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Thursday, July 8, 2004

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Lay, who insists he knew nothing of any wrongdoing and was misled by underlings, was taken away with his hands cuffed behind him to be charged.

The federal indictment of Lay, 62, who also was Enron's chairman, caps an investigation that snared dozens of other employees and executives but took nearly three years to reach the man at the top.

Enron's collapse in late 2001 cost investors billions of dollars, put thousands of Enron employees out of work and wiped out retirement savings for many. The company, once admired, became a symbol of corporate greed and excess, and its fall was followed by a string of scandals at other companies.

Lay had been indicted Wednesday after a federal investigation that has produced charges against some of Lay's once most highly trusted lieutenants, including his hand-picked protege, former CEO Jeffrey Skilling.

The indictment was sealed, and charges were expected to be disclosed later Thursday.

Lay, accompanied by a pastor, emerged from an SUV driven by his wife, Linda, and walked into Houston's FBI headquarters at dawn.

So 'Nice'

"Nice of you all to show up this morning," Lay told a throng of reporters.

About 20 minutes later, his hands behind him in cuffs, Lay was placed in a sedan with authorities for the drive to Houston's federal courthouse. After arriving there, he was led into the building through a back door.

He had said Wednesday he had committed no crimes.

"I have done nothing wrong, and the indictment is not justified," Lay, 62, said in a statement Wednesday after learning of the indictment.

Prosecutors from the Justice Department's Enron Task Force presented an indictment to U.S. Magistrate Judge Mary Milloy on Wednesday, and at their request she sealed the indictment and an arrest warrant, sources told The Associated Press.

A hearing before Milloy was scheduled for 11:30 a.m. CDT Thursday.

The Securities and Exchange Commission was expected to bring civil fraud charges against Lay on Thursday, including making false and misleading statements and insider trading, a person familiar with the case said, speaking on condition of anonymity.

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

Skilling succeeded Lay as CEO in February 2001 and resigned abruptly six months later, just weeks before the scandal broke. He was indicted in February on nearly three dozen counts of fraud and other crimes.

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

Enron's collapse led a series of corporate scandals that led to Congress' passage of sweeping reforms to securities laws with the Sarbanes-Oxley Act two years ago. 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, who was initially indicted a week after Fastow pleaded guilty, target actions over several years leading up to Enron's collapse. But 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.

Days after Skilling's resignation, Lay met privately with Sherron Watkins, then an executive on Fastow's staff, who had sent him a lengthy memo warning of impending doom from Fastow's myriad schemes to hide debt and inflate profits.

But Lay told The New York Times last month that he didn't believe 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 innocent and are free on bond.

© 2004 Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.

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