White-Collar Crime's New Milestone

That made the two men's performances on the stand that much more critical, and both of them fell short. Lay in particular came across as an irritable control freak, while Skilling strained credulity with his complicated explanations and convenient memory lapses, jurors said.

The results mirrored those of other high-profile cases: The jurors who convicted Ebbers also said they didn't believe his testimony that he was unaware of the accounting schemes in that case, and former investment banker Frank P. Quattrone torpedoed his case when he was caught in an apparent misstatement on the stand. Quattrone's obstruction of justice conviction was later reversed, and he is currently negotiating with prosecutors to avoid another trial. Most legal observers credit the lone prominent acquittal, that of Richard M. Scrushy of HealthSouth Corp., to the months he spent cultivating the black and religious communities in Birmingham, where his case was tried.

"It's Shakespearean. The CEOs who have gone down are people who literally lost touch with reality," said Yale University law professor Jonathan Macey. "Ken Lay had so internalized the idea of an imperial CEO that he blamed everyone but himself. He could not conceptualize that he should take responsibility."

More than any other case, Enron symbolized the collapse of the 1990s stock market bubble and the revelation that many of the nation's highest-flying companies were far less substantial than they seemed. "This was the stock market's 9/11. How could the seventh-largest company collapse?" said Samuel W. Buell, a former federal prosecutor who worked on the early stages of the Enron case. "The knowledge that there is going to be punishment in egregious cases has to restore investor confidence."

"The fact that significant and highly credible companies engaged in misconduct of the rankest sort, pulling the wool over the eyes not just of investors but of analysts, journalists and regulators, is a very sorry chapter in our history, and one that deserves the right type of burial," said Harvey L. Pitt, a former chairman of the Securities and Exchange Commission.

Energized after Enron's December 2001 bankruptcy filing and the fall of WorldCom months later, Congress overwhelmingly passed legislation that forces companies to set up stronger internal controls and holds chief executives, finance chiefs, board members and auditors more responsible for financial reports.

The aftermath of the 2002 Sarbanes-Oxley Act spawned new standards by the major U.S. stock exchanges and prompted courts to review such cases more stringently, experts said.

"The failure of Enron . . . fundamentally altered the corporate governance movement forever," said University of Delaware professor Charles M. Elson. "It greatly accelerated changes in the form of more responsibility for corporate boards and auditors, and it led to a great skepticism on the part of the investing public as to the business practices in corporate America. Regardless of what happens, they have been inadvertent change agents."

Even now, however, groups including the U.S. Chamber of Commerce are attacking the law in the courts and in the halls of the SEC. Another trade organization, the Free Enterprise Fund, has mounted a legal challenge to the Public Company Accounting Oversight Board as too costly and invasive. The board is a watchdog body created by the Sarbanes-Oxley Act to police the accounting industry. Advocates of increased oversight warn that if that case is successful, the entire law could be thrown out.

But the law's supporters said they hope the string of prosecution victories will give would-be fraudsters pause and remind Americans of the need for corporate accountability.

"Now we have a greater appreciation of the role of watchdogs," said Anthony M. Sabino, a law professor at St. John's University. "Sarbanes-Oxley was a good idea, is a good idea. Leave it alone. We need it to prevent the Enrons of the future."