HOUSTON – Former Enron Chairman and CEO Kenneth Lay (search) Thursday pleaded not guilty to 11 charges stemming from his role in the energy company's 2001 collapse and said he was ready to go to trial in early September.
Lay could face up to 175 years in jail and $5.75 million in fines if convicted on all counts. Bail was set at $500,000 by U.S. Magistrate Judge Mary Milloy, after prosecutors had sought a $6 million bond on the grounds that Lay was a flight risk.
Click to read the indictment (FindLaw pdf).
"It has been a tragic day for me and my family," Lay said at a news conference shortly after his court appearance. "An indictment came down that should not have occurred."
While repeating his assertion that he took responsibility for Enron's collapse as chairman, "that does not mean I know everything that went on at Enron."
"I continue to grieve as does my family over the loss of the company, my failure to be able to save it," Lay said. "But failure does not equate to a crime.
"I firmly reject any notion that I engaged in any wrongful or criminal activity," he added. "Not only are we ready to go to trial, but we are anxious to prove my innocence."
Lay was allowed to keep his passport because he travels internationally on business, but Milloy said if he wants to leave the country he will have to seek permission from the court.
The federal indictment, which adds Lay to charges already filed against his hand-picked protege, former CEO Jeffrey Skilling (search), and former top accountant Richard Causey (search), accuses Lay of participating in a conspiracy to manipulate Enron's quarterly financial results. It also accuses him of making public statements about Enron's financial performance that were false and misleading and omitting facts necessary to make financial statements accurate and fair.
Andrew Weissmann, head of the U.S. Justice Department's Enron Task Force (search), said those Skilling, Causey and Lay were part of an upper-management conspiracy to inflate the company's profits and jack up its stock price while hiding a deteriorating financial condition.
Weissmann, echoing language in the indictment, said Lay took over the conspiracy when Skilling resigned after just six months as chief executive.
"When Skilling abruptly resigned from Enron (search ) in August 2001, Ken Lay took over the helm of the criminal scheme," he told reporters outside the courthouse.
"Rather than come clean and tell the unvarnished truth about Enron, Lay chose to conceal, distort and mislead at the expense of Enron shareholders and employees -- people to whom he owed a duty of complete candor," he said.
The indictment specifically names Lay in one count of conspiracy, two of wire fraud, four of securities fraud, one of bank fraud and three of making false statements to banks.
A grand jury returned a sealed indictment against Lay Wednesday, the result of two and a half years of a methodical investigation that has produced charges against some of Lay's most trusted right-hand men.
As it has with most of the 21 other ex-Enron employees charged with crimes, the Securities and Exchange Commission also filed civil charges against Lay, accusing him of fraud and insider trading. It said he made unlawful proceeds of over $90 million in 2001.
Michael Ramsey, Lay's attorney, said his client wasn't part of any conspiracy and put most of the blame on Enron's former financial chief Andrew Fastow (search) and people associated with him.
Ramsey told reporters today that Fastow was a "liar" and a "thief" -- and that he admitted as much by pleading guilty to charges stemming from the Enron scandal.
Fastow, who is waiting to testify for the prosecution, admitted to orchestrating partnerships and financial schemes to hide Enron debt and inflate profits while pocketing millions of dollars for himself.
Prosecutors have aggressively pursued Lay, the one-time celebrity CEO and friend and contributor to President Bush who led Enron's rise to No. 7 in the Fortune 500 and resigned within weeks of its stunning failure. Lay is the 30th and highest-profile individual charged.
Skilling succeeded Lay as CEO in February 2001 and resigned abruptly six months later, just weeks before the scandal broke. He was indicted in February on nearly three-dozen counts of fraud and other crimes.
Enron's collapse led a series of corporate scandals that led to Congress' passage of sweeping reforms to securities laws with the Sarbanes-Oxley Act (search) two years ago. Thousands of Enron's workers lost their jobs, and the stock fell from a high of $90 in August 2000 to just pennies, wiping out many workers' retirement savings.
The charges against Skilling and Causey, who was initially indicted a week after Fastow pleaded guilty, target actions over several years leading up to Enron's collapse.
Days after Skilling's resignation, Lay met privately with Sherron Watkins, then an executive on Fastow's staff, who had sent him a lengthy memo warning of impending doom from Fastow's myriad schemes to hide debt and inflate profits.
But Lay told The New York Times last month that he didn't believe the company had serious problems and trusted other senior managers — including Fastow and Causey — when they reassured him that all was fine.
Skilling and Causey are awaiting trial on charges of conspiracy, fraud and insider trading. Both pleaded not guilty and are free on bond.
The Associated Press contributed to this report.
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