Lay, Skilling Convicted

Updated from 12:45 p.m. EDT

Jeffrey Skilling and Kenneth Lay were convicted Thursday of securities fraud and conspiracy in the collapse of Enron, giving prosecutors a crucial victory in a scandal that defined greed and corruption on Wall Street. Skilling was acquitted on nine of 10 insider trading charges.

The two former chief executives were found guilty after only six days of jury deliberations involving one of the most complex business failures ever. Enron went bankrupt in December 2001 amid mounting questions about its accounting, inaugurating a period of upheaval and reform in corporate America.

Both are free on bail, pending sentencing. Each could go to prison for life.

"This sends a message to corporate America and Wall Street that lying to investors is a serious crime deserving of harsh punishment,'' says Jacob Zamansky, a securities lawyer who often represents investors. "Hopefully, this lesson has been learned, and this will serve as a deterrent.''

Skilling, 52, was convicted on one conspiracy charge, 12 counts of securities fraud, five of making false statements and one charge of insider trading. Nine other insider trading charges ended in acquittal. Lay, 64, was convicted on every charge he faced: one count of conspiracy, two of wire fraud and three counts of securities fraud. In a separate trial heard without a jury by judge Sim Lake, Lay was also found guilty of four counts of bank fraud.

Jurors in the trial spent 56 days listening to evidence and testimony from Justice Department lawyers working on a special Enron task force and the defendants' own high-powered legal team. In the trial, prosecutors painted Enron as a hyper-aggressive company whose rapid rise during the 1990s led to cracks in its finances that its executives chose illegal means to fix.

"They perpetrated a lie that Enron was a robust company in the strongest financial condition it had ever been in, even as they knew the truth was significantly different," said Paul McNulty, the deputy attorney general. The scheme was "protracted, deliberate and dishonest," McNulty said, designed to "mislead analysts and investors about Enron's true financial picture."

Lay and Skilling denied wrongdoing in the scandal, which put tens of thousands of people out of work and cost many employees their life savings. Billions of dollars of market capitalization was erased by the insolvency.

Skilling stayed on script after the verdict.

"We fought the good fight, and some things work and some things don't," said Skilling, who at one time was the youngest partner in the history of the prestigious McKinsey consultancy. "We're going to have to go back and think this thing through. Obviously I'm disappointed, but that's the way the system works."

His lawyer, Daniel Petrocelli, promised a "full and vigorous appeal," and said the verdict doesn't alter his opinion of the case.

Guilty!
	Skilling convicted of:
	One count of conspiracy
	12 counts of securities fraud
	Five counts of making false statements
	One count of insider trading.
	Skilling acquitted of:
	Nine counts of insider trading
	Lay convicted of:
	One count of conspiracy
	Two counts of wire fraud
	Three counts of securities faud
	Four counts of bank fraud

"We had a trial that obviously did not come out the way we hoped, but that doesn't change our view of what happened at Enron and certainly doesn't change our view of Jeff Skilling's innocence," Petrocelli said. "The jury saw it differently. That was their right, and we will take it from here."