Enron Prosecutors Ask for Gag Order After Lay Speech

Prosecutors have asked a federal judge to muzzle out-of-court statements related to the fraud and conspiracy case against Enron Corp. founder Kenneth Lay and former chief executive Jeffrey Skilling in light of Lay's public speech Tuesday lambasting government tactics in pursuing him.

U.S. District Judge Sim Lake may consider the issue at a hearing Friday afternoon that was scheduled before Lay presented his speech to Houston business and academic leaders. Lay, Skilling and former top Enron accountant Richard Causey will go on trial Jan. 17.

Last month Lake brought up the possibility of a gag order in anticipation of heavy publicity stemming from the blockbuster trial to emerge from the Justice Department's nearly 4-year-old investigation of Enron's 2001 collapse.

Prosecutors supported it, but the defense teams didn't. The judge decided Dec. 1 to hold off on issuing such an order.

In Tuesday's speech, Lay issued a plea for former Enron employees to defy a "wave of terror" by federal prosecutors and help him fight criminal charges.

In court papers filed Thursday, prosecutors said Lay "made public statements regarding the credibility and testimony of potential witnesses in this case and commented on the motivation of the government in prosecuting him," and that a gag order "is now appropriate."

Lay accused the government of bullying critical witnesses so they wouldn't talk to the defense teams for fear of being indicted or getting harsh prison sentences if they had already pleaded guilty to Enron-related crimes.

"The prosecutor becomes a human guillotine when given the power to charge an individual, act as judge and jury, as well as executioner if a 'cooperating' witness does not assist the prosecutor as the prosecutor believes the 'cooperating witness' should," Lay said in his speech.

Prosecutors have repeatedly denied intimidating anyone, and Lake so far has been unmoved by the allegations.

This week, the count of people who have pleaded guilty to Enron crimes dropped to 15 from 16 when U.S. District Judge Melinda Harmon granted former Arthur Andersen LLP auditor David Duncan's request to withdraw his April 2002 guilty plea to obstruction of justice.

Duncan was the only individual from Andersen to be charged with a crime, and the remaining 15 who have pleaded guilty to various offenses are former Enron executives.

Duncan, who once led Andersen's Enron audit team, made his request after the U.S. Supreme Court in June overturned Andersen's 2002 conviction of obstruction. The high court said vague jury instructions allowed the panel to convict without finding criminal intent behind a mass effort to destroy Enron audit documents as investigators began probing Enron's finances before the company imploded.

Lay alleged in his speech that prosecutors don't want Duncan to testify because he may repeat his testimony in Andersen's trial that he believed Enron's accounting was done correctly.

Skilling and Causey each face more than 30 counts of conspiracy, fraud, insider trading and others related to alleged schemes to maintain Enron's prosperous appearance before the company crashed. Lay faces seven counts of fraud and conspiracy for allegedly perpetuating the ruse after Skilling resigned in August 2001.

All three have pleaded innocent.