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Enron Trial Faces Long Memories in Houston
Defence Lawyers, Fearing 'Stealth Jurors', Have Filed Another Motion to Change the Venue of the Trial
By Sheila McNulty
FINANCIAL TIMES
January 18, 2006

It has been four years since Enron collapsed, giving 4,000 staff one hour to get out the door with whatever they could carry.

In the ensuing weeks, thousands more were laid off, costing many of Houston's businesses - restaurants, limousine services and even florists - their biggest account. Other energy traders suffered a knock-on crisis of confidence from which they never fully recovered.

One former Enron employee committed suicide; one was forced to sell his home to cover medical costs as he died of cancer; others had nervous breakdowns; and 16 more pleaded guilty to crimes connected with the bankruptcy. Meanwhile, thousands lost their retirement savings.

So when the court sent out questionnaires to 280 potential jurors in the upcoming trial of Ken Lay and Jeff Skilling, the former chief executives of Enron, it was not surprising that defence lawyers said 80 per cent "exhibited strong biases against the defendants".

As Shelby Hodge, society columnist for the Houston Chronicle, put it: "I think everybody has an opinion. It will be difficult to find those who can set them aside."

Yet the defence lawyers are being asked to do just that by the courts, which have so far refused to move the trial out of Houston to Phoenix, Denver or Atlanta, which the defence insists "do not remotely harbour the extent or intensity of prejudice against defendants exhibited here".

The latest motion to change the venue of the trial - just two weeks before it is due to start on January 30 - notes that prospective jurors called Mr Lay a "scumbag", "the biggest lying crook of all" and "a selfish, greedy man". Other prospective jurors described Mr Skilling as "the devil" and "a high-class crook" while others pronounced the men "guilty as hell".

The defence of both men, charged with numerous counts of conspiracy and fraud in a scheme to deceive investors about the state of Enron's books, is expected to be that they knew nothing of the fraud perpetrated by Andrew Fastow, the former chief financial officer, and that all deals were approved by lawyers, bankers and accountants.

Mr Fastow, the highest-ranking executive to plead guilty, has agreed to serve a 10-year sentence in return for co-operating against Mr Lay and Mr Skilling.

Jacob Zamansky, a New York-based securities lawyer, calls it the "finger-pointing defence" and believes it will fail - not because the entire jury pool in Houston is biased, but because the law does not excuse fraud just because it was approved by a third-party professional. He believes a fair jury can be found.

"I know there are those who think everyone has been hurt in Houston, but it's a big city," Mr Zamansky says. "This was 2001. It's now five years later - people have moved on."

Even if those connected with Enron have not "moved on", Garnett Coleman, a Houston Democrat in the state legislature, says that is beside the point.

The surprise collapse of what was then the seventh-biggest company in the US was a major news story - not just in Houston, or even across the US, but around the world. Investors everywhere were affected by the company run by Mr Lay and Mr Skilling.

"If the idea is they can't get a fair trial in Houston, then they can't get a fair trial in America," he says. "They are known everywhere."

While that may be true, the defence is arguing that local media coverage has been much more complete than that in the rest of the country because Enron, its executives and those most hurt by the fraud, lived in Houston.

But Rep Coleman says that while all the prospective jurors will probably have heard more in the media about Enron than residents of other states, many will not know many details. He bases that assumption on the fact that when people say they saw him on TV, they usually have no idea what he was saying.

"We're assuming that everyone is paying attention to every major news story that occurs," he says. "They barely give it the corner of their eye, much less their ear."

John Alford, associate professor of political science at Rice University, believes a local jury would be the defence's best bet because those in Houston know both sides of the Enron story.

Before the fall, Enron was the most admired company in Houston: not only for being big, rich and modern in its ideas but also for supporting charities and reviving downtown.

"For most people outside Houston, everything they know about Enron is bad," Mr Alford says. Having jurors from Houston, he believes, gives the defence that "hometown advantage".

Jeff Moseley, president of the Greater Houston Partnership business alliance, says it comes down to the numbers. The court needs just 12 unbiased jurors and a few alternates. There are 2.1m people in Houston alone and 5.2m in the city plus the surrounding region: "That's a pretty good universe."

However, the defence must fear "stealth jurors", who hide their biases to exercise retribution. The defence notes that, for the first time, people have called the courts volunteering to be on the jury.

"Jurors in our case will be uniquely affected - and reminded - by their friends, families, neighbours, co-workers and fellow worshippers just how important this case is to the people of Houston," wrote defence lawyers to the court.

They say that even "the professionals" in the US attorney's office have recused themselves from the case.

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