Ken Lay took the news of his guilt on all six counts of fraud and conspiracy stoically Thursday, sitting with his family, not with his attorneys. His wife, Linda, dabbed her eyes and hugged her husband while daughter Elizabeth Vittor, an attorney herself, sobbed so much her body shook. All the emotion of the moment was understandable. The 64-year-old founder of Enron, the high-flying energy company that once fancied itself as a trader of everything from water to wine, now faces the prospect of 45 years in prison — in other words, the rest of his life. Before leaving the U.S. District Courthouse after the verdict, he had to surrender his passport and his children had to sign a bond waiving rights to their property.
Outside the courtroom, there was little sympathy for the son of a Baptist preacher who created a business dynamo that crashed in late 2001, or for his protege, Jeffrey Skilling, 52, who himself faces 185 years for his 19 out of 28 guilty counts — including conspiracy, securities and wire fraud. “It was a moral victory. Now we hope to get them an economic victory,” said Steve Berman, one of the attorneys representing pensioners ruined by Enron’s demise. In addition to $7.2 billion wrung out of banks like JPMorgan Chase and Citigroup in securities fraud litigation, employees are still waiting to get $260 million for lost benefits.
But if you thought the nearly five-year Enron saga has now come to an end, with both men set for sentencing on Sept. 11, you may be as off base as the company’s financial statements. Attorneys for Lay and Skilling vow to appeal, and there is precedent — all the way to the Supreme Court — to attack a white-collar fraud conviction based on the fine points of the kind of jury instructions given by Judge Simeon Lake. “A ‘willful blindness’ instruction is a very good ground [for appeal],” says Houston defense attorney Joel Androphy. Willful blindness, which Judge Lake specifically cited in the jury instructions as a valid factor in finding guilt, means a jury can find a corporate executive guilty if he personally did not cook the books, but was suspicious or knowledgeable of the goings on in his company and made no attempt to find out about or correct it.