1. Dumbstruck

Let's face it, the collapse of

Enron

made almost everyone look dumb. But maybe the government most of all.

After all, when the Houston energy giant went up in smoke, shareholders were left holding the bag to the tune of $68 billion -- even as some fat cat insiders famously lined their pockets. And yet for the longest time it seemed like no one was going to take the fall. It got so bad that we at the research lab even

devoted a column or two to the issue.

But at last the wheels of justice seem to be rolling. Last month brought a deal that will send ex-Enron financial honcho Andrew Fastow to jail -- an outcome that seemed far-fetched not long ago. Thursday brought the biggest catch yet, with the indictment of former Enron Chief Jeffrey Skilling. Now only former Chairman Ken Lay remains unindicted among the company's top tier.

Like Lay, Skilling has said he's done nothing wrong. But it was the way Skilling said it that stood out. While many of his penthouse peers were taking the Fifth, he told Congress around this time two years ago that all the anti-Enron talk was just filthy.

"The entire management and board of Enron has been labeled everything from hucksters to criminals, with a complete disregard of the facts and evidence assembled," he famously told the Senate Commerce Committee in February 2002. "These untruths shatter lives, and they do nothing to advance the public understanding of what happened at Enron."

Maybe Skilling can help clear everything up at his trial.

2. Maybe the Proof's in the Pudding

For the time being, of course, Lower Manhattan has the market cornered for courtroom drama. In federal court, the Martha Stewart trial is unfolding in all its glory.

So far, both sides have suffered some nasty black eyes. Testimony exposed one case in which Martha was mean to someone at Merrill Lynch on the phone, for instance. Later the judge told the prosecutors they couldn't present some really interesting call logs.

But what's got us scratching our heads at the lab -- besides all the telephone stuff -- is that securities fraud charge hanging over the founder of

Martha Stewart Living Omnimedia

(MSO)

.

You'll recall it was this charge that caused much of the commotion last year when the feds filed their case. "The government is making her the subject of a criminal test case designed to further expand the already unrecognizable boundaries of the federal securities laws," Stewart's lawyers protested at the time, in proclaiming her innocence. "This is gutless by the government," Saul Cohen, a corporate lawyer in New York with Proskauer Rose, told our ace

Matthew Goldstein that day. "They don't have an insider criminal case and they couldn't prove it, so they are trying to go after her for peripheral things."

That view of the charge was only borne out when the judge recently

barred the government from calling expert witnesses on what an investor in Martha Stewart Living might have thought of her actions during the

ImClone

(IMCL)

scandal.

"It helps Martha Stewart to the extent where you don'thave a respected expert telling the jury that her statements were material," Bruce Carton, a former

Securities and Exchange Commission

lawyer, told our ace Gregg Greenberg. "The securities fraud claim is a novel and weak claim, and I suspect she won't get convicted on that."

Of course, next week may see Martha herself on the stand. At that point this week's drama will look like a mere dress rehearsal.

3. It's Time to Get Things Started

It's a

Disney

(DIS) - Get Report

marriage made in heaven.

No, we're not talking about Comcast's $54 billion hostile bid for the mouse kingdom. We're talking about Tuesday's news that Disney is buying the Muppets from Jim Hensen Co. for an undisclosed sum. The deal means that at last Disney's embattled CEO Michael Eisner has found his very own Miss Piggy.

Eisner Pulls Strings
CEO has real puppets now

From a business perspective, the deal makes a lot of sense for Disney, which has been seeking to ink a deal for the child-pleasing Muppets for years. Disney has plans to launch a new series of television shows, movies and products featuring Kermit the Frog and his non-Sesame Street friends. The deal also gives Disney the rights to the popular children's show, "Bear in the Blue House."

"This new and very important relationship will enable our two companies to combine our respective talents and resources in ways that will fully realize the tremendous potential of the Muppet and Bear franchises," gushed Brian Hensen, the company's co-CEO. "Michael Eisner's long-standing passion and respect for the Muppets gives me and my family even more confidence in Disney as a partner.

But what we like best about the acquisition is the symbolism of Eisner getting his hands on some more puppets. After all, Eisner, long accused of running a personal fiefdom at Disney, is a master puppeteer when it comes to getting his way with Disney's do-nothing board. For years, he's stocked and restocked his options larder as the company's directors sat by and watched shareholder value evaporate.

Earlier this week, Eisner once again showed that he's one the one pulling the strings at Disney when the company's directors offered their "unanimous" rejection of Comcast's takeover bid. Close readers will recall that the board's unanimity benefited greatly from the recent resignation of Roy Disney Jr. and Stanley Gold, two directors who were on the record as wanting to give Eisner the boot.

A Muppet like Rizzo the Rat should feel right at home at Disney.

4. Losing Interest

Last weekend's bidding war for

AT&T Wireless

(AWE)

lasted well into Tuesday morning before

Cingular

emerged victorious. The marathon bidding session was evidently too much for some of the company's lawyers.

Down to the Wire
Cingular edged out Vodafone in the AWE bidding

The winning bid came in so late that the folks at

Vodafone

(VOD) - Get Report

went to bed Monday in England thinking they had walked away with the prize. Even a few major media outlets were prematurely predicting Vodafone would emerge the victor, only to be caught off-guard by Cingular's winning bid.

It appears Cingular's midnight oil wasn't bright enough for its legal team.

Late Wednesday, Cingular had to tweak the terms of its offer. In a regulatory filing, the company said it would not pay interest to AT&T Wireless holders if the deal closed later than expected. In its initial merger documents, Cingular had promised to pay 4% interest to AT&T Wireless stockholders if the deal did not close by Dec. 16.

Cingular didn't issue any press release announcing the new terms. It simply refiled a new merger document that deleted the reference to paying interest.

Granted, it's not a big amendment, and certainly no deal-breaker. But it's curious how the whole matter of paying interest got included in the merger document in the first place.

Blame it on the lawyers, sources said.

The issue of Cingular paying interest came up in an earlier round of negotiations, but was dropped by the time the companies agreed on the $41 billion price. The lawyers drafting the deal documents, however, got confused.

No word on what percentage of their fees they'll be returning.

5. Upping the Ante

Speaking of the greatness of this nation: From the people who so kindly brought you the $5 cup of coffee now comes the (almost) $1,000 home espresso machine.

Yes,

Starbucks

(SBUX) - Get Report

has a way of opening up your wallet. Take the Barista Digital Italia, described as "the first fully automatic home espresso machine to wear the prestigious Barista brand name."

For Baristas With the Mostest
Cash, that is

Well, it's about time. Of course, you'll have to pay for the privilege. The company said it rolled the machine out at some of its coffeehouses Wednesday at the low, low special price -- available through March 16 -- of just $790. The Barista Digital Italia's regular price, mind you, will be $995 U.S. But even that's worth it, to read a recent press release.

"The Starbucks Barista Digital Italia combines the highest quality coffee brewing components with programmable convenience, and the result is the best home espresso machine that I have ever used," says Mark Sacks, Starbucks product manager for brewing equipment. "With its improved home barista interface, this espresso machine is easier to operate than many car stereos."

Make of that what you will.

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