HOUSTON – Jury selection began Monday in the trial of former Enron Corp. chiefs Kenneth Lay and Jeffrey Skilling with a federal judge warning a pool of about 100 not to use the closely watched case to exact vengeance for the company's epic implosion four years ago.
"I can assure you this will be one of the most interesting and important cases ever tried," U.S. District Judge Sim Lake told potential jurors, who crammed into five rows of a cavernous courtroom and were being questioned individually throughout the day.
The judge indicated at mid-afternoon Monday that he hoped to have a jury seated within another hour, meaning opening statements could come Tuesday morning in the trial — perhaps the premier criminal case to emerge from corporate scandals that began when Enron went under in 2001.
While thousands of Houston-area residents were laid off in the flame-out of the energy giant, the judge made clear Monday that the jury box was not the place to avenge friends or relatives who lost jobs or investments.
"We are not looking for people who want to right a wrong or provide remedies for those who suffered in the collapse of Enron," Lake said.
Lay, 63, and Skilling, 52, appeared relaxed and ready as they arrived at a federal courthouse here, flanked by lawyers and watched by a horde of reporters and photographers, some of whom had camped out overnight to secure places inside.
A reporter asked Lay how he felt, and he answered, "Fine, how are you?"
Skilling declined to comment, but his attorney Daniel Petrocelli said, "We're looking forward to it. We're ready."
Inside the 11th-floor downtown courtroom, Lay and Skilling stood and turned to face the jury pool briefly before the judge began a lengthy set of instructions and questions designed to make sure jurors would bring no bias to the case. Otherwise they maintained serious faces, Lay occasionally flipping through papers.
Lake acknowledged the heavy publicity in the Houston area and said he did not expect jurors to "blot out" what they had seen and read, but urged them to decide the case based only on the evidence.
When the judge asked the group whether religious or philosophical beliefs would keep them from passing judgment, a 20-year-old man raised his hand. He said he had lived most of his life with his grandmother, "and she's always told me never judge anybody."
"It's not a moral judgment, it's a legal judgment," answered Lake, who thanked the potential juror for his candor but did not immediately excuse him.
The judge also read a long list of potential witnesses in the trial, including Houston Astros owner Drayton McLane Jr. and at least two ministers. Scattered jurors recognized some of the names, but all assured the judge they could hear the case impartially despite their connections.
Lake said he would talk privately later in the day with one woman who recognized the name of one potential witness, identifying her as "my neighbor and friend."
Jury selection was unfolding just blocks from the building that was once a nerve center for Enron, a Wall Street darling in the late 1990s that was considered a new-economy maverick with a high-flying stock price and a now-iconic tilted "E" logo.
But the company's fortunes — not to mention tens of thousands of jobs and billions of dollars in investments — were shattered in 2001, as a series of complex entities designed to hide Enron debt came to light and the company went bankrupt.
"This is what we've been waiting for," said David Tonsall, a former Enron pipeline worker who was one of thousands laid off when Enron crumbled in December 2001, and who watched Lay and Skilling walk into court Monday.
A federal indictment accuses Lay and Skilling of orchestrating a tangled scheme of accounting tricks designed to hide the debt, keep Enron's credit rating high and maintain a healthy stock price, keeping themselves rich in the process.
Skilling faces 31 counts of fraud, conspiracy, insider trading and deceiving auditors for allegedly lying about Enron's financial strength. Lay faces seven counts of fraud and conspiracy for perpetuating the alleged scheme after Skilling resigned in August 2001.
Lake told the jury pool the trial could take as long as four months. Among the expected witnesses is Andrew Fastow, Enron's former chief financial officer, who pleaded guilty to conspiracy charges in 2004 and faces up to 10 years in prison once he is finished cooperating with federal prosecutors. Fifteen other former Enron executives have pleaded guilty in the accounting scandal.
Enron's crash and the subsequent scandals roiled Wall Street, sent investors fleeing, prompted stiffened white collar penalties and raised regulatory scrutiny over publicly traded companies that spawned a slew of high-profile cases.
The Enron collapse touched off a series of corporate scandals, and in the ensuing years the government has won convictions against Martha Stewart and other executives from companies such as WorldCom Inc. and Adelphia Communications Corp. A rare exception was HealthSouth Corp. founder Richard Scrushy, who was acquitted on fraud charges last year, even after five former finance chiefs implicated him in an earnings-boosting scheme.