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
"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.