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Key e-mails and the gamble of letting the defendant take the stand helped a Houston lawyer accomplish what many would have bet against: winning a defense verdict for an energy trading executive in the heart of Enron country Thomas A. Hagemann of Dallas’ Gardere Wynne Sewell convinced a federal jury in Houston recently that Todd Reid, 43, the former trading executive at Duke Energy Corp., did not illegally manipulate the company’s gas and power trades from March 2001 to May 2002 to inflate his unit’s profits to reward himself and his traders with huge bonuses. U.S. v. Kramer, No. 4:04cr155 (S.D. Texas). Hagemann and the lawyers for Reid’s co-defendant, Timothy Kramer, 41, the unit’s lead trader, said the defense began with a smart jury-10 college graduates, including a Ph.D., an MBA and two accountants-”because we were talking about such large numbers and the evidence was so complicated,” he said. Reid convinced the jury because his counsel left no question unasked or unanswered, let the government’s evidence speak for Reid’s innocence and let Reid speak for himself, Hagemann said. “We really did shine a bright light on everything. There was no question we were afraid to ask because we were convinced of Mr. Reid’s innocence,” he said. John Yembrick, spokesman for Chuck Rosenberg, U.S. attorney for the Southern District of Texas, said in a statement, “[o]ur decision not to retry Mr. Kramer was made after careful consideration and thoughtful deliberation consistent with that precept.” Taking the stand Contrary to the government’s theory that Reid and Kramer were trying to hide something from the company, “the vast weight of Reid’s e-mails” showed on cross-examination that the former Duke vice president “did his best to make sure that everyone was communicating,” Hagemann said. “What I’ve found is that when you’ve got the e-mails, people remember lots and lots of things,” he said. But along with using Reid’s own communications to show that the government experts were “flat out” wrong about Reid’s activities, a second defining moment of the trial was when Reid spoke to the jury himself, his lawyer said. “[Reid] took the stand. It is a truism-or it is often said-that when a defendant takes the stand, the focus shifts from the weight of the government’s evidence to whether a defendant is telling the truth. If the jury believes him, he is acquitted. If they don’t, he is guilty as charged. They believed him,” Hagemann said. Reid and Kramer were indicted in April 2004 of 19 counts of conspiracy, wire fraud, mail fraud, bypassing accounting controls and falsifying public company books. The jury that exonerated Reid found Kramer not guilty on seven counts, but hung on the remaining 12 counts, which the government decided not to prosecute again. Brian Lavielle, 35, a trader supervised by Kramer who was also indicted, later pleaded guilty to one count of falsifying company books. Last week, the court granted a post-trial motion that Lavielle’s counsel filed jointly with the government to withdraw that plea. One of the difficulties of the case was defending against “honest services fraud,” a 1988 amendment to the mail fraud statute providing that an employee owes his employer a duty of honest services, Hagemann said. “In the last 15 years, creative prosecutors have started more and more to see the possibilities of that statute,” he said, adding that it was also an issue in the Nigerian barge case. Hagemann was on the team defending Daniel Bayly, former head of Merrill Lynch’s global investment banking division who was convicted in the barge case. That 1999 case involved “parking” Enron assets-an interest in electricity-generating power barges moored off the coast of Nigeria-with Merrill, which artificially inflated Enron’s earnings. U.S. v. Bayly, No. 4:03cr363 (S.D. Texas). “The statute really needs adult supervision or it can be applied in frightening ways,” he said. Hagemann said that his client, who has not worked in the industry since Duke fired him in August 2002, “is looking forward to the future . . . .Happily the nightmare is over.”

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