Tuesday, April 5, 2005

Prosecutors Seek Quick Trial of Ken Lay on Bank Fraud Charges

When the grand jury indicted Ken Lay, Jeff Skilling, and Richard Causey last year in connection with the collapse of Enron, it also included separate charges against Lay for bank fraud and making false statements to banks related to personal lines of credit he obtained from the banks (indictment here).  In February, U.S. District Judge Sim Lake severed the bank charges because they are unrelated to the conspiracy and securities fraud charges involving the other two defendants.  Now, the prosecutors are seeking a quick trial on the bank charges, asking the judge to order a trial on them to begin in May or June.  Lay had asked for a separate trial after the larger conspiracy trial, set to begin in January 2006.  To bolster its position, prosecutors have reprised Lay's requests, at the time of the indictment, that the trial begin as soon as possible.  For example, a transcript of a statement (here) by Lay given the day after the indictment states, "Although my lawyers and I believe I should not have been indicted, now that I have been, I have instructed my legal team that I want a speedy trial and I hope it will begin by early September this year.  Not only are we ready to go to trial but we are anxious to prove my innocence."  (See Lay's website at www.kenlayinfo.com for additional information). 

Lay's attorney, Mike Ramsey, has not taken a position yet on the government's request, and I suspect he will oppose the motion; a conviction would enhance the negative perception of Lay.  Moreoever, it would be hard to call Lay as a witness in the conspiracy trial to advance his "honest-but-ignorant CEO" defense if he's been convicted of fraud and false statement charges.  The benefit to the government of a quick trial is that if Lay is convicted, it will increase significantly the pressure on him to cooperate on the conspiracy charges.  The bank fraud charge carries a 30-year maximum sentence -- a legacy of the S&L collapses of the early 1990s -- and even though the actual sentence would be much less, there is a good chance he would be sent to jail prior to the start of the main event, which would also hinder his trial preparation.  The government's downside is not all that significant, in that the bank charges are more of a sideshow, and a  not guilty verdict will not cause that much damage to the larger conspiracy case.  A Houston Chronicle story (here) discusses the government's motion for a prompt trial date. (ph)

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Tracked on Jun 30, 2005 10:43:12 AM