Making Case Against Lay for Enron Seen Harder

Bringing a case against Ken Lay (search) — the last top ex-Enron officer still standing — will be difficult for U.S. authorities, said lawyers and academics Thursday after the surrender of former Enron CEO Jeff Skilling (search).

Little evidence directly links Lay, former Enron (search) chairman, to the complex web of accounting deceptions blamed for the late 2001 collapse of the Houston energy trading group, they said.

"I'm not saying Lay will get away immune, I'm saying he's a harder case," said John Coffee, a securities law professor at Columbia University in New York.

Skilling on Thursday was indicted on charges of fraud and insider trading. to all counts and his attorneys vowed to fight the charges.

He turned himself into the FBI and was released on $5 million bail, becoming the highest-ranking former Enron executive charged in a two-year-old probe of a scandal that was the first in a series to rock U.S. capital markets.

"They've worked their way up. Now they've gotten everyone but Lay and he's certainly in the prosecutors' sights," said Mark Braswell, a partner at the law firm of Venable LLP in Washington and a former SEC enforcement lawyer.

"Each level you move up the chain, it's more difficult because the person is further removed from the documents that prove the fraud," Braswell said.

In announcing the indictment at a news conference, U.S. Deputy Attorney General James Comey said of Skilling, "This was 'the guy' at Enron ... He was the person who ran Enron."

Comey declined to comment on Lay.

Coffee said calling Skilling 'the guy' tends to rule out any argument that Lay was 'the guy' and reduces chances that a case will be brought against him like that against Skilling.

Authorities accused Skilling, along with former Enron Chief Accounting Officer Rick Causey (search), of manipulating Enron's books to meet quarterly profit expectations on Wall Street, then lying repeatedly to analysts and auditors to cover it up.

A securities lawyer involved in the case, who asked not to be named, said, "They have a lot less evidence that links Lay to knowledge of any of this stuff."

Lay's personal spokesman in Houston and his lawyers in Washington and Texas could not be reached for comment.

Enron was once the nation's seventh-largest corporation and Lay had close political ties to President Bush.

Authorities are likely trying to build an insider trading case against Lay, based on sales of Enron stock he made. But Coffee said such a case would not be clear-cut.

"I understand that Lay basically only sold when he received margin calls. He had problems with his other stock portfolio and when he was under pressure there to come up with margin, he would sell some Enron stock. Skilling is different," he said.

Skilling was accused of insider trading that helped net him $89 million in profits. His indictment came just weeks after former Enron Chief Financial Officer Andrew Fastow (search) pleaded guilty to two fraud counts and got a 10-year prison sentence.