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Opening statements in the criminal trial of former Enron Chairman Kenneth Lay and Chief Executive Officer Jeffrey Skilling began with a federal prosecutor telling jurors, “This case is not about accounting, it is about lies and choices.” John Hueston, an Assistant U.S. Attorney on the Enron Task Force, repeatedly punched on that theme during his opening statements on Tuesday in United States v. Jeffrey K. Skilling, et al. The government, Hueston said, will prove Lay and Skilling violated their duties to investors and to employees of Enron by choosing to tell lies about its true financial condition. “Lies and choices — it’s a simple case,” Hueston told the 12 jurors and four alternates chosen on Monday to hear the case in Houston. And while Lay and Skilling weren’t being truthful in some public comments, Hueston said, they also chose to take care of themselves, for instance, by selling their own holdings of Enron stock. “Lay and Skilling sold tens of millions of dollars of their own stock. The victims — the investing public, employees, those who did not have that information — were not as fortunate as these two men,” Hueston told the jury. He cited several instances when either Lay or Skilling made public statements about Enron businesses, such as Enron Broadband Services and Enron Energy Services, that didn’t disclose information the public should have known. Hueston talked about a meeting Skilling had with Enron Broadband Services employees in Portland, Ore., in March 2001, in which a number of employees were being deployed elsewhere because the broadband business was “doing terrible.” Hueston played a video for jurors, in which Skilling told employees the market is in “absolute meltdown.” Then, he played an audiotape of a call with analysts eight days later during which Skilling said, “EBS is coming along just fine, we’re committed to it.” The prosecutor also cited a meeting in 2001 when Lay told employees the company was doing well, when at the same time he was selling off his own stock holdings. “Lay, over and over again, put his own interests ahead of investors. So, too, did Skilling,” Hueston said. “You will hear that when Skilling left in August [2001] the evidence will show that when he left, there were millions of dollars of problems at Enron.” But defense attorneys for Lay and Skilling told the jury their clients did not participate in any conspiracy to mislead investors or employees of Enron. “There’s false charges in the indictment,” Michael Ramsey, Lay’s defense attorney, told the jury on Tuesday afternoon. “This man, Jeffrey Skilling, the government has accused him of spearheading or leading a massive conspiracy,” Daniel Petrocelli said. “Let me tell you right now, this man, he never, ever led any criminal conspiracy, he wasn’t part of any criminal conspiracy. He didn’t know about any criminal conspiracy, he didn’t see any criminal conspiracy, he didn’t hear any criminal conspiracy.” “The same is true of that man, Mr. Lay,” he said. Ramsey, a solo practitioner in Houston, said Lay takes responsibility for the bankruptcy of Enron, but that’s as far as it goes. “He was the man in control at the time the company failed, but failure is not a crime. Bankruptcy is not a crime,” Ramsey said. Ramsey and Petrocelli said a liquidity crisis led to Enron’s downfall. “It was time for a panic,” Ramsey said in reference to the slide in Enron stock during 2001. He said Enron’s bankruptcy was not the result of criminal activity. He also said Lay never sold a single share of Enron stock he wasn’t compelled to sell to meet margin calls. Petrocelli said that when Skilling left Enron in August 2001, the company was in good financial condition, and he said Skilling “didn’t steal one nickel — not one nickel — from an employee, from a shareholder.” Petrocelli said the case is not one of “hear no evil, see no evil” but instead it’s a case of “there was no evil.” “Mr. Lay did not hide anything from anybody,” Ramsey said. Ramsey told jurors the prosecutors must prove the defendants specifically intended to do something the law forbids with a bad purpose. “That didn’t happen in this case,” Ramsey said. “Ken Lay didn’t do that in this case, he didn’t try to kill his own child, which is Enron.” He also told jurors that some of the testimony at trial will come from witnesses who have struck plea deals with the prosecutors. He said those witnesses were under heavy pressure to do so because prosecutors “have the power to threaten an individual in a case like this with freezing assets, and secondly with putting that person into prison for 20, 30, 40 years without parole.” During his opening statements, Hueston said several former Enron employees who earlier pleaded guilty to criminal charges will testify at the trial, including Andrew Fastow, who was the chief financial officer; Ben Glisan, former treasurer; Mark Koenig, former head of investor relations; and Ken Rice, former head of Enron Broadband Services. Fastow pleaded guilty to one count of conspiracy to commit wire fraud and one count of conspiracy to commit wire and securities fraud. He awaits sentencing. Petrocelli, Skilling’s defense attorney, told jurors his client will testify. “You could not keep him off this witness list. He is going to tell you in his own words,” Petrocelli, a partner in O’Melveny & Myers in Century City, Calif., told jurors on Tuesday. U.S. District Judge Sim Lake of Houston is presiding over the criminal trial, which is expected to last four months or more. Lay and Skilling, who face fraud and conspiracy charges, have pleaded not guilty. “The things they are being criticized for in this particular case is absurd, it’s an absurdity,” Ramsey said. He said the case can be decided by answering three questions: “Was Enron a growing, thriving profitable company? The answer is yes. There’s no fraud at Enron, except for some minor thievery by Andy Fastow. Did Fastow conceal his illegal conduct from Ken Lay? Of course he did. If you are stealing from the house, you don’t tell the boss.” The third question, Ramsey said, is whether a panic killed Enron. “That speaks for itself,” he told jurors. According to the prosecution team, the first witnesses will be Koenig and Rice.

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