Founder of Enron Pleads Not Guilty
Throughout late 2001, Lay met with employees, investors and at least one credit rating agency to tout Enron's health, the indictment said. Prosecutors cited the public statements in an apparent effort to show that Lay crossed the line between promoting a business and lying about its prospects in the face of evidence to the contrary.
The SEC complaint said Lay met with unnamed executives in January 2001 to discuss $500 million worth of "uncollectable" receivables at Enron's faltering retail energy unit. Lay, Skilling and Causey instead tinkered with the accounting to absorb the losses, regulators said.
Lay also was on notice by September 2001 about an accounting rule change that could have resulted in a $700 million write-down for its water services business, according to court papers. The problem was not disclosed to outside auditors or analysts even though it would have had a substantial impact on Enron's financial statements, prosecutors claim.
Later that summer, prosecutors say, Lay and Causey mulled over a merger or a sale of the company's prized assets to help bring in money. Earnings shortfalls adding up to $1 billion "in virtually every Enron business unit" came up in management meetings Lay attended, the SEC said. And Enron officials convened at a Texas resort in early September 2001 to talk about the problems.
Lay said yesterday that his "worst mistake" at the company was trusting former chief financial officer Andrew S. Fastow, who pleaded guilty to conspiracy and fraud earlier this year and who is likely to be a witness at his trial.
Lay claimed he was duped by Fastow, who presided over secretive partnerships used to bury company debt while taking more than $60 million in company money under the table. Fastow's name seldom appears in the Lay indictment, a move that legal experts said could mean prosecutors recognize his credibility is open to attack.
Court papers list several other Enron officials prepared to testify against the company's former leaders, including former Fastow deputy Michael J. Kopper, former treasurer Ben F. Glisan Jr., former division president David W. Delainey and former internal accountant Wesley H. Colwell. Glisan and others were at Enron throughout most of Lay's final days as chief executive.
People inside and outside the company continue to be probed in connection with its fall. "We have gotten to the top of Enron, but we have not gotten to the bottom," Deputy Attorney General Jim Comey said yesterday.
Houston business executives and lawyers said the Lay charges should help resolve some of the uncertainty lingering over the city Lay once commanded as a socialite and master philanthropist.
John Olson, a Houston stock analyst who had repeated run-ins with Lay and other Enron leaders over his lukewarm stock ratings on the company, said, "There's been so many lives and careers ruined by the Enron experience that I don't have any feeling of vindication."
Special correspondent Steven Long contributed to this report from Houston.
© 2004 The Washington Post Company
Kenneth L. Lay is led into court in Houston to face charges that he sold his stock in Enron while deceiving investors and employees, telling them the company was doing well and to buy more.
(Michael Stravato -- AP)
Transcript: Bethany McLean, author of "Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron"
Transcript: Robert Bryce, author of "Pipe Dreams: Greed, Ego, and the Death of Enron"
The Fall of a Giant
Titans Taken to Task
Video: Kenneth L. Lay responds to the charges brought against him.
Video: Prosecutors announce the indictment against Kenneth L. Lay at a news conference Thursday.
Video: Defense attorney Michael Ramsey spoke to reporters after a federal grand jury in Houston issued an 11-count indictment against former Enron Corp. chief executive Kenneth L. Lay.
_____About Ken Lay_____
Biography: Background on Ken Lay's work history, political activity and education.
Superseding Indictment: U.S. v. Kenneth Lay
Lingering Anger Still Directed Against Enron's Once-Trusted Chief Executive (The Washington Post, Jul 9, 2004)
Adelphia Founder, Son Convicted of Fraud (The Washington Post, Jul 9, 2004)
For Enron's Lay, A Day of Jarring Images (The Washington Post, Jul 9, 2004)
No Safety at the Top For Corporate Leaders (The Washington Post, Jul 9, 2004)
_____Enron in Photos_____
Enter Photo Gallery Even since the giant energy firm Enron collapsed in 2001, former CEO Kenneth Lay has insisted that he was unaware of fraudulent accounting and other criminal activities at the company. Nearly three years later, Lay will face criminal charges for his role in one of the largest corporate bankruptcies in history.