Thursday, June 22, 2006

A Hint About How Causey's Guilty Plea Affected the Skilling Defense

In federal criminal prosecutions, Rule 29 permits a defendant to ask a court to dismiss charges for lack of evidence (and sometimes on other grounds) during the trial and after a verdict.  Under the federal rules, it is important to make the motion to preserve the argument for appeal that the government did not introduce sufficient evidence for a reasonable juror to convict; otherwise, a defendant is left arguing that the conviction was the result of "plain error," a very difficult standard to meet.  The motion is rarely granted, and defense lawyers often file it after a conviction almost as an afterthought to preserve their sufficiency claim and as a vehicle to request a new trial if the judge is so inclined, although those are not granted very often either.  Jeffrey Skilling filed a fairly mundane Rule 29 motion (available below courtesy of the Wall Street Journal Law Blog) that largely recites the elements of the crimes for which he was convicted and then asserts that the government's evidence was insufficient.  Given how unlikely it is that U.S. District Judge Sim Lake will grant the motion, it is there more to meet the requirement of the Rule and allow the defense to raise the argument on appeal than with a real hope of success.

One aspect of the motion is of interest, however, related to Count 14 charging Skilling with securities fraud related to Enron's 1999 10-K, that gives a little insight into how the guilty plea of former Enron chief accounting office Richard Causey right before trial affected the defense.  The government's evidence of fraud included the so-called "Global Galactic" memo handwritten by former Enron CFO Andrew Fastow and purportedly initialed by Richard Causey.  Skilling claims that the government changed its theory of his liability by arguing that the indictment did not allege that he had any direct involvement with the memo but only through his coconspirator Causey, who apparently planned to question at trial whether the initials on the document were his.  Once Causey entered a guilty plea to a single count of securities fraud, he was no longer available to dispute the authenticity of the document or question his connection to it.  Right before trial, Judge Lake denied Skilling's motion to have an expert review the original of the memo to determine whether the initials really were Causey's, on the ground that the motion was untimely.  At trial, Fastow testified that Skilling orally acknowledged the "Global Galactic" memo that set forth side deals (including the infamous Nigerian Barge transaction with Merrill Lynch) removing certain risks from Enron's balance sheet, the cornerstone of the government's securities fraud charge.  According to Skilling's motion, this was a material variance from the indictment that misled him as to the importance of the "Global Galactic" memo because the indictment only charged him with liability as a conspirator and not as a participant in the transaction.  Therefore, the denial of the motion to have an expert examine the document meant he had no effective defense to the government's evidence to support a different theory of liability.

Skilling's assertion likely signals one of the claims he will raise on appeal to have Count 14 overturned, and to support his argument that he was denied the right to present exculpatory evidence because the government named so many former Enron employees as unindicted coconspirators that they could not testify out of fear of being charged with crimes.  An interesting question is why, if Skilling's lawyers really believed the initials of Causey were forged, the defense did not call him as a witness.  It may be that the forensic examination is a red herring because Causey could have rebutted any expert testimony about the authenticity of the initials by affirming them on the witness stand, so the evidence would not have affected the outcome.  It seems clear that the defense strategy before Causey's guilty plea was to make Fastow the focus of the case and raise questions about the authenticity of the only document close to being a contemporaneous "smoking gun."  Once Causey switched sides, the defense was left with rebutting Fastow through cross-examination and the testimony of Skilling and Ken Lay, which did not appear to have much beneficial effect.  The "Global Galactic" memo stood out as one of the few pieces of documentary evidence linking Skilling to improper accounting at Enron.

Whether the Causey initials issue is one worth raising on appeal is questionable, but at least it spiced up an otherwise dull motion designed almost exclusively to take the case to the next level. (ph)

Download skilling_acquittal_motion_june_2006.pdf

http://lawprofessors.typepad.com/whitecollarcrime_blog/2006/06/skilling_dots_t.html

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