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Jury finds Lay and Skilling guilty

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  • Greg Cannon
    http://money.cnn.com/2006/05/25/news/newsmakers/enron_verdict/index.htm?cnn=yes Lay and Skilling guilty Ex-CEO and founder convicted on fraud and conspiracy
    Message 1 of 1 , May 25, 2006
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      http://money.cnn.com/2006/05/25/news/newsmakers/enron_verdict/index.htm?cnn=yes

      Lay and Skilling guilty
      Ex-CEO and founder convicted on fraud and conspiracy
      charges in Enron case.
      May 25, 2006: 12:31 PM EDT

      HOUSTON (CNNMoney.com) - Enron former chief executive
      Jeffrey Skilling and founder Kenneth Lay were found
      guilty Thursday of conspiracy and fraud in the
      granddaddy of all corporate fraud cases.

      On the sixth day of deliberations, a jury of eight
      women and four men convicted the former executives of
      misleading the public about the true financial health
      of Enron, whose collapse in late 2001 symbolized the
      wave of corporate fraud that swept the United States
      early this decade.

      Skilling was found guilty on 19 counts of conspiracy,
      fraud, false statements and insider trading. He was
      found not guilty on eight counts of insider trading.

      Lay was found guilty on all six counts of conspiracy
      and fraud.

      In a separate bench trial, Judge Sim Lake ruled Lay
      was guilty of four counts of fraud and false
      statements.

      Both Lay and Skilling could face 20 to 30 years in
      prison, legal experts say.

      Judge Lake set sentencing for the week of Sept 11 and
      ordered Lay to surrender his passport and post a cash
      bond. No home confinement was ordered.

      The verdict is a major victory for the government and
      marks the end of one of the most scandalous chapters
      in the history of corporate America.

      Outside the courtroom after the verdict, Skilling
      said, "We fought a good fight. Some things work. Some
      things don't."

      Houston-based Enron, once one of the hottest companies
      on Wall Street, imploded in a matter of months after
      Skilling abruptly resigned as CEO in August 2001. Lay,
      who was chairman at the time, postponed his retirement
      plans to return to the helm.

      Enron's collapse marked the first of the high-profile
      corporate scandals that rocked the nation, followed by
      WorldCom, Global Crossing, Adelphia and Tyco. The wave
      of fraud led to passage of the Sarbanes-Oxley law that
      tightened oversight of how American companies are
      audited.

      After a government investigation that took 4-1/2
      years, prosecutors presented evidence that Lay and
      Skilling orchestrated a conspiracy to artificially
      inflate profits, hide millions in losses and
      misrepresent the true nature of the company's
      finances.

      The long-awaited trial began Jan. 31 in Houston,
      despite repeated protests from defense attorneys
      calling for a change in venue.

      The defense argued that it was impossible to get a
      fair trial in Houston - the epicenter of Enron's
      collapse. Enron's bankruptcy, the biggest in U.S.
      history when it was filed in December 2001, cost 4,000
      employees their jobs and many of them their life
      savings. Investors lost billions.

      Over 16 weeks, the government presented 22 witnesses,
      including former top executives, who testified that
      Skilling and Lay fostered a culture that put the
      company's image and stock price above everything else,
      at any cost.

      Sixteen people pleaded guilty for crimes committed at
      the company, and five others, including four former
      Merrill Lynch employees, were found guilty at trial.
      Eight former Enron executives testified against Lay
      and Skilling, their former bosses.

      But it was Enron's former finance chief, Andrew
      Fastow, who was the star witness for the government.

      Fastow, who pleaded guilty to wire and securities
      fraud in 2004 in exchange for an expected 10-year
      sentence, testified that special partnerships were
      created to help the company hide millions of dollars
      in losses.

      But defense lawyers dismissed the testimony of Fastow
      and other witnesses, saying that not only were Lay and
      Skilling innocent, but that no crimes were committed
      at Enron, except for the shady deals that enriched
      Fastow.

      As for those other than Fastow who testified against
      Lay and Skilling, defense attorneys said they were
      strong-armed by the government and compelled to lie on
      the stand out of fear for themselves and their
      families.

      In an attempt to explain away the company's aggressive
      accounting and the optimistic comments executives made
      to Wall Street, both Skilling and Lay testified during
      the trial.

      But that yielded decidedly mixed results.

      Skilling, known for his harsh attitude, came off in a
      mostly positive light, though he did lose his temper
      on the stand. But Lay's congenial reputation took a
      blow

      as he appeared confrontational and irritable at
      several points during his testimony.
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