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An hour after pleading not guilty on July 8 to 11 charges in a criminal indictment accusing him of, among other things, conspiring to conceal losses at Enron Corp., former Enron Chairman Kenneth Lay fielded questions from reporters at a highly orchestrated press conference. Inside the Doubletree Houston Allen Center, he spoke as a row of his family members and supporters, including his wife, watched attentively. While assuming overall responsibility for the collapse of Enron, which filed for bankruptcy in December 2001, Lay, the 31st individual to be indicted on charges related to the downfall of the Houston energy company, told reporters he did not engage in any wrongful activity and maintains he should not have been indicted. “Failure does not equate into a crime,” Lay said a few blocks from the Bob Casey Federal Courthouse, where he earlier entered a not-guilty plea before U.S. Magistrate Judge Mary Milloy. Lay was indicted in a superseding indictment that also names Jeffrey Skilling, Enron’s former chief executive officer, and Richard A. Causey, Enron’s former chief accounting officer. Lay’s public comments on July 8, and his promise to continue to make himself available to reporters over the next few weeks, represent a departure from the usual no-comment stance taken by most white-collar criminal defendants. But so was Lay’s lengthy interview published a week before the indictment in The New York Times and his defense attorney’s unusual insistence in the press that his client would not be indicted. Houston solo practitioner Michael Ramsey represents Lay in the criminal matter. “I didn’t know why he [Ramsey] said that,” says Thomas Mills Jr., a partner in Mills & Williams in Dallas, echoing the sentiments of three other white-collar criminal-defense lawyers who talked for this article about the Lay indictment and the unusual and bold public posturing Lay and co-defendant Skilling have adopted since federal prosecutors launched their investigation more than three years ago. “I thought he [Ramsey] was either very bold or he knew something the rest of us didn’t,” says Robert Davis, a partner in Dallas’ Hughes & Luce. “I also think it damages his credibility. There may be some jurors who may remember that.” But Bruce Hiler, a criminal defense attorney for Skilling, who departed from the usually recommended approach for subjects of white-collar criminal investigations when he testified before a congressional committee in 2002, says the Enron prosecutions, because they are so politicized, call for legal and public relations strategies outside standard accepted practices. “The American people have been told a myth about Enron. The government has indicted a lot of innocent people and actively tainted the situation and poisoned the public’s attitude,” says Hiler, a partner in the Washington, D.C., office of O’Melveny & Myers. “Since the day the government started the investigations, this was political, in order to point away and deflect from politicians. The minute they printed those Enron Task Force business cards, what did we think was going to happen?” Andrew Weissmann, the Assistant U.S. Attorney who heads the Enron Task Force, said at a July 8 news conference that the timing of the indictment was not political in any way. Although declining to discuss his client’s specific defense strategy, Hiler expresses no regrets about Skilling’s openness with Congress back in the winter of 2002. Initially, Skilling had been the most verbose among the high-ranking Enron subjects of the government’s investigation. In contrast, Lay, like co-defendant Causey, declined to testify before Congress, citing their Fifth Amendment rights. In his testimony to Congress in 2002, Skilling said Enron failed because of a crisis of confidence, that it was solvent and profitable, but in the end not liquid enough. Hiler notes that Skilling and Causey have not been pointing fingers at others from Enron. “My client maintains his innocence. If you’re innocent and you didn’t have any knowledge of anything going on that was improper, there’s no reason to fingerpoint.” Hiler says he believes that the government prosecutors indicted Lay partly to encourage him to point fingers at Skilling. But at his press conference on July 8, and in his interview recently with The New York Times, Lay was willing to pin blame on another individual: Andrew Fastow, Enron’s former chief financial officer who pleaded guilty to fraud and is cooperating with the government. According to the Times account, Lay said that it was Fastow who took advantage of the company for his own personal benefit and ultimately destroyed it. At the July 8 press conference, Lay said his “worst mistake” was trusting Fastow. The charges against Lay came down in a superseding indictment in United States of America v. Richard A. Causey, which is filed in the Southern District of Texas. Lay is charged with one count of conspiracy, two counts of wire fraud, four counts of securities fraud, one count of bank fraud and three counts of making false statements to banks. It also asks him to forfeit assets, including his high-rise penthouse in Houston, and an unspecified amount of money. If convicted, Lay faces punishment totaling 175 years in prison and tens of millions of dollars in fines. Ramsey, Lay’s criminal defense attorney, says he intends to seek a speedy trial for Lay, which could lead to a trial date as early as September. That would require U.S. District Judge Sim Lake to sever the charges against Lay from the charges against Skilling and Causey. Skilling and Causey have pleaded not guilty. At his press conference at the Doubletree, Lay expressed doubt that he could get a fair jury trial in Houston. Ramsey said he would like to question potential jurors individually, and if he can’t do that, he might ask for a change of location. But Weissmann said he believes Lay can get a fair trial in Houston, citing the jury that convicted Enron accounting firm Arthur Andersen of obstruction of justice following a trial two years ago. ‘PART AND PARCEL’ But as the indictment of the top Enron executives sinks in and the defense lawyers buckle down and determine their strategy, three white-collar criminal defense lawyers not connected to the case say the fingerpointing and public statements may slow down considerably. “That could come back to haunt them,” says Joel Androphy, a partner in Houston’s Berg & Androphy. Specifically, Androphy says, the former Enron executives’ testimony before Congress and comments to the press will be picked apart by the prosecutors. If the men are tried together — and Androphy expects the government will push for that outcome while the defendants will press for separate trials — the comments of one can be used against the other. But, at the same time, the white-collar defense lawyers don’t expect the former top Enron executives and their lawyers — particularly Lay and Ramsey, who ultimately could be thinking about pursuing a presidential pardon for Lay — to ignore completely the convenient target that a guilty-pleading individual such as Fastow makes. “I think it is extremely useful to have someone else they can blame it on. It is one of the things that I know of that may make this a defensible case,” Mills says. He doesn’t doubt the defense lawyers will tread carefully. “I imagine that what they say is being very orchestrated,” Mills says. Androphy agrees that the defense lawyers, if they continue to assign blame to others, will use extreme caution. “If their names show up in something they reviewed that they are blaming Andy for, it could hurt. The judge could issue a jury charge that allowed the panel to consider willful blindness on the part of the defendants and that could be devastating,” says Androphy. “Essentially that says you’re as guilty as the guy that did it. And if Fastow gets on the stand and says to Lay and Skilling, ‘You knew what I was doing,’ that could be it,” he says. Androphy notes that Ramsey in particular is a skillful lawyer, comfortable with such a difficult defense. “These are good lawyers, but it is a very fine line,” Androphy says. For their part, the government prosecutors saw the indictment of Lay last week as an opportunity to take credit in the press for cracking down on Enron. “The indictment charges that Lay, Skilling, Causey and others oversaw a massive conspiracy to cook the books at Enron and to create the illusion that it was a robust, growing company with limitless potential when, in fact, Enron was an increasingly troubled business kept afloat only by a series of deceptions,” Deputy Attorney General James B. Comey, who heads the president’s Corporate Fraud Task Force, said in a statement. Comey continued, “These charges demonstrate the Department’s commitment to the rule of law, its commitment to the principle that no one is above the law, and its commitment to unravel even the most complex of fraudulent schemes.” Outside the courthouse, Weissmann told reporters: “Now with the indictment of Ken Lay, the top echelon at Enron has now been called to account for their crimes.” Among the three defendants included in the indictment last week, Causey, who has denied the charges against him, has been the most taciturn. His lawyer, Reid Weingarten, a partner in the D.C. office of Steptoe & Johnson, did not return a telephone call seeking comment before press time. Originally indicted in January 2004, the government filed new charges against Causey in the superseding indictment. It adds a money-laundering conspiracy count and four counts of money laundering against Causey in connection with alleged fraudulent hedging vehicles, and expands certain factual allegations against Causey in connection with the securities fraud conspiracy. The question of whether Lay, Skilling and Causey are tried together looms large. By filing a superseding indictment naming all three, the government is setting the scene for a joint trial before Judge Lake. But defense lawyers Androphy and Mills expect that the defendants will try and get their cases severed. “There is no question that they are not going to want to go to trial together. Skilling has made a lot of statements that are sworn to. Lay doesn’t want to sit at the same table with Skilling,” Androphy says. Androphy believes that the three defendants have 50-50 odds of getting the judge to agree to sever. But Mills says the odds aren’t that good. The government most likely will successfully persuade the judge that the defendants should be tried together to save time and money, Mills says. Weissmann declined on July 8 to say if he will oppose any motion to sever. The prosecutors had asked Milloy to set Lay’s bond at $6 million, but she set it as $500,000. In a Petition for Personal Recognizance or Unsecured Bond, Lay’s attorneys wrote that Lay’s financial resources have been “largely eliminated” over the past three years; that he has spent large sums of money to defend himself from civil litigation; and that his liquid assets are less than $1 million. Weissmann said Lay was indicted because he did not “come clean and tell the unvarnished truth” years ago about Enron’s financial condition. Weissmann said the charges against Lay were filed as part of a superseding indictment, instead of separately, because “Mr. Lay was part and parcel of the conspiracy.”

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