Enron Chiefs Accused Of 'Hocus-Pocus'

Enron founder Kenneth Lay smiles as he heads to the courthouse for the start of closing arguments in his fraud and conspiracy trial Monday, May 15, 2006 in Houston. (AP Photo/Pat Sullivan)
AP Photo/Pat Sullivan
Two former chief executives of Enron Corp. "lied over and over and over again" to investors and employees in a widespread fraud that cost victims millions of dollars, a federal prosecutor said Monday.

Prosecutor Kathryn Ruemmler told the jury it has been shown proof of Enron founder Kenneth Lay and former CEO Jeffrey Skilling's "accounting tricks, fiction, hocus-pocus, trickery, misleading statements, half-truths, omissions and outright lies," reports CBS News correspondent Cami McCormick. Ruemmler said the two painted a picture of the company's finances that was dramatically different than what was really going on.

Ruemmler, pacing back and forth before the jury box with her hands clasped behind her back, said they lied, and those lies were illegal. Lay and Skilling are charged with misleading investors and employees about Enron's failing finances in the months leading up to the 2001 bankruptcy.

When Enron finances took a turn for the worse in 2001, "Mr. Skilling and Mr. Lay had a choice," the prosecutor said. "They could come clean and tell the truth about Enron's financial condition — or they could lie to cover it up. They chose to lie."

Ruemmler thanked jurors on behalf of the United States for showing up for each day of the trial, and said they had heard complex and wide-ranging testimony. But she said repeatedly the complex case boiled down to criminal lies.

The government began its closing argument after the U.S. District Judge Sam Lake told jurors to weigh with "great care" the testimony of witnesses who have pleaded guilty as part of a deal with prosecutors.

Lake stressed that those plea agreements are "lawful and proper," however, as he read instructions to the eight women and four men who later this week will begin deliberating Lay and Skilling's fate.

"You, as jurors, are the judges of the facts," Lake said as she urged the panel to decide the case solely on the evidence and "without prejudice or sympathy."

A key element of Lay and Skilling's defense is that prosecutors pressured Enron subordinates into admitting crimes they never committed and lying about their bosses to avoid having to go to trial themselves.

Jurors were expected to hear closing arguments by the defense on Tuesday and begin deliberations Wednesday.

The case has lasted more than 14 weeks and featured 54 government and defense witnesses, including Lay and Skilling. Each side also presented mountains of documents and hours of video and audiotapes that will be available for jurors to sift through during deliberations.

While the jury deliberates, Lake will conduct a separate trial related to Lay's personal banking — specifically, that he took out $75 million in loans from three banks and reneged on an agreement not to use the money to carry or buy margin stock.

The bank-fraud trial will be conducted without a jury. Lake plans to issue his verdict after jurors in Lay and Skilling's joint trial deliver theirs.

Sam Buell, a former prosecutor with the Justice Department's Enron Task Force who now is a visiting professor at the University of Texas law school, said it will be critical for prosecutors and the defense teams to tell a coherent, compelling story.

"A jury can't help but feel a little bit at sea. They're looking for a lifeline to pull it all together," Buell said.

The government contends Lay and Skilling repeatedly lied to employees and investors about Enron's financial health and used accounting tricks to create an illusion of success in the company's final years.

The two men, who both testified, counter no fraud occurred at Enron other than that committed by a few executives who skimmed millions from secret side deals. They say bad publicity and diminished market confidence combined to push Enron into bankruptcy proceedings in December 2001.

Skilling faces 28 counts of fraud, conspiracy, insider trading and lying to auditors stemming from his activities from 1999 through his abrupt resignation after only six months as CEO in mid-August 2001. Lay faces six counts of fraud and conspiracy related mostly to the period after he resumed as CEO upon Skilling's departure.

The trial lacked tangible evidence of wrongdoing, and depends on whom jurors choose to believe.

Prosecution witnesses described a sinking company reliant on fraud to appear healthy. They included eight-ex-Enron executives who pleaded guilty to crimes, some who had immunity deals and others who voiced concerns that were ignored.

The defendants said those witnesses lied, made faulty judgments based on incomplete information or misunderstood what they believed to be incriminating conversations.

Skilling, 52, testified for 7½ days and maintained a tense civility, declaring from the outset, "I am absolutely innocent." Lay, 64, was largely combative during his nearly six days on the witness stand, snarling at a prosecutor and even challenging his own lawyer.

Lay said in a statement posted late last week on his Web site, www.kenlayinfo.com, that he will continue to be forceful.

"We are confident that I will be found not guilty on all charges," he said in the statement.