After months (if not years) of speculation, former Enron chairman and chief executive officer Kenneth Lay was indicted for his role in the collapse and bankruptcy of the one-time high-flying energy giant.
A handcuffed Lay was paraded in front of TV cameras early Thursday after surrendering to the Federal Bureau of Investigation. “You guys are up early,” he said to reporters outside the FBI’s offices. “Nice of you all to show up this morning.”
Lay was charged with 11 criminal counts, including securities and bank fraud, in an indictment handed up Wednesday and unsealed Thursday, according to Reuters.
The indictment alleged that Lay — who returned to the role of Enron’s chief executive officer after the abrupt departure of Jeffrey Skilling in August 2001 — deceived banks, employees, and industry analysts by concealing $7 billion in company losses, according to Bloomberg.
The new indictment supersedes an earlier version of the charges against other former Enron officers. According to Reuters, the 11 counts against Lay were added to an earlier indictment against Skilling and former chief accounting officer Rick Causey, indicating that they would be tried together.
Lay’s lawyer, Mike Ramsey, said his client should be tried separately from other defendants. “Ken Lay was CEO and chairman,” Ramsey said, according to Bloomberg. “He is the first person who ought to go to trial.”
Lay pleaded not guilty to the criminal charges and was freed on a $500,000 bond. He faces up to 175 years in prison if convicted on all counts.
In addition, the Securities and Exchange Commission filed civil charges against Lay for his role in what it asserted was “a wide-ranging scheme to defraud by falsifying Enron’s publicly reported financial results and making false and misleading public representations about Enron’s business performance and financial condition.”
The commission also alleged that Lay made more than $90 million from engaging in illegal insider trading of Enron’s stock.
The SEC said it is seeking disgorgement of these gains, civil penalties, a permanent bar from acting as a director or officer of a publicly held company, and an injunction against future violations of the federal securities laws.
“From the very beginning, our mandate has been to hold accountable those who contributed to the false portrayal of Enron as a viable, thriving entity. As Enron’s chairman and chief executive officer, Mr. Lay was an engaged participant in the ongoing fraud, and must therefore be called to account for his actions,” said Stephen Cutler, director of the SEC’s Enforcement Division, in a statement. The commission also filed an amended complaint seeking to add Lay to its pending action against Skilling and Causey.