A federal judge in Houston yesterday ordered former Enron Corp. executives Kenneth L. Lay and Jeffrey K. Skilling to stand trial early next year on criminal conspiracy charges, setting the stage for the most important action to date in the government's premier business fraud case.
U.S. District Judge Simeon T. Lake III said jury selection in the trial of the two men and Enron's former top accountant would begin at the Houston federal courthouse on Jan. 17, 2006. Lake said the busy schedules of defense lawyers prevented him from starting the trial earlier, as he had originally expected.
The December 2001 collapse of Enron, a Houston energy trader that once was ranked the nation's seventh-largest publicly traded corporation, began a period of corporate scandals, congressional hearings and investor mistrust.
Lay, the company's longtime chairman who donated millions of dollars to the campaigns of President Bush and his father, faces seven charges including conspiracy and fraud in connection with an alleged scheme to conceal debt and inflate assets. Skilling, a protege of Lay's who handled day-to-day operations, and former accounting chief Richard A. Causey each face nearly three dozen criminal counts dating to the 1990s. All three men have pleaded not guilty.
Already federal prosecutors on the specially created Justice Department Enron Task Force have charged more than 30 people in connection with the company's demise. Several former executives, including onetime finance chief Andrew S. Fastow and investor relations head Mark E. Koenig, have pleaded guilty and agreed to cooperate with government investigators.
Lake last month turned down requests by Skilling and Lay to move the trial out of Houston, rejecting arguments that the negative publicity about Enron's collapse rendered thousands of potential jurors unable to consider the case fairly.
Lawyers for the three men have blamed Fastow for concealing fraud from them while enriching himself by more than $60 million. But defense lawyers have signaled in court papers that it is possible that the interests of Lay, Skilling, and Causey could diverge in a way that would induce them to blame one another.
Andrew Weissmann, chief of the Enron Task Force, said, "We, like the court, would have preferred an earlier trial date, but understand that the court sought to accommodate the defendants' choice of counsel, who had a series of conflicts."
George McCall Secrest, a lawyer for Lay, said his client was "gratified" that a firm trial date had been set. Mark J. Hulkower, a lawyer for Causey, said he was pleased the judge had agreed to work around his schedule. Hulkower is set to defend former America Online Inc. vice president John P. Tuli against fraud charges in a case set to go to trial in Virginia this year.
Daniel M. Petrocelli, Skilling's lead trial counsel, said the schedule is "sensible."
The January 2006 trial will not end legal wrangling over Enron. After it ends, Lay will face a second trial on charges that he defrauded banks that lent him money. All three men also are fighting class-action lawsuits by shareholders who seek millions of dollars in compensation.