Founder of Enron Pleads Not Guilty

Skilling and Causey, for instance, were charged with criminal insider trading and knowing about several deals that helped Enron hide debt and manufacture earnings. Lay, on the other hand, is facing only civil insider-trading charges, filed separately yesterday by the SEC. Those charges relate to his unloading of company stock in the months before Enron fell apart. That is perhaps a reflection of the rigorous standards of proof needed to bring a criminal insider-trading case, according to criminal law experts.

Former prosecutor David B. Irwin said a bank fraud charge against Lay may be a useful "catch-all" for prosecutors, who can direct jurors to a relatively simple, signed loan application rather than try to lead them through evidence about sophisticated accounting maneuvers that outside lawyers and auditors may have approved.

John M. Callagy, a New York defense lawyer, said it will be a "critical issue" for Lay to be tried separately from Skilling and Causey, lest Lay be affected by the more extensive evidence that prosecutors may present against his co-defendants.

Lay's chief defense lawyer, Michael Ramsey, yesterday said he would seek a judge's approval to have a separate and quick trial for Lay. Ramsey said he would forgo a chance to exchange documents with the government and seek a trial within months, even before the November elections. Prosecutors are likely to contest such a move, and it is unclear whether U.S. District Judge Sim Lake would agree to the defense request.

Skilling's attorney Daniel M. Petrocelli said, "Given my view that the people at the top of the company are being indicted for the acts of a few others, it may make good sense to have Mr. Lay and Mr. Skilling tried together."

One of the highlights of a trial will probably be Lay's time on the witness stand. Ramsey said "of course" Lay will testify in his own defense. Such testimony will be central to the case for Lay, who insists that he believed the company could rebound even in the face of terrible financial woes in late 2001. In fraud cases, the government must prove defendants intended to break the law, focusing on their credibility and state of mind.

Lay reaped $217 million in profit from sales of Enron stock between 1998 and 2001, the indictment said. Over that period, he also collected $19 million in salary and bonuses, including $8 million in salary and bonus for 2001 alone.

As part of its criminal case, the government is seeking to seize Lay's 33rd-floor penthouse apartment in the Huntingdon, a luxury complex near downtown Houston.

Regulators at the SEC demanded Lay return more than $90 million he collected from stock sales during the last year of his tenure at Enron.

The allegations against Lay appear to be based on meetings and briefings in which he was told about financial problems, as well as internal reports he saw as the company's chief executive, according to court papers. Neither the indictment nor the SEC lawsuit contains references to e-mails or other documents that could help prosecutors. Instead, the court papers remain vague on specifics about who said what to whom.