Lay Painted as Enron Conspirator

Federal authorities contend that both Skilling and Causey knew by the fourth quarter of 1999 that Enron was not meeting its budget targets and that the company only appeared to be profitable because of the many schemes they and others concocted to juice reported earnings. The two men specifically are charged with concealing large losses in two of the company's divisions: Enron Broadband Services and Enron Energy Services.

The SEC, meanwhile, has charged Skilling with selling Enron stock while in possession of material, nonpublic information, generating unlawful proceeds of about $63 million.

Last November, a special examiner in the Enron bankruptcy proceeding concluded that both Lay and Skilling most likely knew some of Enron's financial officers were misusing the company's array of off balance sheet entities and providing the public with misleading financial information.

The examiner suggested that Enron's former top managers might have to repay loans to the fallen oil- and gas-trading firm. Between May 1999 and October 2001, Lay borrowed more than $94 million from Enron and repaid it with company stock. In May 1999, Skilling repaid $2 million with Enron stock

The Enron corporate fraud is notable because it goes beyond a mere accounting scandal that catches a few rogue executives.

To date, a number of investment bankers, including three former Merrill Lynch(MER Quote) bankers, were charged with aiding and abetting the company's fraud.

The SEC also has levied steep fines against Merrill, Citigroup(C Quote), J.P. Morgan Chase(JPM Quote) and Canadian Imperial Bank of Commerce(BCM Quote) for their role in helping to finance Enron's shady accounting schemes.

Enron's former auditor, Arthur Andersen, was forced to close its doors after a federal jury convicted the giant accounting firm of an obstruction of justice charge early on in the investigation.