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The Honolulu Advertiser
Posted on: Wednesday, May 17, 2006

Defense blasts Enron prosecutors

By Thomas S. Mulligan
Los Angeles Times

A jury is deliberating in the case against Enron founder Kenneth L. Lay, left, with attorneys George Secrest, center, and Mike Ramsey.

PAT SULLIVAN | Associated Press

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HOUSTON Lawyers for Kenneth L. Lay and Jeffrey K. Skilling, in an emotional last pitch to jurors who could send their clients to jail for decades, accused the government yesterday of building a sham case against the former Enron Corp. leaders because it needed scapegoats for a corporate scandal.

With "their eye on the prize" of two high-profile convictions, federal prosecutors coerced witnesses, selectively used "snippets" of taped presentations and misrepresented documents to concoct their case, Daniel M. Petrocelli, Skilling's lead lawyer, charged during his 3 1/2-hour closing argument yesterday morning.

Enron founder Lay, 64, and former Chief Executive Skilling, 52, are accused of lying to the public about the company's financial health and conspiring with subordinates to inflate profits and hide losses through what the government terms "accounting trickery."

Skilling faces 28 counts of conspiracy, fraud and insider trading. Lay is charged with six counts of conspiracy and fraud.

Lay also faces several bank fraud counts which will be the subject of a separate bench trial scheduled to begin tomorrow while the jury in the main case is in deliberations. U.S. District Judge Sim Lake will hear the evidence and decide the case alone. He said he would withhold his decision until the jury has delivered its verdict in the main case.

Enron's collapse in December 2001 created a public outcry over corporate chicanery and led to congressional hearings and the formation of a special government task force to probe the company's downfall.

Co-lead prosecutor Kathryn H. Ruemmler, in the first half of the government's closing argument on Monday, tried to inoculate the jury against what she said would be a display of "passion" and "indignation" by defense lawyers.

Petrocelli, alluding to her remarks, began by saying: "I'm representing a man falsely accused and on trial for his life. Who wouldn't be passionate? Who wouldn't be indignant?"

The government, said Petrocelli, began its massive investigation of the failed energy company with the conclusion that Lay and Skilling were to blame. It then "reverse-engineered" the evidence to prove it, he said.

"A snippet here, a snippet there, and you create a new story after the fact," said Petrocelli.

He said the government built its case mainly by pressuring Enron subordinates with the threat of long prison terms and financial ruin if they refused to cooperate. Prosecutors, said Petrocelli, want jurors to "discard and disregard years of real facts and listen to the word of people who've been robbed of their will."

Petrocelli said the government avoided talking about its central allegation of conspiracy during the 15-week trial because conspiracy is difficult to prove without documents and it didn't feel it had a winning case. Instead, he said, prosecutors focused on Enron's spectacular collapse and its macho corporate culture.

Petrocelli said the government often asked its witnesses to explain things that were outside their professional background because it didn't trust the real experts to toe the government line. Noting, for example, that former Enron Chief Accounting Officer Richard M. Causey figured in many crucial incidents in the case, Petrocelli asked: "Where is he? Why didn't they call him?"