Ken Lay Claims Innocence a Month Before Enron Trial

HOUSTON – About a month before he faces trial on fraud and conspiracy charges, Enron Corp. founder Kenneth Lay reiterated that he is innocent of any wrongdoing related to his company's scandalous collapse four years ago.

In a speech to about 500 Houston business and academic leaders at the Houston Forum, Lay decried the Justice Department's tactics in pursuing him and others accused of crimes in the Enron fallout.

In particular, he criticized the government for stalking withered former Enron auditor Arthur Andersen LLP. The U.S. Supreme Court this year overturned a 2002 obstruction conviction of Arthur Andersen for destroying Enron-related documents before the energy company failed in 2001.

"Let me cut to the chase," Lay said. "In this trial, apparently unlike most criminal defense cases, defendants are trying to get the truth in and the prosecutors — The Enron Task Force — are trying to keep it out.

"They know that is the only way they can win, and I agree."

Lay faces trial Jan. 17 alongside former Enron CEO Jeffrey Skilling and former top accountant Richard Causey, and his speech could irk the judge presiding over the case.

"If asked, I am certain that the Enron Task Force would say they have taken so much time because the crimes at Enron are so complicated," he said. "However, I would say the Enron Task Force has taken so much time because it is complicated to find crimes where they do not exist."

Houston Forum chairman Willie Alexander, a longtime friend of Lay's, told attendees that Lay's speech may be emotional for some of them given the ripple effects of Enron's demise that left thousands out of work and lost billions for investors.

"This event is offered in the spirit of the public interest," Alexander said.

It wasn't the first time Lay has spoken publicly since he was indicted in July 2004 on charges of fraud and conspiracy stemming from the company's scandalous collapse four years ago.

The day that prosecutors unveiled the charges against him, Lay held a lengthy news conference in which he proclaimed his innocence. He then went on a publicity blitz, conducting interviews with local and national news organizations, including The Associated Press.

Enron imploded in December 2001 in a swirl of devastating revelations of hidden debt, inflated profits and accounting tricks.

Jacob Frenkel, a former federal prosecutor, said Tuesday that Lay's speech could annoy U.S. District Judge Sim Lake, who is overseeing the Lay-Skilling trial and who has considered issuing a gag order on defendants, their lawyers and prosecutors.

"This is the kind of speech that can really raise the ire of judges if it can in any way be perceived as an attempt influence the jury pool," Frenkel said. "Getting up and speaking at this point is treading in dangerous territory."

Prosecutors supported the notion of a gag order, but the defense teams opposed it.

Skilling and Causey each face more than 30 counts of fraud, conspiracy, insider trading, lying to auditors and others for allegedly knowing about or being in on various schemes to fool investors into believing Enron's facade of success in the years before the company crashed.

The narrower case against Lay involves seven counts of fraud and conspiracy for allegedly taking over the ruse upon Skilling's abrupt resignation in August 2001. Once that jury begins deliberating, he will be tried before Lake without a jury in a separate case on charges of fraud and lying to banks about his intention to use loans to buy Enron stock on margin.

All three have pleaded not guilty.

Lay has maintained publicly that he knew of no crimes at Enron and trusted the wrong people — namely former Enron finance chief Andrew Fastow, who is expected to be the government's key witness against the trio.

Fastow faced 98 criminal charges until he pleaded guilty to two counts of conspiracy in January 2004 and agreed to serve the maximum 10-year prison term when prosecutors no longer need his cooperation.