HOUSTON – Federal prosecutors unveiled charges Thursday that placed Enron Corp. founder and former chairman Kenneth Lay at the center of a conspiracy to manipulate the company’s books in the frenzied weeks before its scandalous collapse.
He returned the punch with an aggressive public declaration of innocence, speaking at length at a news conference and taking questions from reporters after entering an innocent plea.
“I firmly reject any notion that I engaged in any wrongful or criminal activity,” Lay said, adding that his failure to prevent the company’s bankruptcy did not equate to a crime. “Not only are we ready to go to trial, but we are anxious to prove my innocence.”
Lay was escorted to federal court here in handcuffs 21/2 years into a methodical investigation that has produced charges against some of his once most highly trusted lieutenants. Prosecutors have aggressively pursued the one-time friend and contributor to President Bush, and this week’s action made Lay the 30th and highest-profile individual charged.
Prosecutors contend Lay, his hand-picked protege and former Enron CEO Jeffrey Skilling, and the company’s former top accountant Richard Causey were among principal operators of a wide-ranging scheme to deceive the public, shareholders, government regulators and others.
A federal indictment unsealed Thursday alleged that Skilling spearheaded the scheme until he abruptly quit in mid-August 2001, less than four months before Enron imploded. Lay resumed as CEO upon Skilling’s departure and “took over leadership of the conspiracy,” the indictment said.
In 11 counts of conspiracy, securities fraud, bank fraud and other charges, prosecutors allege Lay was not a CEO blithely unaware of wrongdoing by his minions, as he has maintained. The indictment alleged Lay intensified his oversight of Enron’s day-to-day operations and “took control” of a conspiracy to keep Enron’s ever-growing financial crises hidden in the bowels of the company.
Enron’s collapse led a series of corporate scandals that led to Congress’ passage of sweeping reforms to securities laws. Thousands of Enron’s workers lost their jobs, and the stock fell from a high of $90 in August 2000 to just pennies, wiping out many workers’ retirement savings.
The charges allege Lay painted a rosy picture of Enron to employees, analysts and investors when he had learned in meetings that the company faced massive losses on shoddy assets and money-losing business units.
“Rather than come clean and tell the unvarnished truth about Enron, Lay chose to conceal and distort and mislead at the expense of shareholders and employees, people to whom he owed a duty of complete candor,” said Andrew Weissmann, head of the Justice Department’s Enron Task Force.
Associated Press
Former Enron Corp. chairman and CEO Kenneth Lay addresses a news conference Thursday after his appearance in federal court in Houston.
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