Risk & Compliance

Lay, Skilling Guilty

A Houston jury Thursday found former Enron executives Kenneth Lay and Jeffrey Skilling guilty of multiple counts of securities fraud, conspiracy, a...
Stephen TaubMay 25, 2006

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Former Enron Corp. chairman Kenneth Lay was convicted of all six charges against him and former Enron chief executive officer Jeffrey Skilling was found guilty of 19 counts, including conspiracy to commit securities fraud and wire fraud, the most serious of the 28 charges he faced. In a separate trial, Lay was found guilty of four bank fraud charges.

Skilling was acquitted on 9 charges, including most of the insider trading charges.

Sentencing is scheduled for September 11. Both men face decades in prison.

“The message of today’s verdict is simple,” said U.S. Deputy Attorney General Paul J. McNulty shortly after the verdicts were announced. “Our criminal laws will be enforced just as vigorously against corporate execs as they will against street criminals.”

“Lay, Skilling and their numerous co-conspiritors perpetrated an elaborate scheme,” McNulty said. “Their efforts to mislead the markets were protracted, deliberate and dishonest.”

Lay, who heard his verdict after Skilling’s, looked “white as a ghost” as it was read, according to CNBC.

According to FOX News, Linda Lay, Ken Lay’s wife, was crying and holding on to her husband as the verdict was read.

“Today, the jury said leaders will be held accountable for their actions,” Sherron Watkins, former Enron vice president and noted whistle-blower, told CNBC.

The verdict was read on the sixth day of deliberations in the trial, which began with jury deliberations back on January 30.

Skilling faced 28 counts of fraud, conspiracy, insider trading and lying to auditors, as well as a maximum of 275 years in prison if convicted on all counts, according to the Associated Press.

Lay faced six counts of fraud and conspiracy.

The two men were accused of knowingly overstating the health of the former energy giant shortly before it plunged into bankruptcy in December 2001.

Skilling and Lay countered that the company was in pretty good financial shape, blaming bad press, short sellers and a run-on-the-bank for the company’s failure.

“We’re going to have to go back and look at this thing again,” Skilling told press outside the courtroom. “Obviously, I’m disappointed. But that’s the way the system works.”

“We will continue to fight the good fight,” added Skilling attorney Daniel Petrocelli.

Lawyers for both Lay and Skilling will file appeals.

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