Lay: Enron didn't follow law on stock purchases

HOUSTON -- Former Enron Corp. chairman Kenneth Lay said he didn't comply with federal law when he bought stock with loans that weren't approved for that purpose, while jurors in his separate fraud trial deliberated for a third day.

Lay told US District Judge Sim Lake yesterday he wasn't ``in compliance" with federal laws barring the use of some loans to buy publicly traded stock, though he said he wasn't trying to mislead the banks by mishandling some of the $75 million he borrowed. The government contends he made false statements to the banks and engaged in fraud in his handling of the credit lines.

``There's no doubt we did not fully comply with the provisions of" loan documents barring the use of some of the money to buy stock, Lay said in the nonjury bank fraud case. ``It was not my intent" to defraud the banks, he said.

Lay's testimony comes as jurors in federal court in Houston concluded their third day of deliberations on fraud and conspiracy charges against Lay, 64, and former Enron chief executive Jeffrey Skilling, 52. Prosecutors contend the men manipulated Enron's earnings to deceive investors while enriching themselves.

Lay has been charged with one count of bank fraud and three counts of making false statements, and, if convicted, faces a maximum sentence of 30 years on each charge.

He also faces at least 25 years in prison in his other trial if jurors find him guilty of conspiring with Skilling to defraud Enron investors while enriching himself.

The bank fraud charges were split off from the fraud and conspiracy case when Lay sought to have his trial severed from Skilling's in 2004. Lay agreed to have Lake hear it without a jury.