The prosecution of Enron Corp.'s Kenneth L. Lay and Jeffrey K. Skilling is entering a new phase, as the investigation into the energy giant's collapse makes way for trial.
Presiding over the cases against Enron's former leaders is U.S. District Judge Simeon T. Lake III, who will consider his first big decision next week when lawyers for the government and the defendants fight over a trial date in his Houston courtroom.
Lawyers for Lay have said they want the former chairman to be separated from the broader fraud case and to go to trial soon, within weeks. The Justice Department's Enron Task Force wants a trial next year. Lawyers for former chief executive Skilling and former accounting chief Richard A. Causey are seeking even more time to prepare a defense.
Whether a Houston jury hears evidence in one blockbuster trial or a series of smaller cases will be up to a 60-year-old judge who, according to former colleagues, is known for his quick mind and even temper.
Friends said Lake, who was appointed a federal judge in 1988 by President Ronald Reagan, is the embodiment of discipline: first in his law-school class, a veteran who learned Vietnamese during his tour of duty and an avid jogger whose lean frame reflects the well-worn paths he takes along Houston's streets.
Lake declined to be interviewed.
Although he is not widely known outside of Texas, Lake has presided over several high-profile cases during his 16 years on the bench. Earlier this year, he sentenced a mid-level executive at Dynegy Inc. to 24 years in prison for the accountant's role in a $300 million securities fraud. That sentence prompted a heated debate over the federal sentencing guidelines and highlighted an aspect of Lake's demeanor familiar to Houston lawyers: He will not hesitate to impose stiff prison sentences.
"The way I'd put it is, he is a trial lawyer's dream and a defendant's nightmare if they've been convicted," said Houston lawyer David H. Berg, who has tried a case before Lake.
Rusty Hardin, another Houston trial lawyer, said he attributes Lake's tough sentences not to a lack of compassion for defendants, but rather to determination to follow the law.
"Most lawyers would say you're going to get an extremely fair trial in front of him," Hardin said.
Houston lawyers give Lake high marks for fairness, intellect and for allowing them a little wiggle room in terms of jury selection and rhetorical flourishes. The Houston Bar Association consistently rates Lake among the top three federal judges in the Southern District of Texas. Last year, 73.9 percent of the lawyers taking part in the survey gave him an "outstanding" rating. Another group named him Trial Judge of the Year in 1998.
Lake has dealt with cases similar to Lay's and Skilling's that were both financially complex and attractive to the media.
In 1999 the judge threw out nearly two dozen shareholder lawsuits against Zapata Corp. Investors had accused its top executives of insider trading, claiming that they had hyped the stock and sold $6 million worth when the share price doubled, soon after which the price nosedived. Zapata was founded by George H.W. Bush and a few colleagues in the 1950s, although the former president was no longer involved in the company at the time of the events alleged in the lawsuits.
Lake ruled that optimistic public statements made by Zapata executives about a series of planned Internet acquisitions were merely "puffery" that "no reasonable investor would rely on."
Houston securities lawyer Thomas R. Ajamie, who defended several Zapata executives in the lawsuits, said it had "all the hallmarks of a very complex case with a lot of media attention. But when we went into his courtroom, we were just lawyers." He said Lake ignored the hoopla surrounding the cases to concentrate on the issues at the heart of the dispute.
The Skilling and Lay cases encompass tens of millions of dollars in stock sales by executives who knew that Enron's share price had been inflated by fraud, including secret partnerships that helped the company inflate profit and bury millions of dollars in debt, prosecutors claim. Enron's prominence and Lay's role as a Republican fundraiser helped turn the company's bankruptcy in December 2001 into a national news story. Lay, Skilling and Causey have pleaded not guilty to the charges against them.
Former partners of Lake's at the Houston law firm Fulbright & Jaworski said it is typical for the judge to delve straight into difficult legal issues. Lake spent his entire career in private practice trying environmental and business cases at Fulbright.
David J. Beck, Lake's mentor and the partner who recruited him from the University of Texas law school, said he used to tease the judge that "he could actually build a glass plant himself" after they handled a difficult environmental case in Waco that involved the glass manufacturing process.
Several colleagues at Fulbright said they were surprised when Lake told them in the late 1980s that he hoped to become a judge, in part because he was not highly political, said retired partner Rufus Wallingford. Others cited the close, profitable relationships with clients that Lake had nurtured.
Lake's defense of Browning-Ferris Industries Inc. in a civil rights case was criticized by African American and labor groups when he was nominated as a federal judge. Critics also pointed out that Lake had belonged to a country club with no black members. But a bipartisan group of lawyers and sitting judges rushed to his defense, and the Senate confirmed him a few months later.
These days, friends say, Lake prefers to spend time outside the office with his wife, Carol, with whom he has two adult sons. Lake, a history major at Texas A&M, told the local trade publication Houston Lawyer in 2001 that he likes to read history books and magazines in his spare time.
One case over which Lake presided may shed some light on a key issue to come in the Enron prosecutions. In 1997 Lake directed the acquittal of controversial cancer doctor Stanislaw R. Burzynski on nearly three dozen counts of mail fraud after a jury could not reach a unanimous verdict. The government had pursued Burzynski, who prosecutors claimed was peddling untested drug therapies, for nearly 14 years.
Lay's attorney, Michael Ramsey, was one of four lawyers who defended Burzynski. One of the jurors later said the jury they could not agree on whether the doctor intended to break the law by shipping his experimental medicines across state lines -- precisely the kind of "state of mind" issue that will play a central role in the case against Lay and Skilling.