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Former Enron Corp. Chairman Kenneth Lay and former Chief Executive Officer Jeffrey Skilling spent many years getting their way in the business world, but in the courtroom, where it really counted, the men and their skilled defense lawyers could not sway a jury hearing criminal charges against them. On Thursday, a federal court jury in Houston found Lay guilty of all six criminal charges against him and found Skilling guilty of 19 of 28 charges against him. The jury found Skilling not guilty of nine insider-trading charges. The jury’s verdict sends an “unmistakable message” to corporate America, prosecutor Sean Berkowitz, director of the Enron Task Force, said after the verdict. “You can’t lie to shareholders,” Berkowitz, an Assistant U.S. Attorney, told reporters shortly after the jury verdict was announced on Thursday. “No matter how rich and powerful you are, you have to play by the rules,” he said. Fellow task force prosecutor John Hueston spoke similarly: “The jury has spoken. CEOs can’t hide behind accountants, can’t hide behind lawyers.” The jury of eight women and four men returned their verdict at 11 a.m. on Tuesday, in their sixth day of deliberations. The verdict came in the 17th week of proceedings in the trial, which received considerable U.S. and international coverage. Enron, once the nation’s seventh highest-grossing company, filed for bankruptcy in December 2001. The breakdown of the verdict is as follows. The Houston jury found Skilling guilty on one count of conspiracy to commit wire and securities fraud; 12 counts of securities fraud; five counts of making false statements to auditors; and one count of insider trading. Jurors found Lay guilty of one count of conspiracy to commit wire and securities fraud; two counts of wire fraud for making false and misleading statements; and three counts of securities fraud. Upon hearing the verdict, Skilling showed little emotion. Lay’s daughter and wife cried as the verdict was read. U.S. District Judge Sim Lake set sentencing for Sept. 11. Berkowitz declined to say what kind of a sentence the government would seek for Lay and Skilling. Skilling was one of the first people out of the courtroom after Lake excused the jury. Lay couldn’t leave the courthouse until after he surrendered his passport and he and his family put up enough assets to back a $5 million bond. Lay and his wife, Linda, and three of his children put up deeds to property to secure the bond. Outside the courthouse in downtown Houston, both Skilling and Lay continued to proclaim their innocence. Lay said he was surprised and shocked by the verdict but that he is blessed by the support of a loving family and friends. He spoke of his faith in God: “Indeed He does work all things for the good, for those who love the Lord.” Attorneys for Lay, including lead defense lawyer Michael Ramsey, a solo practitioner in Houston, did not comment on the verdict. Skilling’s lead defense lawyer, Daniel Petrocelli, a partner in O’Melveny & Myers in Century City, Calif., answered questions at the courthouse with Skilling at his side. Both men looked tired. “We’ve just begun the fight,” Petrocelli told reporters, later adding, “We will have a full and vigorous appeal.” Asked about how he would proceed with the appeal, Petrocelli said, “I’m going to sit down and take a look at everything.” About the jury, he said, “They gave it five full days, and they saw it their way.” Petrocelli impressed juror Freddy Delgado. Delgado said, “If I was ever a defendant, I would go with Mr. Petrocelli.” After the verdict, Delgado and the other 11 jurors as well as three of the four alternates met with reporters. Forewoman Deborah Smith, who works in human resources at a large oilfield services company, said jurors didn’t have a target date to reach a verdict; they were prepared to stay as long as it took. Delgado, an elementary school principal, said, “We looked at all the facts and looked at the documents, put in long, long hours.” Jurors said they were not bothered by the fact that many of the government’s witnesses had struck plea deals. One of those government witnesses was Andrew Fastow, Enron’s former chief financial officer. “Fastow was Fastow,” juror Don Martin said about the testimony of the former CFO, who pleaded guilty to two criminal charges and admitted on the witness stand that he stole from Enron. “We knew where he was coming from from the outset. We kind of discounted some of it.” Juror Doug Baggett said the jury listened to and considered the testimony of every witness. “We figured they were all there for a reason,” he said. Forewoman Smith and Baggett said the jury found Skilling not guilty of nine of the 10 insider-trading charges against him, because the government didn’t bring enough evidence to the table to convict him of the charges. Smith noted that not guilty does not mean innocent. One juror, Wendy Vaughn, said, “At the very beginning of the trial, I admired both men. … It was sad to see that, in the end, it [the success of Enron] was not accomplished in a respectful manner.” Juror Kathy Harrison said of Skilling: “He was a hands-on individual. It was hard to believe such a hands-on individual would not know what was going on in the company.” She later added, “Mr. Lay did many great things, but all this is a tragedy. … No American is above the law.” Jurors said they didn’t know why former Enron Chief Accounting Officer Richard Causey didn’t testify, and they wish he would have. Baggett said, “To me, he was a missing link.” However, Smith said Causey’s testimony wouldn’t have changed the verdict. Causey was a defendant in the case alongside Lay and Skilling, but he struck a plea deal with prosecutors in December 2005. Lake presided over the 16-week jury trial, held in the Bob Casey U.S. Courthouse, located just a few blocks from the 50-story Enron Center skyscraper where Lay and Skilling once reigned as powerful executives. In the jury trial, prosecutors alleged Lay and Skilling participated in a conspiracy to misrepresent the true financial condition of Enron. The indictment in United States v. Jeffrey K. Skilling, et al. alleged Lay and Skilling “engaged in a wide-ranging scheme” to deceive investors, including Enron shareholders and the U.S. Securities and Exchange Commission, about the true performance of Enron by manipulating public financial reports, making “false and misleading” public statements about the company’s financial performance, and failing to disclose facts that would make those statements and representations fair and accurate. Lay and Skilling had pleaded not guilty. They blamed Enron’s problems on criminal acts by Fastow. In 2004, Fastow pleaded guilty to one count of conspiracy to commit wire fraud and one count of conspiracy to commit wire and securities fraud. Also on Thursday, following a separate bench trial that began on May 18 and ended on Tuesday, Lake found Lay guilty of four bank fraud charges. In 2005, Lay had asked for a separate trial from Skilling, but Lake only granted a separate trial on the bank fraud charges. Lay was accused of violating a federal banking regulatory rule by using up to $75 million in loans from Bank of America, Chase Bank of Texas and Compass Bank, from 1999 to 2001, to buy stock. According to the indictment, Lay signed loan forms known as Forms U-1, which would require him to state that he will not use loan proceeds to buy stock on margin. But the indictment in United States v. Jeffrey K. Skilling, et al. alleged he did so. “WILLFUL BLINDNESS” INSTRUCTION Joel Androphy, a partner in Berg & Androphy in Houston who has watched most of the trial, says he gives Skilling — unlike Lay — reasonable odds at a successful appeal. Androphy says Lake’s instructions to the jurors will help Skilling’s appeal. Androphy believes the evidence was not sufficient against Skilling to justify the judge’s instructions that the jurors should consider “willful blindness.” The government had laid out a case against Lay that he specifically avoided learning details but not so against Skilling. Androphy says two government witnesses were extremely important to the prosecutors’ case: Ben Glisan, the former Enron treasurer who pleaded guilty in 2003 to one count of conspiracy to commit wire and securities fraud and is serving a five-year prison term, and Mark Koenig, the former head of investor relations at Enron who has pleaded guilty to aiding securities fraud at Enron. Androphy’s assessment is the jurors put little stock in the defense’s arguments that the government’s witnesses were tainted by deals they cut with prosecutors to avoid jail time. “Jurors are becoming immune to witnesses making government deals. That should send shock waves to criminal lawyers all over the country,” Androphy says. Dan Cogdell, of the Cogdell Law Firm in Houston, watched the trial with the perspective of a lawyer who won the only acquittal for a defendant in an Enron case. Cogdell won an acquittal in 2004 for Sheila Kahanek, a former Enron employee who was charged in United States v. Daniel Bayly, et al., the so-called Nigerian Barge trial. A federal court jury in Houston found Kahanek not guilty of charges of conspiracy to commit wire fraud and to falsify books and records. About the Lay and Skilling verdicts, Cogdell says, “I am surprised that there were blanket convictions.” For such a long case, he says, the jury deliberated for a very short period of time. Like Androphy, Cogdell too believes that the judge’s instructions to the jury to consider “willful blindness” hurt the defense significantly. He does not believe, however, in any likelihood for a successful appeal for Skilling or Lay. He notes that the 5th U.S. Circuit Court of Appeals does not often reverse Lake. Moreover, Cogdell says, during the time he spent at the trial, Lake appeared to be bending over backward to give a fair trial to the defendants. Thomas Ajamie of Ajamie LLP in Houston also believes a successful appeal of the verdicts is unlikely for Lay or Skilling. “Sim Lake is a very careful, methodical judge. He knows this case is being watched very carefully,” says Ajamie. Ajamie does not believe that the medical issues that forced Lay’s lead lawyer Michael Ramsey to leave the trial had a significant impact on the outcome. “Ramsey is a great lawyer. But I’m not sure that the Lord himself could have turned these facts around. A Mack truck coming at you at 100 miles an hour is a hard thing to stop.” Lay himself hurt his case, Ajamie says. “He was terrible witness. I came away thinking he is a bad person. He wasn’t forthright. But he was clearly a man who was in control.” Philip Hilder, a Houston criminal defense attorney who represented former Enron executive and prosecution witness Sherron Watkins, says the verdict was a “stunning victory” for the Enron Task Force. “Jurors rarely come back as quickly as this one did in such a complicated case,” Hilder says. “The legacy of the Task Force will be defined by this.” But juror Vaughn, a business owner, told reporters that due to expected appeals by Lay and Skilling, “I don’t think it’s over.” She said, “Will justice really prevail? Will the almighty dollar prevail again? We’ll see.” Reporter Miriam Rozen contributed to this article.

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