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If Kenneth Lay ever goes to trial in Houston, he may have a surprising ace up his sleeve: a pool of sympathetic jurors. Although the former Enron chairman is reviled by thousands of local citizens who lost jobs and money because of the company's downfall, he is still regarded fondly by many other Houstonians for his mammoth charitable contributions.
Indicted on July 7 for his role in the debacle, Lay was passionate about turning the Bayou City into a "world-class" community. His generosity touched almost every imaginable segment of the population. During the late 1990s, "he was probably the largest single donor" to the Houston branch of the NAACP and raised "most of" the $375,000 the group needed to host two national conventions, according to Howard Jefferson, president of the local organization. He also played a critical role in the financing of the city's Holocaust Museum.
THORNY PROBLEM. Sports fans are grateful for his efforts to build a new baseball stadium. Art lovers applaud his contributions to the Houston Museum of Fine Arts. Sick Texans benefited from the money he showered upon the M.D. Anderson Cancer Center. And kids in nearby Katy, Tex., still play T-ball at the Ken Lay YMCA.
"There's a good chance that you would see a hung jury against Ken Lay," says Houston criminal defense lawyer David Berg. "He was nice to people on the way up, and it is going to be difficult to get people to turn on him on the way down."
Uncooperative jurors have been a thorny problem for white-collar prosecutors. A lone holdout helped to unravel the case against former Tyco (TYC) chieftain Dennis Kozlowski. And jury disagreement torpedoed the first case against investment banker Frank Quattrone -- even though prosecutors won a conviction on retrial. While Lay has been knocked off his pedestal, remember this: Defense lawyers have to win over only one juror for a mistrial.
LAY'S FINAL DAYS
After gradually surrendering operating responsibility for Enron in the late 1990s, Chairman Ken Lay had it thrust back upon him when CEO Jeffrey Skilling resigned in August, 2001. Lay ran the company until it filed for bankruptcy three-and-a-half months later. Prosecutors intend to focus on this brief period in court.
Aug. 14, 2001: Skilling's retirement is announced after close of market. Lays says, "There are no accounting issues, no trading issues, no reserve issues, no previously unknown problem issues."
Aug. 15: Receives letter from then-anonymous whistleblower Sherron Watkins warning that company could "implode in a wave of accounting scandals."
Aug. 17: Mid-level executive sends Lay e-mail warning of "black box reporting" and "overhyping of the stock."
Aug. 27: Sends e-mail to demoralized employees calling Enron "an incredible bargain" and urging them to "talk up the stock."
Aug. 28: Announces his new No. 2: Chief Operating Officer Greg Whalley.
Sept. 11: Terrorist attacks in the U.S.
Oct. 16: First shoe drops. Enron announces $1 billion charge against earnings for investment losses. Lay: "If we thought there were any other significant concerns, we would have taken care of them today."
Oct. 22: SEC launches investigation of Enron.
Oct. 23: In the wake of revelations about circular deals between CFO Andrew Fastow's LJM partnerships and Enron, Lay holds emergency conference call announcing, "I continue to have confidence in Andy."
Oct. 25: In a cash crisis, Enron initiates merger talks with Dynegy.
Nov. 14: Enron restates earnings for prior four years, taking away $586 million in net income. "Everything we know," says Lay, "you know."
Nov. 28: Dynegy walks away from proposed merger.
Dec. 2: Enron files for bankruptcy.
Data: BusinessWeek