Houston (July 9, 2004) -- Nearly three years after the collapse of the firm he founded, former Enron Corp. chief executive and chairman Kenneth Lay pleaded not guilty to federal charges that he was involved in a wide-ranging scheme to deceive the public, company shareholders and government regulators about the company's true financial performance, according to published reports.
A 65-page federal indictment unsealed Thursday charges that Lay, former CEO Jeffrey Skilling and former chief accounting officer Richard Causey manipulated Enron's publicly reported financial results, made false and misleading public statements and representations about the company's financial performance, and "omitted to disclose facts necessary to make those statements and representations fair and accurate."
The indictment charged Lay with 11 counts, including one count of conspiracy to commit securities and wire fraud; two counts of wire fraud and false and misleading statements in employee meetings; four counts of securities fraud; one count of bank fraud; and three counts of making false statements to banks.
The indictment says that Lay, Skilling and Causey "enriched themselves as a result of the scheme through salaries, bonuses, grants of stock and stock options, other profits and prestige within their professions and communities."
Skilling, a former consultant to Enron who succeeded Lay as CEO in February 2001 and resigned six months later, was indicted in February on nearly three dozen counts of fraud and other crimes. Former chief financial officer Andrew Fastow in January pleaded guilty to two conspiracy counts.
According to the indictment, between 1998 and 2001, Lay received about $300 million from the sale of Enron stock options and restricted stock, netting over $217 million in profit, and was paid more than $19 million in salary and bonuses.
If convicted on all counts, Lay could receive up to 175 years in prison plus fines possibly totaling more than $5.7 million, AP reported.
U.S. Magistrate Judge Mary Milloy reportedly set Lay's bond at $500,000, and Lay emerged from the courthouse less than an hour later, the Associated Press reported.
"I firmly reject any notion that I engaged in any wrongful or criminal activity," Lay reportedly said at a news conference shortly after his court appearance. "Not only are we ready to go to trial, but we are anxious to prove my innocence."
Enron's implosion in late 2001 cost investors billions, cost thousands of Enron employees their jobs and retirement funds, and led to the demise of its former audit firm, Arthur Andersen, which was convicted on one count of obstruction of justice in 2002 for destroying documents related to its audits of the bankrupt energy company.
The Securities and Exchange Commission on Thursday filed civil charges against Lay. The SEC charged Lay with fraud and insider trading, and seeks to recover more than $90 million in unlawful proceeds from stock sales.
-- Melissa Klein Aguilar
