Saturday, May 20, 2006

Trying the Lay Bank Fraud Case Like You're Double-Parked

While I suspect federal judges have particularly nice reserved spaces in most courthouse garages, U.S. District Judge Sim Lake seems to be hearing the evidence of the alleged bank fraud and false filings with a financial institution of Ken Lay as if he were double-parked in front of a fire hydrant.  As recounted by the Houston Chronicle TrialWatch blog (here), the judge has commented favorably on the unavailability of a government witness due to recent surgery, urged both sides to skip detailed questioning, listened to a scant 15 minutes of opening argument from each party, and bemoaned the fact that a more long-winded prosecutor would be questioning a witness.  Has the judge already made up his mind? 

The charges involve some rather technical disclosure regulations related to extensions of credit involving the application of Reg U, and the issues are not nearly as explosive as the conspiracy and securities fraud charges in the recently concluded trial that is now with the jury.  I think it is very unlikely that Lay will testify, not just because of the rather negative experience in the first trial but also because his defense is largely a technical one that these forms were so complicated and unimportant to the bank that he did not have the requisite intent.  That's certainly not something one would want to testify about.  One sideshow has been the focus on the use of an autopen to sign "Kenneth L. Lay" to at least some of the documents.  Does that make a difference when the issues are knowledge of falsity and intent to defraud?  It is unlikely, particularly in a bench trial, that the use of a machine to sign a document will be relevant, but then it seems the judge needs something to keep him interested.  The trial will likely conclude after another day or two, and the defense may not even call any witnesses.  At least everyone will be spared the reputation witnesses. (ph)

Enron, Fraud, Prosecutions | Permalink

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My guess is the unstated agreement is that the judge is going to treat the bank fraud charges as part of the larger picture. If Lay is convicted in the Lay/Skilling matter, the judge will make the sentence all part of a package. If Lay is not convicted of the big case and the judge disagrees with the jury's verdict (i.e., the judge thinks Lay deserves or thinks that the public thinks that Lay deserves punishment), the judge will use the smaller case as a make-up. (Did they call that "make-up sex" on Seinfeld?)

Whatever happens, don't expect a verdict in the smaller case until the jury has returned with a decision in the big case.

Posted by: j greenspan | May 21, 2006 12:35:25 PM

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