Interesting article in today's
New York Times about how difficult it was for the prosecutors to make the case against Lay:
the journey from the collapse of Enron to Mr. Lay's conviction was anything but predictable. Instead, it was a long and arduous legal journey for federal prosecutors, filled with false leads and evidentiary dry holes.
The public widely perceived the criminal case against Mr. Lay to have been a "can't lose" proposition, similar to the parallel case assembled against Enron's former chief executive, Jeffrey K. Skilling. But the legal hurdles on the path to Mr. Lay's conviction were so daunting that some prosecutors privately worried that they would never even be able to charge Mr. Lay with any crimes.
"There was this public perception of Ken Lay as the mastermind, but that really didn't bear out," said Leslie R. Caldwell, who headed the task force in its first two years. "We realized very fully early on that Lay was not involved in the decision-making day to day and that we weren't going to be able to prove his involvement in the structuring of transactions like LJM."
Prosecutors speculated that they could build a fraud case against Enron by proving that the company publicly portrayed itself as strong and vibrant, even though executives like Mr. Lay knew that it was rotting from the inside.
"It was definitely a shift in investigative strategy," Ms. Caldwell said of the meeting. "We had to focus on the big picture, and not just the individual transactions. But it was just a seed that pointed to a direction. It wasn't as if that immediately led us to decide what we were going to charge."
Enron's former treasurer, Ben F. Glisan Jr., appeared before a grand jury in Houston and gave prosecutors a little gift. In addition to providing evidence against Mr. Skilling, he testified that Mr. Lay knew he was lying in 2001 when he provided upbeat statements about Enron's prospects even as the company was plummeting toward bankruptcy proceedings.
"That was a real turning point for a whole variety of reasons," said Andrew Weissmann, a former task force director who questioned Mr. Glisan that day. "Ben Glisan clearly pointed the way to the Lay case. I was relieved."
Other dominoes continued to fall. An F.B.I. agent assembled evidence that Mr. Lay lied to accountants to help Enron avoid a huge write-down. New witnesses, meanwhile, told the grand jury fresh details about other possible lies by Mr. Lay.
They also focused on statements that Mr. Lay made in an online forum in which he told Enron employees that he was buying falling Enron stock without mentioning the far greater number of shares he was selling to the company itself. That omission, prosecutors believed, amounted to securities fraud.
Mr. Lay and Mr. Skilling were both convicted of multiple fraud and conspiracy charges. The jury found that both men carried out their crimes by misleading investors and employees about Enron's performance.
In short, they decided that Mr. Lay was a liar.
