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The Honolulu Advertiser
Posted on: Tuesday, May 16, 2006

Don't buy Enron defense, jury told

By Carrie Johnson
Washington Post

HOUSTON A prosecutor urged jurors in the fraud trial of former Enron Corp. leaders Kenneth Lay and Jeffrey Skilling to "hold them accountable for the choices they made and the lies that they told," as final arguments began in a case stemming from the era's biggest corporate scandal.

After four months of testimony, Assistant U.S. Attorney Kathryn Ruemmler sought to remind the jury of what she called "accounting tricks, hocus-pocus, fiction, and outright lies" that helped Enron paint a healthy external portrait even as it limped toward bankruptcy protection in December 2001.

Central to the fraud, the Washington-based prosecutor argued, was a series of falsehoods that former chief executive Skilling and former chairman Lay told investors to boost the stock price as Enron's problems mounted. At the same time, Ruemmler asserted, both men quietly unloaded tens of millions of dollars in stock, putting their own interests above the company employees'.

Skilling faces 28 criminal charges, and Lay faces six counts of conspiracy and fraud. Each man could go to prison for more than a decade if convicted. Defense lawyers have a final chance to persuade jurors today before prosecutors take a parting shot and hand the case off to the panel later in the week.

The eight-woman, four-man jury seemed attentive, frequently jotting notes but mostly keeping poker faces.

An alternate juror who was dismissed last week for health reasons attended the morning session, squeezing into a crowded back bench. Lay and Skilling sometimes exchanged looks of amusement and anger as they disagreed with a point the government lawyer made.

Yesterday, prosecutors took four hours to sum up 16 weeks of testimony from more than 50 witnesses, many of them former Enron insiders who pleaded guilty and testified in exchange for reduced prison sentences.

Legal experts say the case, which has no documents that link the defendants directly to fraud, could come down to a battle of credibility. Skilling and Lay took the witness stand and testified, for 14 sometimes rocky days, that they believed Enron was vibrant up until its demise.

Ruemmler asked jurors to compare the demeanor of witnesses who had accepted responsibility for their actions with that of Skilling and Lay, who she said offered "a series of excuses, convenient memory lapses," and blame games.

"On cross-examination, they fought, argued, made long speeches, evaded questions," she said. "Nobody else is smart enough ... That is extraordinary arrogance. It is the exact same tactic they used when they were running Enron."

The prosecution also sought to disarm the defense by mocking its central arguments, including the theory that Enron collapsed during a market panic fueled by skeptical news reports and investors called short sellers, who bet that a company's stock price will drop.

Calling the defense rhetoric a "diversionary tactic," Ruemmler said, "It's absurd. It's ridiculous. Don't buy it."

Instead, prosecutors counseled the jury to look past courtroom theatrics and focus on the evidence and their own common sense.

Ruemmler reminded the jury of testimony that Enron's highly touted retail unit was instead "a basket case," according to the executive hired to rescue it.

She showed jurors a conference call script in which Skilling chose to omit mention of losses. And she sketched out a last-minute scheme to meet Wall Street earnings expectations for the fourth quarter of 1999.

"Abracadabra. Just like that. A penny to meet the consensus estimate. That's fraud. It's wrong," she said. "The only people who said something different were Mr. Skilling and his $600,000 expert."