Thursday, July 8, 2004

Ex-CEO of Enron says he'll surrender


Ken Lay expected to face charges today

By Kristen Hays
The Associated Press

HOUSTON - Kenneth Lay, the former Enron Corp. chief executive who insisted that he knew nothing about financial fraud at the energy trading giant, has been indicted on criminal charges, sources said Wednesday.

The action caps a three-year investigation that already has seen several other executives charged and, in some cases, already sentenced to prison for their roles in the company's collapse.

In a statement, Lay, 62, said he would surrender to authorities today. "I have done nothing wrong, and the indictment is not justified," he said.

The specific charges remained under seal. Prosecutors from the Justice Department's Enron Task Force presented an indictment to U.S. Magistrate Judge Mary Milloy in Houston Wednesday. At their request, she sealed both the indictment and an arrest warrant, sources said.

A hearing before Milloy was scheduled for late this morning. Lay's lawyer, Michael Ramsey, didn't return a call for comment.

The Securities and Exchange Commission was expected to bring civil fraud charges against Lay today, including making false and misleading statements and also insider trading, a person familiar with the case said.

Prosecutors have aggressively pursued the one-time celebrity CEO and friend of President Bush who led Enron's rise to No. 7 in the Fortune 500 and resigned within weeks of its stunning failure. Lay will likely be the 30th and highest-profile individual charged.

He will be the second Enron CEO charged. Jeffrey Skilling, who succeeded Lay and stepped down abruptly in August 2001, shortly before the scandal broke, was charged with almost three dozen counts of fraud and other crimes in February.

Waiting to testify for the prosecution is former finance chief Andrew Fastow, who pleaded guilty to two conspiracy counts in January. Fastow admitted to engineering partnerships and financial schemes to hide Enron debt and inflate profits while pocketing millions for himself.

Enron's collapse topped a series of corporate scandals that led to Congress' passage of the Sarbanes-Oxley Act two years ago, a package of sweeping reforms to securities law. Thousands of Enron's workers lost their jobs, and the stock fell from a high of $90 in August 2000 to just pennies, wiping out many workers' retirement savings.

The charges against Skilling and former top accountant Richard Causey target actions over several years leading up to Enron's collapse, while allegations against Lay were expected to focus on his actions after he resumed the role of CEO upon Skilling's abrupt resignation in August 2001, the sources said.

Lay told the New York Times last month that he didn't think that the company had serious problems and trusted other senior managers - including Fastow and Causey - when they reassured him that all was fine.

Skilling and Causey are awaiting trial on charges of conspiracy, fraud and insider trading. Both pleaded not guilty.

The Associated Press' Marcy Gordon in Washington contributed.




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