- The Washington Times - Thursday, October 2, 2003

From combined dispatches

A federal judge yesterday instructed former Enron Corp. Chairman Kenneth Lay to prove why documents in his possession sought by the Securities and Exchange Commission should not be turned over to the agency.

Mr. Lay, who presided over the second-biggest U.S. bankruptcy amid charges of accounting fraud, has refused to turn over the documents, citing his Fifth Amendment rights against self-incrimination.

The SEC asked U.S. District Court Judge Royce C. Lamberth on Monday to enforce its subpoena of memos and letters that include personal notations by Mr. Lay, which his lawyers say are personal and indicative of his “thinking processes.”

In an order posted on the court’s Web site and dated Oct. 1, Mr. Lamberth said Mr. Lay must “show cause why he should not be ordered to produce” the documents, which the SEC says are corporate records and cannot be withheld under the Fifth Amendment. The court scheduled a hearing on the documents issue for Nov. 7.

The SEC’s court filing was the first government legal action against the company’s founder in the almost two-year investigation of accounting fraud at Enron, the world’s largest energy trader before it filed for bankruptcy in December 2001.

U.S. prosecutors have filed criminal charges against 20 former Enron officials, including ex-Chief Financial Officer Andrew Fastow, and have been weighing criminal charges against Mr. Lay and Jeffrey Skilling, a former chief executive of the Houston-based company. Representatives of Mr. Lay declined to comment.

In separate action yesterday, the wife of Mr. Fastow asked that her criminal trial be held outside of Houston because any jury formed there might be tainted by the extensive media coverage of the Enron scandal and the presence of Enron victims. Lea Fastow is charged as an accomplice in accounting schemes the government says were masterminded by her husband to make Enron’s books look better.

The court developments occurred as Enron notified employees this week that another 200 of the company’s 1,200 remaining workers will be laid off in December and February.

“As the bankruptcy estate winds down, we require fewer and fewer people, and this is an indication of that,” Enron spokesman Mark Palmer said.

Anthony Sabino, a law expert at St. John’s University in New York, said the continual whittling of Enron’s work force is expected while the company prepares to emerge from Chapter 11 bankruptcy as two to three new companies with different names.

“We’re coming to the typical situation of the last person out shuts out the lights,” he said.


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