White Collar Crime Prof Blog

Enron Playbill

The Enron Trial of Ken Lay and Jeffrey Skilling opens today.  And it is likely that this trial, although perhaps at times it will be a sleeper, may be the biggest corporate trial of the year, and perhaps the decade. Like many of the recent trials, it places two top corporate executives on trial for criminal actions occurring on their watch.  Their participation in those actions and their knowledge of those actions are likely to be the focal point of contention throughout the trial.  How much knowledge does a CEO need to have in order to be considered a participant in the criminal activity? And how much knowledge did Ken Lay and Jeffrey Skilling have regarding the improper and criminal activities occurring at Enron?

Prosecution Strengths - 

• The venue -  Trying this case in hometown Houston will certainly be a plus for the prosecution team.
• The loss suffered by so many - The amount of loss to so many people will be a strong point for the prosecution case.
• The number of key witnesses who have flipped and will be available for the prosecution- this will likely offer key evidence that can support the prosecution's case.
• The charges - conspiracy and fraud are fairly easy for the prosecution to prove.

The Defense Strengths -

• Complexity of the case - This case requires the prosecution to explain to the jury accounting mechanics that even with superb graphics may be difficult for the typical layperson to understand.
• Some may believe that all the guilty people flipped and thus, only the innocent ones remain.
• The essence of the illegality rested with other individuals - e.g., Fastow.
• How can a CEO know everything going on in the company?

Unknown Factor -

• Normally an accused says little before trial.  Here, however, we have ample statements and all proclaim innocence. How will this play to a jury?

The NYTimes has a wonderful playbill of the upcoming trial of Ken Lay and Jeffrey Skilling. (here) It provides a synopsis of the 10 Enron players here and one even has a short video of the upcoming scenes.

Tom Kirkendall of Houston Clearthinkers discusses an anticipated key evidentiary issue. (here)

Ken Lay's Website here has been quiet since January 20th.

(esp)

Addendum - Washington Post story here.

Roger Williams Medical Center Agrees to Deferred Prosecution Agreement

The Roger Williams Medical Center in Providence, Rhode Island, entered into a deferred prosecution agreement (document available below) with the U.S. Attorney's Office to settle corruption charges.  The hospital was charged, along with its former CEO and two officers (one of whom worked for a subsidiary), with funneling money to a Rhode Island state Senator to protect its interests by disguising the source and reason for the payments.  The state Senator, John Celona, has already entered a guilty plea, and the hospital originally asserted that it was not guilty.  Since the indictment in early January, however, pressure has grown to settle the case (see earlier post here), and the hospital terminated the indicted CEO and resumed negotiations with federal prosecutors that resulted in the deferred prosecution agreement.

Under the agreement, the Medical Center admits that its officers engaged in criminal conduct, and agreed to cooperate in the government's prosecution.  The hospital also agreed to provide $4 million in free health care to the poor over and above what it already provides over the next two years.  The free health care is the substitute for a fine that a for-profit corporation would be expected to pay as part of a deferred prosecution agreement. Similar to other such agreements, the Medical Center will waive its work product protection and the attorney-client privilege related to the underlying conduct, and appoint an ethics compliance officer to ensure proper procedures are followed.  For the hospital, in addition to getting out from under the criminal charges, the Department of Justice also agreed not to recommend that it be debarred from federal health care programs (Medicare and Medicaid) for its conduct.  The Medical Center is already the subject of a Corporate Integrity Agreement with the Department of Health and Human Services, and if the current charges had triggered a debarment from the federal health programs, that would likely cause it to shut down.  A Providence Journal story (here) discusses the deferred prosecution agreement. (ph -- thanks to a Rhode Island reader for passing along the deferred prosecution agreement)

Download roger_williams_deferred_sentence_agreement.pdf