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Former Enron Corp. Chief Executive Officer Jeffrey Skilling, testifying for the second day at his criminal trial, said on April 11 that he and co-defendant Kenneth Lay, Enron’s one-time chairman, never conspired together or with others to defraud investors by presenting false and misleading financial statements. Skilling’s testimony contradicts allegations in United States v. Jeffrey K. Skilling, et al., the federal indictment that includes 28 fraud, conspiracy, making false statements and insider-trading charges against him. Lay faces six fraud and conspiracy charges in the trial, which is in its 11th week in U.S. District Judge Sim Lake’s Houston courtroom. Under direct questioning from his defense attorney Daniel Petrocelli, Skilling testified that he did not conspire with Lay, former Enron Chief Accounting Officer Richard Causey, former Treasurer Ben Glisan or former Chief Financial Officer Andrew Fastow, among others, to deceive the investing public. “Did you ever have a single conversation and sit down with someone at Enron and say in so many words, �You know, we aren’t cutting it and we’ve got to break the law?’ ” Petrocelli, a partner in O’Melveny & Myers in Century City, Calif., asked Skilling in a rapid-fire set of questions. “No, I didn’t do it,” Skilling said with emphasis in his voice. Skilling testified he never told anyone at Enron to cheat, lie or engage in misleading transactions. He also testified he has reviewed tens of thousands of documents while preparing for his defense and has seen no document, e-mail or other writing that proves anyone lied, cheated or otherwise conspired to defraud investors. Skilling also testified he never had private meetings with anyone to discuss a conspiracy. “Did you ever meet in any basement or garage?” Petrocelli asked Skilling, in an apparent reference to Watergate reporter Bob Woodward’s meetings with anonymous source Deep Throat. “No,” Skilling replied. Skilling disputed allegations in the indictment that he conspired with others to falsely report earnings per share for the fourth quarter of 1999 and the second quarter of 2000 that were pennies higher than they should have been, to beat the expectations of analysts. “I don’t recall any last-minute changes in numbers,” Skilling testified about the 1999 report. He testified that Enron’s earnings per share for the second quarter of 2000 came in at 34 cents per share, which was 2 cents higher than analysts had expected, because the California energy crisis had started to develop, and the company was in a good position to make money on a volatile market. “If you think of what Enron sells, Enron sells reliable delivery and predictable prices, so when this happens, what we sell is more valuable,” Skilling testified. When asked if Enron manipulated the earnings per share for that quarterly report in 2000, Skilling adamantly denied it. “That’s absurd. I’m sorry, that’s not true. That is not true,” he testified. Prosecutors allege Skilling and Lay participated in a conspiracy to misrepresent the true financial condition of Enron, but the defendants have blamed Enron’s problems on criminal acts by Fastow, who pleaded guilty to two criminal charges and agreed to a 10-year prison sentence. Skilling testified he made plenty of money at Enron — he was worth about $100 million by 1999 — and his motivation didn’t come from money. “The money was secondary. It was the company that made a difference,” Skilling testified, noting that he used to have a vanity license plate on his car with the letters WLEC, for world’s leading energy company. Petrocelli asked Skilling questions about the LJM partnerships, which were the off-balance-sheet financial structures Fastow admitted he used to help Enron manipulate its earnings, and to enrich himself on the side. While on the witness stand last month, Fastow testified that Causey told him Skilling had approved the so-called “global galactic agreement,” which was Fastow’s handwritten list of side deals between Enron and the LJM entities. Those side deals detailed guarantees from Enron that LJM would not lose money on particular transactions. Causey was a co-defendant with Skilling and Lay until December 2005, when he pleaded guilty to securities frand. His plea bargain calls for an 84-month sentence. He has not testified in the trial. But Skilling refuted much of Fastow’s testimony about LJM. Skilling testified that in 1999 at the time when the Enron board approved creation of the first LJM partnership, he supported it and believed it would be a true third-party entity. There was no reason in 1999, nor in 2000 nor 2001, to create LJM to engage in fraud, Skilling testified. He testified that LJM1 was created in 1999 to provide a hedge against a $390 million profit Enron had earned from an investment in the Rhythms Net Connection high-tech company, which had just gone public. Skilling testified that while at Enron, he spent maybe four hours total dealing with matters related to the LJM1 and LJM2 partnerships. He acknowledged that Fastow’s involvement in the LJM entities posed potential conflicts, but the board discussed those potential problems prior to approving LJM1 in 1999 and LJM2 in 2000. At those board meetings, Skilling testified, no one questioned Fastow’s integrity or honesty. Skilling also testified that he would not have been in favor of the LJM entities if he had known at the time that Fastow had earlier stolen money from Enron in connection with transactions known as Radar and Chewco, and that Fastow had a “secret partnership” with Enron executive Michael Kopper. Skilling testified that during the summer of 2000, he asked Fastow for an estimate of his income from the LJM partnerships, and Fastow told him he was making about five times as much from Enron as from LJM. But that information was incorrect, Skilling testified. “He misled me,” Skilling testified. During his testimony in March, Fastow admitted to conspiring with Kopper to unlawfully obtain millions of dollars from Enron through various “scams” over several years beginning in 1997. Kopper has pleaded guilty to criminal charges related to the collapse of Enron, and he awaits sentencing. Skilling’s testimony was continuing as of presstime on April 11. Prosecutors have alleged the conspiracy to defraud Enron began in 1999, but Skilling testified that Enron was doing great that year and there was no reason for Enron to start breaking the law simply to continue the growth in its stock price. When court proceedings continued the afternoon of April 11, Lake told jurors about the medical condition of Lay defense lawyer Michael Ramsey, who has not been in court for several days due to heart problems. “He has undergone three invasive medical procedures, including the insertion of a stent into his heart on March 24 and one in his carotid artery on Friday [April 7],” Lake told jurors. “He will return to court as soon as allowed by his physician.”

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