by Matt Daily and Bryson Hull
(Reuters)
HOUSTON -- Former Enron Corp. Chairman and Chief Executive Kenneth Lay, who grew the company into an energy trading giant that became the ultimate symbol of corporate wrongdoing and greed, was indicted on Wednesday and said he would surrender to authorities.
Lay said in a statement issued Wednesday afternoon he had been indicted and would surrender on Thursday morning. Sources earlier said a federal grand jury returned a sealed indictment with undisclosed criminal charges for Lay's actions before the company fell into bankruptcy in December 2001.
On Thursday, Lay is to follow a well-worn path for former Enron executives: surrender to the FBI and then make his initial appearance before a federal magistrate judge.
``I have been advised that I have been indicted. I will surrender in the morning,'' Lay said. ``I have done nothing wrong, and the indictment is not justified.''
Houston-based Enron was the nation's seventh-largest publicly owned firm when it unraveled in the final months of 2001 amid disclosures that it had used off-the-books deals to hide billions in debt and falsely inflate profits.
Lay, 62, has steadfastly denied any wrongdoing.
Andrew Weissmann, the director of the U.S. Justice Department's Enron Task Force, did not return a call seeking comment.
Separately, the U.S. Securities and Exchange Commission plans to file civil fraud charges against Lay in Houston on Thursday morning, a source familiar with the matter said.
Lay, once a leading U.S. industrialist and close friend of President Bush -- who called him ``Kenny Boy'' -- now faces felony charges stemming from the Enron debacle.
Bush, at an appearance in Waterford, Michigan, was asked by reporters about the indictment but walked away without answering.
The charges come 2-1/2 years after the U.S. Justice Department began an investigation which has slowly climbed the corporate ladder to bring criminal charges against 22 former Enron employees.
Former Chief Financial Officer Andrew Fastow pleaded guilty in January and is cooperating with prosecutors who were aiming higher up the corporate ladder.
He helped prosecutors bring charges against Lay's hand-picked successor, Jeff Skilling, who unexpectedly quit in August 2001, six months after becoming CEO.
He and former chief accountant Rick Causey were charged together and have both pleaded not guilty to more than three dozen counts of insider trading, fraud and lying on Enron financial statements. Observers have speculated Lay could face similar charges.
The fall of Enron touched off investigations that uncovered widespread financial fraud in corporate America and was followed by scandals that brought down giants such as accountancy Arthur Andersen, telecoms giants WorldCom Corp., now MCI , and GlobalCrossing (GLBCE) and HealthSouth Corp. .
Those bankruptcies and charges of criminal behavior in the boardroom eroded consumer confidence and helped send world stock markets into a year-long tailspin. In the wake of the scandals, strict new federal laws on corporate governance were enacted.
In a recent interview with the New York Times, Lay accepted responsibility for Enron's demise, but said he had committed no crimes.
He said Fastow, the architect of Enron's financial house of cards, was largely to blame for the company's troubles.
``At our core, regrettably, we had a chief financial officer and a few other people who, in fact, mismanaged the company's balance sheet and finances and enriched themselves in a way that once we got into a stressful environment in the marketplace, the company collapsed,'' Lay told the Times.
Legal experts said that defense may not win over a jury, especially in Houston, where thousands of people were affected by the company's collapse.
``When you're talking about transactions of tens of millions of dollars, you'd expect the CEO to know about it,'' said Chris Caldwell, a former federal prosecutor now in private practice in Los Angeles.
Fastow, who is accused of enriching himself by siphoning off millions from the off-the-books partnerships, has pleaded guilty to fraud and is cooperating with prosecutors in exchange for a 10-year prison sentence that is yet to begin.
His wife Lea, a former assistant treasurer at Enron, has pleaded guilty to filing a false tax return and is slated to start a one-year jail sentence next week.
Skilling and Causey have pleaded not guilty and currently are free on bail.
Lay, as head of then Houston Natural Gas, led a 1985 merger that formed the modern Enron.
He became an aggressive political player who lobbied lawmakers such as Bush and his father, former President George H.W. Bush, to deregulate natural gas markets.
Generous campaign donations -- at one time he was the current President Bush's top contributor -- helped gain access to the halls of power.
Enron used deregulation to become a dominant force in electricity trading in the 1990s and served as a role model for dozens of other firms that mimicked its no-holds-barred trading practices.
But the burgeoning merchant power industry imploded after Enron's collapse and the California power crisis of 2000-2001.
Lay was Enron's chief executive for most of the company's history, but handed the post to Skilling in February 2001.
Skilling suddenly resigned in August 2001 Lay resumed as CEO until he quit in January 2002.
Lay told the Times his personal fortune once stood at $400 million, but had dropped below $20 million because most of his holdings were in now worthless Enron stock.
(Reuters)
HOUSTON -- Former Enron Corp. Chairman and Chief Executive Kenneth Lay, who grew the company into an energy trading giant that became the ultimate symbol of corporate wrongdoing and greed, was indicted on Wednesday and said he would surrender to authorities.
Lay said in a statement issued Wednesday afternoon he had been indicted and would surrender on Thursday morning. Sources earlier said a federal grand jury returned a sealed indictment with undisclosed criminal charges for Lay's actions before the company fell into bankruptcy in December 2001.
On Thursday, Lay is to follow a well-worn path for former Enron executives: surrender to the FBI and then make his initial appearance before a federal magistrate judge.
``I have been advised that I have been indicted. I will surrender in the morning,'' Lay said. ``I have done nothing wrong, and the indictment is not justified.''
Houston-based Enron was the nation's seventh-largest publicly owned firm when it unraveled in the final months of 2001 amid disclosures that it had used off-the-books deals to hide billions in debt and falsely inflate profits.
Lay, 62, has steadfastly denied any wrongdoing.
Andrew Weissmann, the director of the U.S. Justice Department's Enron Task Force, did not return a call seeking comment.
Separately, the U.S. Securities and Exchange Commission plans to file civil fraud charges against Lay in Houston on Thursday morning, a source familiar with the matter said.
Lay, once a leading U.S. industrialist and close friend of President Bush -- who called him ``Kenny Boy'' -- now faces felony charges stemming from the Enron debacle.
Bush, at an appearance in Waterford, Michigan, was asked by reporters about the indictment but walked away without answering.
The charges come 2-1/2 years after the U.S. Justice Department began an investigation which has slowly climbed the corporate ladder to bring criminal charges against 22 former Enron employees.
Former Chief Financial Officer Andrew Fastow pleaded guilty in January and is cooperating with prosecutors who were aiming higher up the corporate ladder.
He helped prosecutors bring charges against Lay's hand-picked successor, Jeff Skilling, who unexpectedly quit in August 2001, six months after becoming CEO.
He and former chief accountant Rick Causey were charged together and have both pleaded not guilty to more than three dozen counts of insider trading, fraud and lying on Enron financial statements. Observers have speculated Lay could face similar charges.
The fall of Enron touched off investigations that uncovered widespread financial fraud in corporate America and was followed by scandals that brought down giants such as accountancy Arthur Andersen, telecoms giants WorldCom Corp., now MCI , and GlobalCrossing (GLBCE) and HealthSouth Corp. .
Those bankruptcies and charges of criminal behavior in the boardroom eroded consumer confidence and helped send world stock markets into a year-long tailspin. In the wake of the scandals, strict new federal laws on corporate governance were enacted.
In a recent interview with the New York Times, Lay accepted responsibility for Enron's demise, but said he had committed no crimes.
He said Fastow, the architect of Enron's financial house of cards, was largely to blame for the company's troubles.
``At our core, regrettably, we had a chief financial officer and a few other people who, in fact, mismanaged the company's balance sheet and finances and enriched themselves in a way that once we got into a stressful environment in the marketplace, the company collapsed,'' Lay told the Times.
Legal experts said that defense may not win over a jury, especially in Houston, where thousands of people were affected by the company's collapse.
``When you're talking about transactions of tens of millions of dollars, you'd expect the CEO to know about it,'' said Chris Caldwell, a former federal prosecutor now in private practice in Los Angeles.
Fastow, who is accused of enriching himself by siphoning off millions from the off-the-books partnerships, has pleaded guilty to fraud and is cooperating with prosecutors in exchange for a 10-year prison sentence that is yet to begin.
His wife Lea, a former assistant treasurer at Enron, has pleaded guilty to filing a false tax return and is slated to start a one-year jail sentence next week.
Skilling and Causey have pleaded not guilty and currently are free on bail.
Lay, as head of then Houston Natural Gas, led a 1985 merger that formed the modern Enron.
He became an aggressive political player who lobbied lawmakers such as Bush and his father, former President George H.W. Bush, to deregulate natural gas markets.
Generous campaign donations -- at one time he was the current President Bush's top contributor -- helped gain access to the halls of power.
Enron used deregulation to become a dominant force in electricity trading in the 1990s and served as a role model for dozens of other firms that mimicked its no-holds-barred trading practices.
But the burgeoning merchant power industry imploded after Enron's collapse and the California power crisis of 2000-2001.
Lay was Enron's chief executive for most of the company's history, but handed the post to Skilling in February 2001.
Skilling suddenly resigned in August 2001 Lay resumed as CEO until he quit in January 2002.
Lay told the Times his personal fortune once stood at $400 million, but had dropped below $20 million because most of his holdings were in now worthless Enron stock.
