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Enron Task Force prosecutors began making their case last week against former Enron Corp. Chairman Kenneth Lay and former Chief Executive Officer Jeffrey Skilling. And in seeking the duo’s convictions, they’re also looking for a little vindication. The government lawyers have stumbled more than once in their four-year pursuit of Enron employees, and that track record has followed them into the Houston courtroom. Inarguably, the government lawyers have scored some notable successes by persuading 16 former Enron employees, including former Chief Financial Officer Andrew Fastow, to plead guilty to charges related to the downward financial and stock-price spiral that led to Enron’s bankruptcy in December 2001. More recently, on Dec. 28, 2005, Richard Causey, Enron’s former chief accounting officer and Skilling and Lay’s co-defendant, pleaded guilty to one count of securities fraud and agreed to cooperate with prosecutors. In an earlier success, in November 2004, in United States v. Daniel Bayly, et al., the so-called Nigerian Barge trial, prosecutors persuaded a jury to convict four former Merrill Lynch & Co. bankers and one former Enron executive on charges related to conspiracy to commit wire fraud. But the government lawyers have also faced setbacks in the courtroom. At the Nigerian Barge trial, one former Enron executive, Sheila Kahanek, was acquitted. Six months later, in May 2005, the U.S. Supreme Court overturned the 2002 conviction of Arthur Andersen, Enron’s accounting firm, for obstruction of justice. In July 2005, in the so-called Enron Broadband trial, a jury deadlocked in the trial of five former Enron executives, and the proceedings ended in a mistrial. Two months later, U.S. District Judge Vanessa Gilmore of Houston blamed the government lawyers trying that case for confusion at the trial, and she subsequently acquitted some of the defendants of some of the government’s charges. Skilling and Lay have pleaded not guilty. The task force’s success has been a “mixed bag” in the view of Rusty Hardin, who represented Arthur Andersen at the 2002 obstruction of justice trial. “You have to give them, I think, credit for a very thorough and largely successful investigation in terms of the pleas,” says Hardin of Rusty Hardin & Associates in Houston. “One doesn’t know whether the results would have been the same if just everybody had chosen to go to trial.” At the same time the task force has endured disappointments in the courtroom its leadership has changed, and several prosecutors have left the task force. In the most recent significant change, Sean Berkowitz became the task force’s third leader in four years. He succeeded Andrew Weissmann, who resigned from the task force in July 2005 — which happened to be when the defense lawyers in the Lay and Skilling case made it clear they were going to file a motion alleging prosecutorial misconduct. Weissmann is now special counsel to the director of the Federal Bureau of Investigation. “If they are successful at the Lay and Skilling trial, some of that baggage will disappear,” says Charles Blau, a white-collar criminal-defense lawyer, about the task force. “But if they aren’t successful, that baggage will be hung around their neck and the whole task force will look like a failure from a historical standpoint.” Blau, a former federal prosecutor who is now a partner in Dallas’ Meadows, Owens, Collier, Reed, Cousins & Blau, represents a witness in another Enron-related criminal case. Dan Cogdell, a white-collar criminal-defense lawyer and member of the Cogdell Law Group in Houston, offers an equally equivocal assessment of the task force’s success. “You can look at their glass as half full or half empty,” he says. Cogdell represented Kahanek, the former Enron accountant and senior director who was acquitted of conspiracy and fraud charges in 2004 in the Nigerian Barge trial. Bryan Sierra, a spokesman for the Justice Department, says that Berkowitz was preparing for trial and could not comment for this article. Rich Kolko, a spokesman for the FBI, says that Berkowitz’s predecessor, Weissmann, was not available for comment. DIVERGENT VIEWS But Bill Mateja, who once supervised the Enron Task Force, sees its glass as half full. Mateja, now a partner in the Dallas and Washington, D.C., offices of Fish & Richardson, served as senior counsel to former Deputy Attorneys General Larry Thompson and James Comey at the U.S. Department of Justice in Washington. During that time, from 2003 to 2004, Mateja was the point person for President George W. Bush’s Corporate Fraud Task Force, and he oversaw the DOJ’s corporate fraud efforts. Mateja downplays the effect of the turnover at the top of the task force. “I haven’t seen the changes in the task force leadership as being detrimental to the efforts,” he says. Moreover, Mateja contends that the U.S. Supreme Court’s decision to overturn the Andersen conviction reflects a weakness in the applicable statutes that make it a crime to “corruptly persuade” a witness to withhold evidence, a point specifically cited in the high court’s unanimous opinion. It does not represent any fault on the prosecutors’ part, Mateja says. Common sense dictated that the government would not retry the case against Arthur Andersen, which now only exists as a shell of its former self, he says. Hardin, however, contends that Arthur Andersen would not have been indicted if the task force had not rushed to seek an indictment in the weeks after Enron filed for bankruptcy. Samuel Buell, a prosecutor in the Arthur Andersen case who left the task force in 2004, disputes the notion that the task force is in trouble because of the turnover among prosecutors or because of the reversal in Andersen, a ruling he characterizes as “disappointing.” “The prosecution is institutional, and the lawyers are somewhat fungible,” says Buell, who now teaches criminal law and seminars on corporate crime and prosecutorial powers at the University of Texas School of Law in Austin. Buell notes the Enron Task Force demands grueling hours and people get tired. He says he left the task force because he ran out of gas, and he suspects that’s why Weissmann and his predecessor as director of the task force, Leslie Caldwell, moved on. But clearly, the outcome of the Andersen case scarcely ranks as a success for the task force. The Supreme Court’s decision was a big break for David Duncan, the former lead Andersen accountant for Enron who pleaded guilty in 2002 to obstruction of justice and testified for the prosecution at the trial. While Duncan’s plea deal was among the task force’s first success stories, in December 2005, U.S. District Judge Melinda Harmon of Houston allowed Duncan to withdraw his plea on the grounds that he didn’t admit to having a criminal intent when he entered it. Task force prosecutors have the option to indict him again, although they did not oppose Duncan’s motion withdrawing his earlier plea. Under the circumstances, Mateja says, “It wouldn’t have been very fair if they had pursued him.” But it’s the outcome of the so-called Enron Broadband trial that is perhaps the most prominent setback for the task force. In July 2005 the federal court judge in the Enron Broadband trial returned a verdict that acquitted defendants of some criminal charges and ended with a hung jury on other charges. Judge Gilmore later acquitted three of the five defendants, all former employees of the Enron Broadband Services subsidiary of Houston’s Enron Corp., of some of the charges on which the jury had deadlocked. The defendants face retrials this year in Gilmore’s court. In September 2005, Judge Gilmore laid the blame for the deadlocked panel squarely at the feet of the Enron Task Force prosecutors. The judge complained that the defense lawyers had filed post-trial motions that also looked at the evidence in a one-sided manner. But at trial, Gilmore said, the defense had shown more balance than the prosecutors. Edwin Tomko, a partner in Dallas’ McManemin & Smith who represented a defendant in the Enron Broadband trial, says the task force’s trial record is simply not good. “They haven’t had many trials, and those that they’ve had have not been too successful. It’s mediocre,” says Tomko, whose client Rex Shelby, a former senior vice president of engineering and operations at Enron Broadband Services, was acquitted of four of the 20 charges against him. Gilmore subsequently dismissed some of the charges against Shelby, and he now faces one count of conspiracy, one count of securities fraud, and four counts of insider trading in a retrial scheduled for later this year.
Miriam Rozen is a reporter with Texas Lawyer , the ALM publication where this article first appeared. Senior reporter Brenda Sapino Jeffreys contributed to this report.

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