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Enron founder to face 2 criminal trials

Last updated on: October 20, 2004 14:04 IST

Former chairman of energy giant Enron, Kenneth Lay will now face two separate criminal trials - one by himself and another with ex-chief executive Jeff Skilling and top accountant Rick Causey.

US District Judge Sim Lake has refused to separate Lay, Skilling and Causey into three trials as requested. But the founder of Enron would be tried separately on four counts of bank fraud and making false statements on allegations that he misled banks about using loans to buy the energy company's stock on margin.

The Enron Saga: Complete Coverage

However, on seven pending counts of conspiracy and fraud, Lay will face a jury with Skilling and Causey, each of whom face more than 30 counts that include conspiracy, insider trading, fraud and lying to auditors. All three have pleaded not guilty.

"This is Ken Lay's worst nightmare. The government gets two bites at the apple," said Jacob Frenkel, a Washington-based former federal prosecutor and Securities and Exchange Commission lawyer who has been following the case.

"First, it's much easier to point fingers at people who are not sitting next to you in the courtroom and second, if he's convicted in one case and then faces the second it becomes harder still for Lay," Frenkel said.

Judge Lake looked at how the charges against the trio are related and noted, "When all the defendants named in an indictment are alleged to have participated in an overarching conspiracy that encompasses the substantive offense charged the defendants are properly joined."

But Judge Lake found the personal banking charges against Lay were not sufficiently related to the conspiracy at Enron, despite prosecutors argument that they were part of Lay's continuing schemes.

"The Government's own description of the banking charges asserted against Lay demonstrates that the facts required to prove those charges are not the same facts required to prove any or the other charges asserted in the (indictment)," the judge wrote. Causey and Skilling are each accused of 35 or more counts of conspiracy, fraud and insider trading in a scheme to manipulate the earnings of Enron to enrich themselves.

Lay is accused of far fewer charges - only seven charges relating to fraud and conspiracy at Enron and four charges of fraud in his personal banking. Mike Ramsey, Lay's Houston lawyer, said that he "always prefer a trial where the jury gets clarity about the charges against an individual and, in my mind they won't get clarity with them all tried together," the Houston Chronicle daily reported.

Lay, Skilling and Causey had all requested that they be separated for a variety of reasons including that they could be prejudiced by the complaints against their co-defendants, the charges were distinguishable from each other and they could have antagonistic defences.

Judge Lake did not rule on Lay's request on Tuesday. But that speedy trial request may now be largely moot since his co-defendants want as much time as possible before the trial to continue preparing their case.

Lay wanted to be tried in September. Prosecutors have asked Lake to set the Enron trial in March 2005. Skilling and Causey requested a March 2006 trial.

Seema Hakhu Kachru in Houston
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