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The Difference Between Ebbers and Lay

By Jeralyn, Section Crime in the News
Posted on Tue Mar 15, 2005 at 11:56:23 PM EST
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You would think Ken Lay's lawyers would be shaking in their Texas boots after yesterday's conviction of Worldcom's Bernard Ebbers. Not so. Lay may have been more hands-off and less involved in the financial aspects of Enron than Ebbers was at WorldCom. His lawyer, Mike Ramsey, says another big difference will be the cooperating co-conspirators: Andrew Fastow is not Scott Sullivan.

"At Enron we had a trusted employee who was stealing and hiding his theft from the people above him," Ramsey said of ex-CFO Andrew Fastow. "But Sullivan at WorldCom appears to be just a cheat, and not a cheat and a thief."

As many credibility problems that Sullivan had, I think Fastow may have even more. He kept denying his and Ken Lay's involvement until the very end--when his wife was either going to have to go to trial or take a deal. The Government said no deal for Lea Fastow unless Andrew pleaded guilty and took a ten year hit. That' not only purchasing Fastow's testimony, it's practically extorting it. How credible is a man going to be whose testimony was obtained by threatening the mother of their two young children with a long prison sentence....or a five month sentence, to be served after he goes in so the children don't spend any time without at least one parent?

Some deals are too good for defendants to turn down. Sometimes juries understand. If the Ken Lay jury doesn't believe Andrew Fastow, Ken Lay should walk.

Plus, Andrew may be a little bitter now. The Judge refused the five month deal between Lea and the Government, and instead sentenced her to one year. Worse, the judge refused to make a recommendation to the Bureau of Prisons that she serve her time at a camp. BOP designated her to a downtown Houston high-rise federal detention building, where she's in a cell with nowhere near the kind of amenities or visiting facilities that Martha had. And don't get me wrong, Martha didn't have many.

So if Andrew's stipulated sentence is 10 years, all he has to do to get it is not mess up at Lay's trial. Demeanor plays a big role in how juries assess credibilty. If Fastow gives the answers, fairly monotonously, but they're correct, and he answers every question, he'll get his 10 years. If he goes gung ho, and answers questions with exhuberance, he'll get no less than ten years. So he can act like a robot and not hurt himself or Lea. And he'll do less damage to Ken Lay, whom he may hate, but he probably hates the Government more for separating his family for so long.

One more factor: Ken Lay will be tried in Texas. He'll have the home boy advantage.

I've written far more here about Lea and Andrew, since Lea's sentence to "hard time" really angered me, but I've also written about Skilling and Enron. There's a search box on the right side of TalkLeft and you can just type in their name and all the posts I've written will come up.

This post is getting long, so I'll put the chronolgy of the events in the next post.

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    The Difference Between Ebbers and Lay | 23 comments (23 topical)
    Re: The Difference Between Ebbers and Lay (none / 0) (#1)
    by Talkleft Visitor on Wed Mar 16, 2005 at 12:58:02 AM EST
    "One more factor: Ken Lay will be tried in Texas. He'll have the home boy advantage." How's that? The former governor of Texas has stated that he never knew who the guy was, even after Lay donated hundreds of thousands dollars to the Republicans and even send him handwritten Christmas cards. Oh, you're wondering why Bush came up with the nickname "Kenny Boy" despite never actually speaking to Kenny Boy. ... Perhaps I should remind you that, in the words of the Bush Administration, people need to watch what they say. And I'll leave it at that... to do otherwise would be uncivil, like a librul.

    Re: The Difference Between Ebbers and Lay (none / 0) (#2)
    by Talkleft Visitor on Wed Mar 16, 2005 at 01:19:42 AM EST
    On the other hand, since it is now apparent that Enron was a criminal enterprise through and through (California's artificial shortages, India's useless Dhobal power plant, etc), Lay is going to have even less credibility than Fastow.

    Re: The Difference Between Ebbers and Lay (none / 0) (#3)
    by Talkleft Visitor on Wed Mar 16, 2005 at 01:21:52 AM EST
    Sorry. Dabhol, not Dhobal.

    Re: The Difference Between Ebbers and Lay (none / 0) (#4)
    by Richard Aubrey on Wed Mar 16, 2005 at 04:47:01 AM EST
    What was it Lea Fastow was supposed to have done?

    Re: The Difference Between Ebbers and Lay (none / 0) (#5)
    by Talkleft Visitor on Wed Mar 16, 2005 at 05:41:57 AM EST
    et al - Ken Lay will be convicted. You can quit moaning. It is a done deal.

    Re: The Difference Between Ebbers and Lay (none / 0) (#6)
    by wishful on Wed Mar 16, 2005 at 06:26:55 AM EST
    Oh, I see, credibility of witnesses for the prosecution is a factor when the perps are rich and somehow related to Bush and Co. Read some X-scripts from trials of not-so-well-placed criminal defendants. You will see that we have executed people on less credible jailhouse informant testimony. Maybe an infusion of integrity would be advised, throughout our whole justice system. I'll hold my breath. ...right...and my funeral is scheduled for...

    Re: The Difference Between Ebbers and Lay (none / 0) (#8)
    by Talkleft Visitor on Wed Mar 16, 2005 at 06:35:18 AM EST
    I agree with TL that the case is going to be weak. But unlike the Peterson trial, the trail of money is pretty clear. These guys - Ebbers, Lay, Kozlowski - et al definitely enriched themselves through unethical means, but it's a complicated crime that looks like theft, but isn't. This kind of white collar crime needs a new criminal statute with strict liability like statutory rape. We need a stick to enforce business ethics or we should let these guys walk because the cases are just so murky. These are very shrewd criminals.

    Re: The Difference Between Ebbers and Lay (none / 0) (#9)
    by Talkleft Visitor on Wed Mar 16, 2005 at 06:35:26 AM EST
    RA - We agree on many things, but there is no difference between what Ebbers did and a bank robber, except the amount he stole was a thousand or so more than the bank robber. I watched the telcom industry implode. I watched "executives" get thousands of shares of "friends and family" stock options during product selection process. I watched Wall Street spin the dogs into sure winners. I watched companies who had never made a dime, have their stock mushroom into the stratosphere, all based on a comment by those "executives" who had been given the stock options, that they were impressed, liked, thought highly of, were in the planning process, etc. My favorite press release always said that they were entering into a "purchasing agreement." Know what they means? They have established a price list. Nothing more. Not a word about actual orders. Just as in Martha Stewart's case, the people who bought the inflated stocks lost their as* when the bubble burst. The bad actors in this haven't come close to paying their dues. Ebbers should spend at least 20 years in a medium security prison. He should have many cell mates. And BTW. This isn't sour grapes. I sold all of my telcon stocks at the end of '99. But I watched a lot of people get killed.

    Re: The Difference Between Ebbers and Lay (none / 0) (#10)
    by Talkleft Visitor on Wed Mar 16, 2005 at 08:05:29 AM EST
    I agree with C A. "This kind of white collar crime needs a new criminal statute with strict liability like statutory rape." It should be called "Economic Terrorism" These guys are doing more harm to America than any Arab in an airplane ever did.

    Re: The Difference Between Ebbers and Lay (none / 0) (#11)
    by Talkleft Visitor on Wed Mar 16, 2005 at 08:23:47 AM EST
    One of the reasons why poor people like me Hate this system is because of people like Lay who have cost us 50 percent more for our power in san diego and it has been because of our low life government who knew this would happen. Lay is only one of many more that hate us and we can only hope he will someday pay for his evil little ideas with time in prison, in the "general population" along with some other people who need prison life. But I think we all know what will happen don't we?

    Re: The Difference Between Ebbers and Lay (none / 0) (#12)
    by kdog on Wed Mar 16, 2005 at 08:25:44 AM EST
    A odds of a presidential pardon for Lay are less than even money. If he is ever tried and convicted that is.

    Re: The Difference Between Ebbers and Lay (none / 0) (#13)
    by Dadler on Wed Mar 16, 2005 at 09:26:11 AM EST
    jim, saying this is like martha stewart is not analogous. ebbers ran a company that was entirely fraudulent. stewart pulled a fast one to keep, comparatively, a paltry amount of money in her pocket. stewart is a pea shooter's crime compared to ebbers/lat/et al's howitzer destruction and greed. also, i'm not so sure lay will be convicted of anything. every trial is different, every defendent is different, every jury is different. i hope he gets slammed, since my state was extorted for billions and lives were literally destroyed or ended as a result. still, i don't see it as any slamdunk.

    Re: The Difference Between Ebbers and Lay (none / 0) (#14)
    by Talkleft Visitor on Wed Mar 16, 2005 at 10:45:37 AM EST
    I think that the big difference between Ebbers and Lay is that Sullivan's testimony was basically irrelevant, and Fastow's is quite relevant. The Ebbers jury did not buy Sullivan's credibility, at least if you buy the news stories. They convicted because there was no way that Ebbers wasn't involved up to his armpits. The mere existence of the fraud was enough. Any normal CEO would be in such a fraud up to his armpits. And--outside his Sgt. Shultz testimony--there was no evidence that Ebbers wasn't a normal CEO. Lay might be different. He was not a normal CEO; he was unusually hands-off. Fastow's testimony might be necessary, and its credibility might be critical.

    Re: The Difference Between Ebbers and Lay (none / 0) (#15)
    by kdog on Wed Mar 16, 2005 at 10:47:18 AM EST
    he was unusually hands-off
    I don't see how Lay's negligence or laziness applies. He was the CEO. He is responsible. Case closed.

    Re: The Difference Between Ebbers and Lay (none / 0) (#16)
    by Dadler on Wed Mar 16, 2005 at 12:24:43 PM EST
    kdog, i agree in principle, but "plausible deniability" is a powerful hand for the powerful. and for lay, it may well work. hope not, but you never know.

    Re: The Difference Between Ebbers and Lay (none / 0) (#17)
    by cp on Wed Mar 16, 2005 at 01:17:14 PM EST
    if what ken lay claims is true, he is guilty of criminal ignorance. to be the ceo of a company, and yet have no clue what is going on, strikes me as the worst crime of all. that is, after all, the job of the ceo, to know what is going on in the company you head. that's why you get paid the big bucks, instead of that money going to the shareholders. he isn't expected to have his finger in the daily minutia of the company, that's what underlings are for. but, he is expected to have a pretty darn good general idea of what's going on. if he doesn't, he isn't doing his job. for that reason alone, he should be convicted, and embarrassed.

    Re: The Difference Between Ebbers and Lay (none / 0) (#18)
    by Richard Aubrey on Wed Mar 16, 2005 at 03:04:54 PM EST
    PPJ, you missed my point. I wasn't excusing Ebbers or Lay. I was comparing the sympathy they get on this board to that received by violent criminals. Not other thieves. Violent criminals. They get less than murderers, muggers, rapists and so forth. As to responsibility, I guess there is a law about criminal negligence. But "should have known it was happening" is different from "did it". Seems we could look at fraud. Lay was taking money under the pretense of being a good CEO. If he didn't do it, he isn't guilty. That sort of view is common on this board about other sorts of crimes.

    Re: The Difference Between Ebbers and Lay (none / 0) (#19)
    by Talkleft Visitor on Wed Mar 16, 2005 at 05:06:11 PM EST
    RA - Sorry for the rant. But I saw so much really bad stuff that has just slipped by, I get a little emotional. As for bias, these folks are defense lawyers, so I just expect it and accept it. dadler - Look. Stealing is stealing. If a bank robber got $60K in a robbery he wouldn't get what, six months? He'd get 15 to 30. Like in YEARS. But tell me, do you understand that selling stock today that you, and the market does not, know will be worth zilch tommorrow, is really fraud? And if you were the person who bought those shares she dumped, would be happy? I think your problem is you don't understand. When a stock is purchased, it has been sold by someone else. It is a real activity. It is a real transaction. Since we can't walk around and kick the tires, it is absolutely necessary that the market be transparent. Now, I would agree that Ebbers is worse. But, so what? And I think Lay will be convicted. Let's wait and see.

    Re: The Difference Between Ebbers and Lay (none / 0) (#20)
    by Richard Aubrey on Wed Mar 16, 2005 at 05:35:47 PM EST
    PPJ. They may be defense lawyers, but their sympathetic bias seems reserved for violent criminals. You know, every one of the Enron folks who claimed to have a mill in the 401k didn't really. What they had was fraud and hype and they may or may not have suspected it. Their beef was that they didn't get to sell it to some other poor chump BEFORE it tanked.

    Re: The Difference Between Ebbers and Lay (none / 0) (#21)
    by Dadler on Wed Mar 16, 2005 at 09:22:31 PM EST
    jim, hello? my entire point was ebbers is worse than stewart. everything else you're talking about -- for example, how i don't know that when a stock is bought someone actually sells it to them...gee, really? -- is besides the point, since i was responding to your using stewart for some kind of comparable example with ebbers.

    Re: The Difference Between Ebbers and Lay (none / 0) (#7)
    by Talkleft Visitor on Wed Mar 16, 2005 at 09:46:35 PM EST
    Lea Fastow entered a guilty plea to filing a false tax return for failing to report over $200,000 in income that she (and her husband) received, I believe from one of the partnerships Andy Fastow set up to do business with Enron. The plea agreement is here .

    Re: The Difference Between Ebbers and Lay (none / 0) (#22)
    by Talkleft Visitor on Thu Mar 17, 2005 at 07:10:19 AM EST
    RA - Hey, I didn't say I agreed with the bias, just that I expect it. I am, I think you will admit, somewhat of a contrarion around here. dadler - I just seemed to remmember that you defended Stewart during her trial/investigation, and wanted to (again) point out that stealing is stealing. She did it one way, Ebbers did it another. Both involved the use of privately known data to manipulate stock prices.

    Re: The Difference Between Ebbers and Lay (none / 0) (#23)
    by Dadler on Thu Mar 17, 2005 at 01:25:27 PM EST
    jim, i most certainly did NOT defend stewart, except to the extent that the prosecution seemed excessively politically motivated. i have NEVER been a martha stewart honk, not on this page or anywhere. i have nothing against her personally, but i was anything but the lefty chanting "free martha"! very disappointing, my man, that you would erroneously attribute this to me. look it up.

    The Difference Between Ebbers and Lay | 23 comments (23 topical)