Enron Defense Attacks Credibility of Witness

HOUSTON – A lawyer for former Enron Corp.Chief Executive Jeffrey Skilling Monday attacked a key prosecution witness who has testified that the company inflated its earnings, saying the witness tried to please prosecutors in hopes of avoiding jail time.

The witness, Mark Koenig, the first person to take the stand in the trial of Skilling and his boss Ken Lay, is testifying under an agreement with prosecutors and has forfeited about $1.5 million to the government.

Daniel Petrocelli, Skilling's lead lawyer, displayed a large zero on a screen in the courtroom, and said that was the amount of time Koenig hoped to spend in jail.

"I would love for that to be the amount of time I spend in jail," Koenig said under questioning from Petrocelli as the defense began its cross-examination of the man who was investor relations director for Enron.

Koenig faces up to 10 years in prison for his guilty plea in aiding and abetting securities fraud, but his cooperation could prompt government prosecutors to request a judge give him a light sentence.

In nearly two and a half days of testimony last week, Koenig said he and other executives at Enron, including Skilling and Lay, kept information from investors that they felt would hurt its stock price, even as its financial problems mounted.

Legal experts, however, have said Koenig's testimony, though damaging, did not score a direct hit on the defendants.

Petrocelli also said Koenig is also trying to protect $5 million he earned at the company.

"I would love to keep the money," Koenig said.

Koenig said he was currently being sued by investors for his role in Enron's collapse, and said he had little chance of protecting his money.

Petrocelli hit back that Koenig was fighting those lawsuits, and had successfully argued his money should not be frozen while those cases are ongoing.

Koenig, in addition to a possible prison sentence, could potentially face monetary fines.

Lay and Skilling together face more than three dozen counts of conspiracy and fraud linked to the company that was once a darling of Wall Street, but imploded into bankruptcy in December 2001 after its hidden debts and inflated profits were discovered.

The two men have pleaded guilty to all counts and said the company did not engage in any widespread illegal activity, except for some crimes committed by former Chief Financial Officer Andrew Fastowand his team.

Fastow and 15 other former Enron executives who have pleaded guilty to Enron-related crimes are expected to testify against Skilling and Lay in the coming weeks.