Enron chief faces 11 charges over firm collapse
Former Enron chief executive Kenneth Lay was involved in a wide-ranging scheme to deceive the public, company shareholders and government regulators about the energy company that he founded before its collapse in 2001, according to an 11-count indictment today.
The federal indictment adds Lay to charges already filed against his hand-picked protégé, former chief executive Jeffrey Skilling, and former top Enron accountant Richard Causey.
It accuses Lay of participating in a conspiracy to manipulate Enron’s quarterly financial results.
It also accuses him of making public statements about Enron’s financial performance that were false and misleading and omitting facts necessary to make financial statements accurate and fair.
The contents of the indictment were released a few hours after Lay was taken away in handcuffs after he surrendered to the FBI in Houston.
The indictment of Lay, 62, who was also Enron’s chairman, caps an investigation that snared dozens of other employees and executives but took nearly three years to reach the man at the top.
Enron’s collapse in late 2001 cost investors billions of dollars, put thousands of Enron employees out of work and wiped out retirement savings for many. The company, once admired, became a symbol of corporate greed and excess, and its fall was followed by a string of scandals at other companies.
The indictment accused Lay, Skilling and Causey of enriching themselves through salaries, bonuses, grants of stock and stock options.
It specifically names Lay in 11 counts: one count of conspiracy, two of wire fraud, four of securities fraud, one bank fraud and three of making false statements to banks.
After he learned of the indictment, Lay said in a statement: “I have done nothing wrong, and the indictment is not justified.”
Lay’s attorney, Michael Ramsey, said he would push for the former Enron chief executive to go trial ahead of other executives charged in the investigation.
He maintains Lay did nothing wrong and cast blame on former chief financial officer Andrew Fastow, who pleaded guilty to two conspiracy counts in January.
Fastow admitted to orchestrating partnerships and financial schemes to hide Enron debt and inflate profits while pocketing millions of dollars for himself.
“Andy is obviously a liar and a thief,” Ramsey said before entering the courthouse today. “He admits that.”
The Securities and Exchange Commission was also expected to bring civil fraud charges against Lay, including making false and misleading statements and insider trading, a person familiar with the case said, speaking on condition of anonymity.
Prosecutors have aggressively pursued the one-time celebrity CEO and friend and contributor to President Bush who led Enron’s rise to No. 7 in the Fortune 500 and resigned within weeks of its stunning failure. Lay is the 30th and highest-profile individual charged.
Skilling succeeded Lay as CEO in February 2001 and resigned abruptly six months later, just weeks before the scandal broke. He was indicted in February on nearly three dozen counts of fraud and other crimes.
Waiting to testify for the prosecution is Fastow, who pleaded guilty to two conspiracy counts in January. Fastow admitted to orchestrating partnerships and financial schemes to hide Enron debt and inflate profits while pocketing millions of dollars for himself.
Enron’s collapse led a series of corporate scandals that led to Congress’ passage of sweeping reforms to securities laws with the Sarbanes-Oxley Act two years ago. Thousands of Enron’s workers lost their jobs, and the stock fell from a high of 90 in August 2000 to just pennies, wiping out many workers’ retirement savings.
