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Lay's Defense Is As Big As Texas

Attorney Andrew Cohen analyzes legal issues for CBS News and He is presently in Houston observing the Enron trial.

Michael Ramsey, the attorney leading the defense for former Enron chief Kenneth Lay, talks like he has a bag of marbles in his mouth. He mumbles. He stumbles. He hems and haws. He sounds like old-school Texas, through and through, and that, in essence, is what the Lay defense is offering jurors in this corporate fraud and conspiracy case. The man President George W. Bush called "Kenny Boy" may ultimately have messed up big with Enron (and Houston), the theory goes, but his heart was in the right place and his many good deeds ought now to count for something, if not in the minds of jurors than certainly in their hearts.

Ramsey's presentation was markedly different from either the government's opening statement or the opening remarks offered by co-defendant Jeffrey Skilling's attorney, Daniel Petrocelli. Whereas Petrocelli was as edgy and cocksure as his own client, Ramsey was as folksy and as down-home as Lay would like the world to believe he is. One was fire, the other ice. One made you think of "Law and Order," the other made you think of "Hee Haw." Lay's attorney talked to jurors Texan-to-Texan in a way that the other two attorneys who shared Tuesday's stage did not. How often these days does a lawyer stand up in court and, describing the fall of a company's stock price, say: "What happened was the odor of the wolf got into the flock, and the flock stampeded." Yet that's precisely what Ramsey said as though he were talking to his neighbors over a water trough.

Contrary to what federal prosecutor John C. Hueston had told jurors earlier Tuesday, Ramsey told the panel that Lay didn't hide Enron's failings as part of grand fraudulent scheme but rather disclosed them often in ways large (to analysts and investors) and small (in written disclosures hidden in voluminous securities' reports). There was no conspiracy or cover up, Ramsey said, just a bad corporate situation that got worse and, ultimately, out of control before Lay, Skilling and the other big dogs at Enron could do anything about it. Failing is not a crime, Ramsey told the jury, and neither is going bankrupt. So "why are we here?" Ramsey kept asking rhetorically as the afternoon wore on.

We're here, remember, because federal prosecutors say that Lay and Skiling participated in a massive scheme that allowed Enron to cover up its losses in order to keep inflated its stock price in order to allow the men, and others, to rake in big dough — at the expense of their employees, investors, the market and the truth. We're here because the government alleges that Lay and Skilling were playing the roles of snake-oil salesman in public long after they were dumping their Enron shares in private. But Ramsey said that these optimistic statements are part of a good executive's job function. You don't want "a chicken little" running a big company, do you?, he asked the panel.

Like Petrocelli before him, Ramsey promised that his client would take the witness stand. And he also told jurors that the defense wants the panel to see all of the tapes, all of the documents, and all of the reports that describe the company's financial status during Enron's rocky past. The government, Ramsey claimed, was cherry-picking certain passages and sound bytes here and there in the vast material to weave a story that just isn't supported by the context contained in the rest of the materials. No surprise here, really. Defense attorneys almost always want jurors to get enmeshed in the details of stories and events. Details lead to debates during deliberations and debates can lead to reasonable doubt. So when Ramsey told jurors that this is "a case that has got to do with accounting because they are saying we lied about our accounting" he was really warning them that Skilling and Lay and Co. intend to give these folks a crash course in the rules that govern the corporate books.

Ramsey also focused upon the prosecution's case to come. It is a case where many former Enron officials, including many men and women who worked closely both with Lay and Skilling, will testify for prosecutors. So Ramsey took advantage of his early time before the jury to try to shape their views of plea deals and the testimony they can generate. The testimony is practically worthless, Ramsey said, because so much pressure and fear is brought to bear upon witnesses whom prosecutors threaten with indictment. "What would you do," Ramsey asked, "if your family, your welfare, your freedom and all your assets were threatened" by prosecutors in such a fashion? "What would you do?" he asked again. Besides, he told the panel, the people who decide when such witnesses are telling the truth — prosecutors — merely "pull up their britches one day at a time, just like I do," Ramsey said.

But if lawyers all over the world pull up their britches the same way, the defense lawyers surely did not in court Tuesday offer the same explanations for what happened to Enron. Petrocelli told jurors that the company was fine when Skilling suddenly left it in August 2001. But Lay's attorney told those same jurors that the company gave plenty of warning to anyone in the outside world who would listen that times weren't all that good. Petrocelli talked about how many former Enron executives pleaded guilty even though they had not committed any crimes. Lay's attorney made sure to tell the panel that Andrew Fastow, the former chief financial officer of the company, "was a crook. He was a liar. He was deceitful. What Andy stole from Enron was its good name."

And what a name! Ramsey spent a good chunk of his two-hour opening statement extolling his client's virtues and for a while the courtroom seemed like one of those actor-gets-honored shows on television. Jurors were shown home-style slides of Lay's life and times, which Ramsey called "an American success story." They were reminded that without Lay Houston might not have had a new baseball field or football stadium. And they were told that while Lay was making his hundreds of millions at Enron he also was giving part of his wealth back to the community — $25 million over three years — this "greedy, greedy, greedy" man gave, Ramsey sarcastically barked at jurors. Moreover, he told them, his client is not a "courthouse Christian," someone who suddenly finds faith on the eve of trial. No, Ramsey said, Ken Lay is genuinely religious and has been all life.

None of this is relevant to the charges against Lay or Skilling, of course, but it's an important part of the defense case. On some level, it is hard to imagine how this man who seemed so good to Houston and to Enron could turn out so rotten. And it is that kernel of wonder and curiosity that the defense hopes will pop open into a reasonable doubt as the trial proceeds. So Ramsey figures to serve as a bridge between Lay's riches and haughtiness and the average juror's everyday concerns. He figures to remind jurors that the Enron story is a Texas story, a story of grand success and great failure, and that Lay's role in it is simply another chapter in the history of a state known for its excess. That may be a crime in other places, Ramsey hopes to convince jurors, but not in Texas and certainly not in Houston.

All in all, it was a good day of lawyering on all sides in the case. Prosecutors kept it simple like they needed to. Skilling's attorney oozed confidence. And Lay's counsel gave jurors cause to be soothed about the allegations against his client. Trials are not won or lost on "opening day." But if Tuesday's start was a sign of things to come, then the trial some bill as "The Most Important and Interesting Corporate Trial in American History" may actually live up to that billing.

By Andrew Cohen

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