Lay Defends Personal Loans in Separate Trial

Jurors in the trial of former Enron Corp. chiefs Kenneth L. Lay and Jeffrey K. Skilling ended a third day of deliberations without reaching a verdict Monday, leaving the courthouse as Lay took the witness stand to defend himself in a separate case.

The jurors were heard from only once, asking U.S. District Judge Sim Lake for computer speakers as they considered the 34 counts of fraud and conspiracy that could send Lay and Skilling to prison for decades.

They are deliberating behind closed doors not far from Lake’s courtroom, where Lay, 64, is in the midst of a nonjury trial for bank fraud in connection with $75 million in personal loans.

Although Skilling, 52, has not been spotted during the deliberations at the downtown Houston courthouse, Lay took to the witness stand Monday to deny he had lied to banks by falsely promising that he would not buy stock with the money.

Lay was barred by banking regulations from using the $75 million from those loans to buy stock because he had put up other securities as collateral -- a rule that prosecutors say he repeatedly violated.

Under questioning from his attorney, Ken Carroll, Lay quickly conceded that he used the money to purchase stock -- but insisted he was unaware of violating regulations.

“I regret that I didn’t have a lot more time to spend on my personal matters, and perhaps this is one of the consequences of that,” Lay said, echoing an argument by his attorneys that the busy executive often signed documents or had assistants affix his signature to them without reading them closely.

Lay was still on the witness stand when Lake recessed court for the afternoon and was scheduled to return today for further testimony.

Jurors were expected to resume deliberations today in the main fraud and conspiracy case against Skilling and Lay, which centers on accusations that the two men concealed Enron’s crumbling finances as the energy giant spiraled toward bankruptcy in 2001.

In another Houston courtroom, a federal judge sent the fraud trial of two former executives at Enron’s Internet unit to a jury after prosecutors claimed the defendants falsely reported millions of dollars in revenue.

Prosecutors allege that Kevin Howard, 43, former vice president of finance at Enron Broadband Services Inc., and Michael Krautz, 37, a former accounting director, helped the unit fraudulently book future revenue from a video-on-demand business with Blockbuster Inc. to meet estimates for 2000.

Howard and Krautz are among five Enron Broadband executives whose three-month trial ended inconclusively in July. The trial on 202 charges spread among the five produced 24 acquittals and mistrials on the rest, leaving none of the defendants convicted and none completely exonerated. Prosecutors intend to retry the five at three smaller trials, beginning with Howard and Krautz.

Howard and Krautz face five counts apiece -- three of wire fraud, one of falsifying records and one of conspiracy.