Lay, Skilling Appeal Judge's Ruling About Venue

HOUSTON – Enron Corp. founder Kenneth Lay and former CEO Jeffrey Skilling on Wednesday appealed a judge's rejection of their pleas to move their fraud and conspiracy case out of Houston, where they say a hostile jury pool obliterates their chance of a fair trial.

Defense teams filed an appeal of U.S. District Judge Sim Lake's decision this week to keep the case in Enron's hometown and begin as scheduled Monday with jury selection. They also aim to ask the 5th U.S. Circuit Court of Appeals to halt the trial if Lake refuses to halt it pending the appeal's outcome.

Lake issued an order late Monday rejecting their second request to move the trial to Denver, Phoenix or Atlanta, without hearing oral arguments. The defense teams want a hearing before the appeals panel.

"We just disagree with being denied a hearing on venue," said Michael Ramsey, Lay's lead attorney. "We are obliged to try to get in front of the issue as quickly as we can so not to put things in more disarray than they already are."

Prosecutors declined comment.

Experts said the effort had little chance of success.

"You go through a lot of these steps in any trial, criminal or civil, to build your record in case you get an adverse result," said Gary Brown, former special counsel for the Senate Committee on Governmental Affairs during its investigation of Enron's December 2001 collapse.

"To my knowledge, there's never been a case reversed or stayed because of a venue issue," said David Berg, a Houston civil litigator.

Lake's ruling Monday denied the former executives' last-minute request to move the trial based on potential jurors' vitriolic statements about Lay and Skilling on questionnaires. The judge said he wasn't convinced a fair jury can't be found in Houston because the questionnaire answers reveal inherent prejudice against Lay and Skilling.

Enron crashed upon revelations of hidden debt and inflated profits, leaving thousands out of work. Potential jurors wrote on some of the 400 questionnaires sent out nearly four years later that Skilling was "a high-class crook" who "would lie to his mother if it would further his cause" and Lay was "the biggest lying crook of all" who "did a lot of injustice to a lot of good people."

That pool has been whittled to about 160.

Lake said questionnaires with unbiased answers and his intention to question the pool Monday "provide adequate safeguards to defendants and will result in the selection of a fair and impartial jury in this case."

His ruling was expected. A year ago he rejected the defense's first request to move the trial, noting that extensive pretrial publicity wasn't so inflammatory or pervasive that it would prevent a fair trial.

In the appeal, Daniel Petrocelli, Skilling's lead trial lawyer, and Ramsey reiterated many arguments already made to Lake, saying their clients have consistently been "demonized" in Houston since Enron collapsed.

They also say former Enron chief accounting officer Richard Causey's last-minute decision to avoid trial alongside Lay and Skilling by pleading guilty last month to securities fraud further prejudiced their clients.

"This is an extraordinary case and, in this venue, defendants face extraordinary prejudice and cannot receive a fair and impartial trial," the filing said.

Berg said district courts like Lake's have much freedom and discretion when it comes to venue and jury selection.

"So much data from questionnaires demonstrating the antagonism of this community toward Lay and Skilling may make a difference, but I doubt it," he said.

Skilling faces 35 counts of fraud, conspiracy, insider trading and lying to auditors for allegedly conspiring to fool investors into believing a fragile Enron was healthy before the company went bankrupt. Prosecutors intend to tell Lake at a hearing Thursday that the government will drop four wire fraud counts against Skilling that are related to Causey counts, so the former CEO will face 31 criminal counts.

Lay faces seven counts of fraud and conspiracy for allegedly perpetuating the public lies about Enron's health after Skilling resigned in August 2001.

Both have pleaded not guilty.