart, "Enron Legal Fallout." In the United States, 28 individuals have either been indicted or pleaded guilty in Enron-related cases. In addition, three former Enron bankers indicted in Houston are fighting extradition from the United Kingdom back to the United States. The unhappy fraternity of former Enron employees, advisers and bankers who need defense lawyers swells even larger when you consider the undisclosed number of others linked to the scandal whom the government has named as unindicted co-conspirators or plans to call upon as witnesses for the prosecution. With a second grand jury impaneled last month in the Enron investigation, the threat remains for more indictments of former Enron employees, Cogdell and Ramsey say. One Enron defense lawyer who requests anonymity and who represents a defendant in Hirko, says, "Since everybody had stock options that they all sold, there is the implied threat of insider-trading charges for most of them. Many people who have only been designated as witnesses are fearful." That same lawyer, along with Cogdell, Petrocelli and Ramsey, say that the prospect of more indictments has limited defendants' access to witnesses who could be helpful to build their cases. "The government has gone out of its way to chill witnesses," the lawyer who requested anonymity says. Ramsey agrees. "The witnesses have all been denominated as unindicted co-conspirators, some publicly and some not, and that dries the witness pool completely up," Ramsey says. "If those witnesses talk to the defense and don't tell the government, that's going to be a deal-breaker with the government," he adds. Another defense lawyer, who represents an Enron defendant who pleaded guilty, supports Ramsey's point. "A witness cooperating with the government would not do anything that was unwelcome by prosecutors. Everything you do is designed to make sure that the government writes a letter at the end to the judge asking to reduce your sentence. That's the dynamics of cooperation," says the defense lawyer, who requests anonymity. "It's a cooperative relationship. Testifying for the defense is not cooperative," he says, noting that his client has testified as a witness for the government. But Assistant U.S. Attorney Andrew Weissmann, who directs the Enron Task Force, argues that criminal-defense lawyers, through the civil litigation related to Enron, have deposed witnesses, even reluctant ones. Weissmann says defense lawyers have subpoenaed witnesses in the Enron criminal cases by going through the civil litigation process. Ramsey says that tactic has not worked for criminal-defense lawyers, because some witnesses who cooperate with the government have invoked their Fifth Amendment rights against self-incrimination. Prosecutors don't want defendants to have unlimited access to witnesses, a point underscored at the May 2004 hearing in Causey. At that hearing, Assistant U.S. Attorney Linda Lacewell, who reports to Weissmann, complained that Skilling had honked when he spotted an Enron defendant in a separate case on a street in the tony River Oaks neighborhood in Houston. Lacewell told the court that Skilling yelled "hang in there" at the other defendant, who had pleaded guilty to government charges but who was not identified specifically at the court hearing. Lacewell wanted Stacy to clarify her restrictions regarding Skilling's communications with the government's cooperating witnesses. Lake told Skilling that saying hello to neighbors is fine but that he should not contact cooperating witnesses, according to the Chronicle's account. It's the mandate of the Enron Task Force, defense lawyers say, that has spawned much of the expense and peculiar defense challenges in the Enron cases. More than three years ago, when the federal government established a single-purpose task force to focus on Enron-related crimes, it recruited top prosecutors from U.S. Attorney's Offices nationwide and supplied them with seemingly unlimited resources to cast a wide net, defense lawyers say. As a result, defendants targeted by the task force must also pull out all the stops when it comes to preparations for their defenses. They face legal bills that dwarf the usual high-dollar expenditures in white-collar criminal cases. "I'm not saying the prosecutors are being fair or unfair," says Cogdell, "but the difference in Enron is resources. There are more FBI agents and more out-of-town prosecutors with more experience than I've ever seen in my life." Many Enron defendants simply cannot afford to face those odds at trial, Cogdell says. "If you just do the math in terms of the anticipated length of trial and the volume of discovery, it is cost-prohibitive for the average person to afford a lawyer for that chunk of time," Cogdell says about Enron cases. The fees skyrocket, because defendants must hire lawyers, who Cogdell says typically bill at their top-dollar rates, because they have conflicted themselves out of other potentially lucrative Enron work by representing one defendant. Then the lawyers must be paid at those high rates to sort through some 80 million documents that have been produced for the Enron criminal cases. Weissmann believes that some Enron defendants have the money to mount a proper defense. Some defendants have received insurance proceeds from their companies' policies that protect directors and officers against litigation costs. In a letter to the court, the prosecutors have said the four former Merrill Lynch & Co. executives whom a jury found guilty of wire fraud in the Nigerian barge trial received more than $17 million to spend on their defense from the company. The former Merrill Lynch executives did receive funds to pay for their defenses from the investment bank, says Lawrence Zweifach, but he does not know the total sum paid nor whether insurers chipped in, too. Zweifach, a partner in Heller Erhman White & McAuliffe in New York, represented James A. Brown, a former head of the investment bank's Strategic Asset and Lease Group and a defendant in the Nigerian barge trial who was found guilty of wire fraud. Enron defenses unquestionably are expensive � in large part because of the volume of documents involved. In Causey and Hirko, defense lawyers have asked the court to order the government to produce more documents and, at the same, help them sort through those documents that have been produced to find exculpatory information. Skilling's lawyers specifically argued in a Memorandum in Support of a Motion for Brady Materials that prosecutors have buried the defense lawyers in documents and, at the same time, withheld exculpatory evidence. Judge Lake denied the motion on Feb. 2. In Hirko, prosecutors agreed at a hearing only a week before the April 18 trial date to give defense lawyers related grand jury testimony. Typically, prosecutors offer that material long before that, even though they are not legally required to do so, two Enron defense lawyers say. After prosecutors gave the defendants the grand jury material, the defense lawyers filed a motion on April 13 seeking to delay for three days opening arguments in the Broadband trial, because they could not digest before then the more than 7,500 pages they had just received, they wrote. Also on April 13, the prosecutors responded, arguing no need existed for a postponement. As of presstime, Judge Gilmore had not ruled. In his Feb. 2 ruling in Causey, Lake wrote that the prosecutors had not violated Federal Rule of Criminal Procedure 16 or the U.S. Supreme Court's holding regarding exculpatory evidence established in Brady v. Maryland. Undeterred, Ramsey expects the battle over exculpatory evidence may continue if necessary. Indeed, Lay's lawyer, despite his assessment of the difficult road his client faces, isn't ready to quit. Ramsey recognizes the challenges but doesn't deem them insurmountable. Notes Ramsey, "Just because they [prosecutors] built a fence doesn’t mean that we can’t get (over it.”

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