Will Former Enron Execs Walk or Do Time? You Can Bet on It
Long before Enron Corp. drowned in scandal, its chiefs, Kenneth Lay and Jeffrey Skilling, trumpeted the company’s savvy in creating trading markets beyond energy. Now it turns out they are the subjects of futures contracts that allow investors to wager on whether they will be convicted of fraud and conspiracy charges.
Intrade, a futures market based in Dublin, Ireland, creates trading vehicles for such topics as which film will win best picture at the Academy Awards and whether bird flu will be discovered in the United States before March 31. It recently added contracts on whether jurors will convict Lay of at least four charges and whether they will find Skilling guilty on at least 16 counts.
A Costa Rica bookmaking website has posted odds on the same bet.
Lawyers for the two men criticized such speculation on their clients, who will face decades in prison if convicted. “I think it’s abhorrent, betting on people’s lives,” Skilling lawyer Daniel Petrocelli said. Added Michael Ramsey, Lay’s lawyer: “It should probably be illegal. That’s an invitation to tamper with the case.”
Prosecutors contend that Lay and Skilling lied to investors about Enron’s financial health before the company filed for bankruptcy protection in December 2001. The defendants counter that there was no fraud and they are not guilty of wrongdoing. The trial, which enters its third week Monday, is expected to last four months or more.
Enron’s once-envied trading operation sought to create markets in commodities beyond energy, such as metals and Internet bandwidth.
On Friday, when court was not in session, the trading at Intrade showed a more than 60% chance that Lay would be convicted of at least four of the seven counts of fraud and conspiracy against him. For Skilling, trading showed about a 75% chance that he would be convicted on more than half the 31 counts of fraud, conspiracy, insider trading and lying to auditors filed against him.
“I can predict that it’s going to be very volatile for the next few weeks. As more information comes out, you’ll be able to see what the markets are hanging on and what the markets think are important,” Intrade spokesman Mike Knesevitch said.
Intrade created a trading market for last year’s molestation trial of Michael Jackson, who was acquitted. Those contracts settled at zero because of the acquittal -- as will those on Lay and Skilling if jurors exonerate them or find them guilty of less than the requisite number of charges.
Intrade’s other such markets include a 24% probability that U.S. Rep. Tom DeLay (R-Texas) will be convicted on money-laundering charges.
“The major difference between us and a bookie is the fact that we allow individuals to make markets in these events in the same way they make markets in a stock,” Knesevitch said.
Oddsmakers for the Costa Rican site, www.betcris.com,consider a conviction so likely that they require bettors to put up a lot of money to win a little, Chief Executive Mickey Richardson said in an e-mail.
The Costa Rican site places odds of a Lay conviction at 1 to 50 and an acquittal at 1 to 1.05. For Skilling, the site places odds of conviction at 1 to 100, and acquittal at 1 to 1. That means bettors stand to pocket less money if the men are convicted, because oddsmakers consider that the most likely outcome, Richardson said.
Oddsmakers in Las Vegas and London aren’t taking similar bets. Bob Scucci, race and sports book manager for the Stardust Resort & Casino, said Nevada gaming regulations limit them to taking bets on sports.
Graham Sharpe, spokesman for London bookmaker William Hill, said his outfit didn’t post odds on court cases because “it’s a recipe for legal disaster.”
Associated Press writer Randy Herschaft in New York contributed to this report.
