HOUSTON, 9 July 2004 — Former Enron Corp. Chairman and Chief Executive Kenneth Lay surrendered to federal authorities early yesterday morning and was charged with multiple counts of fraud later in the day.
Lay, who has steadfastly denied all wrongdoing, appeared calm and relaxed as he entered FBI offices in Houston. In a statement on Wednesday after he was indicted, Lay said he had done nothing wrong and that the indictment was not justified.
“You guys are up early,” the 62-year-old Lay said as he strode past a pack of about 50 reporters and news cameras gathered in front of the FBI offices yesterday. “Nice of you all to show up this morning.”
Asked if he planned to comment on the charges, he replied, “I don’t think this morning we’ll make a statement.”
His attorney, Mike Ramsey, said Lay would speak to reporters later.
After about 20 minutes inside the FBI offices, where he was fingerprinted and processed, Lay emerged in handcuffs and was taken to a federal court house.
Lay was later indicted on multiple counts of wire fraud, securities fraud, bank fraud, and false statements in connection with the collapse of the failed energy giant.
Lay allegedly engaged in a “wide-ranging scheme” to defraud investors, shareholders and the public with regard to the company’s financial statements with two other high-ranking former Enron executives, the indictment said.
The three conspirators allegedly used “secret oral side deals, back-dated documents, disguised debt, material omissions and outright false statements to further the scheme.”
The superseding indictment unsealed yesterday homes in on Lay’s actions after he took over the helm of the troubled energy trader in August of 2001 when former Enron CEO Jeffrey Skilling stepped down, the papers said.
Lay took over as CEO, managing the day-to-day operations of the company and “took control of the conspiracy.”
In the autumn of 2001 Lay was briefed by numerous employees on Enron’s “mounting and undisclosed financial and operational problems including several billion dollars of losses.”
Lay and former Enron accountant Richard Causey held a series of crisis meetings in late September to consider ways to handle the “growing financial crisis” including the sale of assets or a restructuring.
At that point Lay was aware that the company’s debt had swelled to at least $7 billion, but he talked up the stock to employees, even saying that he had encouraged management to buy more shares in the company.
Lay recounted that he had bought some additional stock, reportedly $4 million, but did not disclose that he had sold $24 million in stock back to the company in transactions that were concealed from the public and employees.
On Oct. 16, the energy trading company reported a $683 million loss and wrote down shareholder equity by $1 billion dollars.
On Dec. 2, 2001, it filed for bankruptcy.
