A Texas jury on Thursday declared former Enron executives Kenneth Lay and Jeffrey Skilling guilty of fraud and conspiracy. The verdicts could mean life in prison for the men behind the quick rise and disastrous fall of the once-mighty energy giant.
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Lay, founder and former chief executive officer, was found guilty on all six counts of fraud and conspiracy charges, along with four counts of bank fraud in a separate case. Skilling was found guilty on 18 counts of fraud and conspiracy and one count of insider trading. He was acquitted of nine insider-trading charges.
The conspiracy and fraud convictions each carry a sentence of five to 10 years in prison. Sentencing is set for the week of Sept. 11.
Lay told the New York Times: "Certainly, we're surprised, but it's probably more appropriate to say we're shocked." He added, "I firmly believe I am innocent of the charges against me."
Skilling, the former chief executive and president said as he left the courthouse, “Obviously, I'm disappointed, but that's the way the system works."
Nell Minnow, co-founder of The Corporate Library, a leading shareholder watchdog group, hailed the outcome. "I'm very happy with the verdict," she told MarketWatch. "I want to see them go to jail. I don't want a community-service thing."
Enron's 2001 implosion, along with other high-profile corporate scandals, led to the Sarbanes-Oxley Act, which requires CEOs and chief financial officers to sign off on company financial statements, among other things.
U.S. Rep. Michael Oxley, who helped write the corporate reform legislation as chairman of the House Financial Services Committee, said in a written statement, "The jury's verdicts help to close a notorious chapter in the history of America's publicly traded companies." The Lay-Skilling trial lasted nearly four months, involved about four dozen witnesses and hundreds of documents.
A raft of civil cases is still pending. William S. Lerach, the plaintiff's lawyer in the largest civil case, told the Times, "Everyone knows that most of their assets have been burned up in legal fees and the like. They are not the ones who are going to pay the billions of dollars in additional recoveries that we hope to obtain on top of the $7.2 billion we already have from banks in our previous settlements."
Legal experts told the Wall Street Journal that chances of overturning Thursday's guilty verdicts are slim.
“Your typical white-collar defendant has a better chance of winning a Golden Globe award than getting his conviction reversed in the Fifth Circuit," said Brian Wice, a Houston lawyer who specializes in criminal appeals.