Wednesday, February 13, 2002 Volume 67, Issue 92


 
 









 

Enron is focus of law symposium

By Ken Fountain
Senior Staff Writer

On the same day that former Enron chief executive officer Kenneth Lay "took the Fifth" in his appearance before Congress, a panel of legal and accounting experts spoke about the ramifications of the energy company's collapse in a symposium at the UH Law Center.

One of the panelists at the UH symposium provided the legal strategy most likely involved in Lay's decision.

"I can't imagine, in any scenario given to me, that someone in this situation would ever testify," said Houston attorney Joel Androphy, a specialist in "white collar" criminal defense. "Why would you testify, and not take the Fifth?

"Obviously, what's your strategy? Is your strategy to try the case, or plead the case? You have a choice," Androphy said. "If your strategy is to try the case, why talk now? There's nothing to accomplish. You may be rewarded in heaven, as they say, for doing this, but on earth, no one's going to give you any benefits."

Androphy said if Lay, or other Enron executives, were to provide testimony before Congress, that testimony "can't be changed" in any future legal proceedings without opening them up to charges of perjury.

And even if Enron executives decided to plead guilty to any future criminal charges, it would still be inadvisable to testify, Androphy said.

"If your mindset is to plead, you should sit down with the government (prosecutors) and go over your story. This is a quick lesson, not in legal ethics, but in unethical conduct," he told an audience largely made up of law students.

"The government, if they want to deal with you in a plea, they don't want you before Congress," he said. "They don't want you testifying based on what you think the version of facts are. That doesn't help them. They want you testifying that you did everything wrong."

Federal prosecutors have a variety of options regarding the kinds of charges they might file against Enron executives, Androphy said.

"The simplest thing for the government to do in a case like this is to charge the defendants with a racketeering offense," Androphy said. Racketeering involves unlawful interference with business or employment.

While other criminal charges, such as mail and wire fraud or securities violations, will probably also be made, "they have to look at what's going to give the largest sentence, the largest amount of fines, the largest amount of forfeiture, the largest amount of penalties and the largest amount of jail time."

"These (racketeering) statutes give them everything they need," Androphy said, adding that since Enron's alleged illegalities involved large financial institutions, each instance of mail or wire fraud could entail a jail sentence of 30 years. 

Racketeering, the "granddaddy of all charges," could entail the forfeiture of all the defendant's assets, plus twice the profits the person made through the illegal activities.

There were other panelists at the symposium as well. UH Law Center professor Jacqueline Weaver gave an overview of how Enron was able to take advantage of massive deregulation of the natural gas industry since the early 1970s. 

UH Law Center professor Ronald Tucker discussed the ramifications of Enron's downfall for its employees whose 401(k) retirement plans were heavily invested in Enron stock. 

Also, Rice University accounting professor Bala Dharan discussed ways in which loose oversight of the accounting industry might have contributed to Enron's collapse.
 

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