Before Bernard Madoff jumped to the top of America's most-hated fraudster list, Kenneth Lay and Jeffrey Skilling shared the spot. The two were accused of lying about Enron's financial health while growing rich from inflated high share prices. Of all the frauds in the early aughts, none galled as much as the one that broke the world's largest energy trader.
While lesser crooks were hauled into courthouses and tossed in jail, impatience grew for the hides of Lay and Skilling. A special government task force spent years building a case, winning an indictment and maneuvering through pretrial skirmishes.
Finally, in 2006, after 16 weeks of trial and five days of deliberation, a federal jury in Houston declared them guilty of multiple counts of fraud.
Now there is a chance all of that will come to naught.
Lay died in 2006 before sentencing and appeal, so a judge nullified his conviction as the law required. However reviled, he died an innocent man in the eyes of the law.
Now Skilling just might come out from under his conviction by less dramatic means.
As his appeal awaits a decision from the Supreme Court, look for a partial reversal at least. Several justices have expressed distaste for one of the laws that prosecutors used in
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this indictment, as in other white-collar cases.
The vague "honest services" fraud statute could well doom those counts that are based on it. If the court alters or strikes down the law, it could reverse anywhere from one to 14 of the 19 counts of Skilling's conviction.
But there are five counts, for insider trading and lying to auditors, that have nothing to do with honest services fraud. Those counts would keep Skilling in prison for years to come. He would stay put unless the court decides the entire trial was too unfair to trust any part of the guilty verdict.
This week, several justices gave him reason to hope for an all-out reversal, on every single count.
Skilling was handed that possibility because of his trial judge's devotion to efficiency. U.S. District Judge Simeon Lake III in Houston was more focused on keeping his own tight schedule for jury selection than he was on weeding out biased jurors.
The first problem was that Lake let the trial take place in Houston, the one city in the world where anti-Enron passions ran hottest, deepest and broadest. Even if jurors entered the courtroom with no such feelings themselves, would they have the backbone to declare these men not guilty when everyone around them wants their hides?
Lake blew off defense evidence of widespread bias without so much as a hearing.
That might have been OK had he then thoroughly questioned potential jurors and sent home those too biased to be fair, or those with a conflict of interest.
He didn't.
One potential juror said she had lost $50,000 to $60,000 in the Enron debacle, yet Lake declined to excuse her for cause.
"How can we be satisfied that there was a fair and impartial jury picked when the judge doesn't follow up on a witness who says, 'I'm a victim of this fraud?'" asked Justice Sonia Sotomayor.
True, that juror was dismissed on a discretionary strike by the defense, as were others who expressed bias. But the number of those so-called peremptory challenges is limited.
Lake's refusal to excuse some seemingly biased jurors for cause forced the defense to use strikes they might have otherwise saved for jurors who provoked subtler concerns for them. Limited in number, peremptory challenges are designed for that.
During Supreme Court arguments, Justice Stephen Breyer said he counted at least three and as many as six potential jurors who Lake refused to dismiss in spite of clear indications of bias.
"I am worried about a fair trial," Breyer said. "I am genuinely worried."
Whether the court will decide for Skilling based on that concern is another question. Breyer also fretted about how far the Supreme Court should go in micromanaging jury selection and telling an experienced, respected judge such as Lake how to do his job.
And yet, part of Lake's solid reputation stems from his ability to keep trials running smoothly and quickly without bullying lawyers. Great. But surely fairness should come first.
A 14-page pretrial questionnaire culled the most deeply prejudiced of the potential jurors. Of those who were left, Lake spent a mere five hours questioning 48 of them to see whether any expressions of bias in their written answers made them unable to fairly judge the evidence.
Five hours was nothing, considering a widespread sense in Houston that the once-beloved Lay had betrayed the city's trust, a belief that Lay and Skilling should be made to pay for their crimes and the pervasive publicity about Enron's collapse and the trial itself.
It took five days to sort through Martha Stewart's jury pool in New York.
But Lake had promised to conclude jury selection in a day, and this he did.
If Skilling wins on that claim, his conviction on all 19 counts would be thrown out. The government would have to decide whether to seek re-indictment, which would be far more difficult now than it was before, when the evidence was less than a decade old.
And this time Lay wouldn't be there as his co-defendant to give the allegations more heft.
The whole previous effort would have been wasted.
How is that for efficiency?
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