Jurors in Kenneth Lay and Jeffrey Skilling's trial will be instructed to consider whether the former Enron Corp. executives deliberately ignored accounting fraud as the energy trader fell into bankruptcy, a judge ruled yesterday.
US District Judge Sim Lake denied a motion by defense lawyers to prevent the jury from considering whether Skilling or Lay can be found guilty if either deliberately chose not to know about alleged criminal activity at Enron. At a hearing in federal court in Houston, Lake didn't say what the precise wording of his instructions to the jury would be.
Another former top US executive charged with accounting fraud, WorldCom Inc. founder Bernard Ebbers, has appealed his conviction partly on the ground that he was unjustly convicted because of the same jury instruction.
''That is clearly the biggest issue," said Skilling's lawyer Daniel Petrocelli, referring to the judge's instruction, following the hearing. ''The critical issues for the jury to decide in this case are whether the transactions and statements at issue were fraudulent and whether defendants intended them to be so -- not whether defendants purposefully blinded themselves," he said in court papers.
Lay, 64, and Skilling, 52, are accused of defrauding investors by misrepresenting the finances of what was once the seventh-biggest US company by sales. Enron had more than $68 billion in market value before it collapsed in December 2001, wiping out thousands of jobs and at least $1 billion in retirement funds virtually overnight.
Nine witnesses testified in the Enron case under plea deals or nonprosecution agreements. Prosecutors named more than 100 individuals as unindicted coconspirators, which defense lawyers claimed prevented these people from helping the defendants for fear of government reprisals.