Taking Enron to Task
Wednesday, January 18, 2006
A disabled woman lay dead in her Chicago apartment. No videotape, no gun, no fingerprints.
For days, Assistant U.S. Attorney Sean M. Berkowitz puzzled over the circumstantial evidence. He examined ballistics, phone records, stray papers. With no hard evidence to go on, he won the indictment of a doctor, who ultimately was sentenced to death for killing a patient to keep her quiet about Medicare fraud.
Berkowitz is "not afraid of taking on a difficult case," said former colleague David Hoffman, now Chicago's inspector general.
Enter Enron Corp.
Berkowitz, 38, is the third and -- presumably -- final director of the Justice Department's Enron Task Force, which is designed to get to the roots of fraud at the Houston energy trader that collapsed in 2001.
He and a small group of government lawyers will be in the spotlight in the Jan. 30 trial of Enron's former leaders. The case is the capstone in the cleanup after an era of business misconduct that left investors billions of dollars poorer. The outcome could shape the public's -- and history's -- judgment of how effective it was.
"Enron defines the age of corporate fraud," Berkowitz said.
The stakes for the defense are high, too. Enron founder Kenneth L. Lay, a man accustomed to hob-knobbing with members of the Bush family, could spend the rest of his life in prison. The same is true of Jeffrey K. Skilling, the company president who ascended to chief executive and then abruptly quit shortly before the company unraveled. Both men maintain their innocence.
And, like the case in Chicago, the Enron prosecution may rely heavily on circumstantial evidence.
Few documents have emerged directly tying Lay and Skilling to the fraud that prosecutors say was used to inflate Enron's stock price. Instead, investigators have pieced together accounts from corporate insiders to build their case. The task force has secured 16 guilty pleas, sealing deals with Enron's former finance chief, its top accountant, two investor relations officials and two heads of operating units, among others.
That strategy has come under heavy fire from the defense. Lay recently blasted the government for employing what he calls "a wave of terror" to intimidate people into striking plea deals rather than face years behind bars if they take their cases to trial and lose. A judge recently rejected allegations that prosecutors intimidated witnesses, ruling that there is "no credible evidence to support defendants' allegations."
Lawyers for Skilling and Lay say the task force was out to get their clients from the very beginning -- a fact disputed by the group's first leader.