In a development first reported by the Houston Chronicle, it appears prosecutors may be close to an indictment against former Enron Corp. chairman Kenneth Lay, for allegedly urging employees and investors to buy Enron stock even as he knew the company was on the verge of collapse.
The Washington Post reported the development stating that an indictment against Lay, 62, would cap a two-and-a-half year investigation into the collapse of the Houston-based energy giant, once the nation’s seventh-largest company in terms of revenue. A much smaller version of the company is expected to emerge from bankruptcy court later this year.
The company’s collapse left thousands without jobs or pensions and sparked an era of corporate meltdowns that led to the sweeping Sarbanes-Oxley corporate reform legislation, passed in 2002. Enron’s collapse also led to the demise of the venerable Arthur Andersen accounting firm.
Lay, once was a major Texas philanthropist, traveling in the same circles as both Presidents Bush, returned to the fold as chief executive after the abrupt departure of Jeffrey Skilling, who is aggressively defending himself against numerous charges in the case.
Lay’s attorneys told the Post they know of no imminent charges and continue to remain confident of Lay’s innocence.
"We're very comfortable Ken didn't commit a crime," Ramsey said. "We're uncomfortable with the fact that we had prosecutors who picked their target before they knew the facts."
Stepping up its activity in recent weeks, a Houston grand jury has heard testimony from Lay’s bookkeeper and his children, the Post reported, adding that a prosecution request to review 50 to 60 boxes of Lay’s personal financial records remains outstanding. The records have been in the possession of the Securities and Exchange Commission for several months.
Prosecutors have attempted to build a case against Lay with the cooperation of witnesses who themselves have committed crimes in the case, including former chief financial officer Andrew Fastow and former corporate secretary Paula Rieker, the Post reported.
"We are very conversant with all the facts and all the documents. I've seen nothing that will support a prosecution. I cannot conceive of anything Andy Fastow can say" that would hurt Lay, Ramsey said Saturday.