Enron Founder Lay 'Shocked' at Conviction

Kenneth Lay and Jeffrey Skilling were known as visionaries, hands-on executives, corporate titans directing the high-flying ship at Wall Street darling Enron Corp. Add another title: convicted felons.

"Certainly we're surprised," a shaken Lay said Thursday after a jury capped a four-month-long fraud and conspiracy trial and in its sixth day of deliberations returned guilty verdicts against him and Skilling. "I think it's more appropriate to say we're shocked. This is not the outcome we expected."

Besides all six counts in the main trial, Lay, Enron's founder, also was convicted of four charges of bank fraud and making false statements to banks in a separate non-jury trial before U.S. District Judge Sim Lake related to his personal finances.

Skilling was convicted of 19 counts of fraud, conspiracy and insider trading at a trial spawned by one of the biggest business scandals in U.S. history, the toppling of a high-profile energy trader that once was the nation's seventh-largest company.

"Obviously, I'm disappointed," the former Enron chief executive said. "But that's the way the system works."

Lake set Sept. 11 as sentencing date for Skilling and Lay. Legal experts, while not questioning the pair eventually would be spending time behind bars, predicted another fierce courtroom battle over the duration of their likely prison time.

Skilling faces a maximum of 185 years in prison. For Lay, the fraud and conspiracy convictions carry a combined maximum punishment of 45 years. The bank fraud case adds 120 years, 30 years on each of the four counts.

While the reality is the sentences will be considerably less under federal sentencing guidelines, for Lay, 64, a likely double-digit term could be the equivalent of a life sentence, said Kirby Behre, a former federal prosecutor in Washington who wrote the government's white- collar sentencing guide.

"They're both facing 20-plus years," he said. "You do 20 years, and that's entirely conceivable, you're looking at life. And people don't age well in prison.

"Lay may catch a break, but Skilling doesn't have that. He's looking well north of 20 years."

"They'll each be in a prison uniform," agreed Douglas Young, a San Francisco-based white collar defense lawyer who's followed the case. "But I don't think 100 years or 50 years."

Whatever their incarceration, he said, it could be stalled for a year or more.

"They have excellent defense lawyers," Young said. "I think they performed extremely well. They tried a heck of a good case. Sometimes it works. Sometimes it doesn't. That same quality is going to go into post-trial motions, advocacy motions.

"Expect the same level of intensity."

The common practice will be for lawyers to ask the judge to allow them to self report, giving them time to get their affairs in order and show up on their own.

"Whether the judge lets them depends on the strength of post-trial motions," Young said.

He said one avenue for appeal could be Lake's instruction to jurors that Lay and Skilling could be found guilty even if they did not know about the fraud if the facts showed they should have known and were willfully ignorant of it.

"Chances are very slight," Behre said of appellate success. "You need a total screwup and that would have been something you heard about, some outrage from the trial.

"Nothing has jumped out from what I've seen that would make it appear there's some very good appellate issues."

Jurors found the men, who received tens of millions in pay and stock options, repeatedly lied to cover up accounting tricks and business failures that led to the company's 2001 demise. The collapse wiped out more than $60 billion in market value, almost $2.1 billion in pension plans and 5,600 jobs.

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