HOUSTON (CNNMoney.com) - A former Enron employee told the jury Thursday that he lost nearly all of his retirement savings as a result of investments he made based on what then CEO Ken Lay was telling workers at the failed energy company.

John Sides, a 22-year Enron veteran with a background in accounting, said he shifted all of his 401(k) holdings into Enron stock in October 2001 even as controversy dogged the firm and its shares spiraled towards zero.

Special Reportfull coverage Skilling gets 24 years Lessons from Enron: Just say 'sorry' Skilling's possible new home Skilling sentence likely to be a long one

Meet the players Find out who you might see at the Enron trial, how they got involved, and what they're doing now. Launch gallery

Quick Vote Did Ken Lay and Jeff Skilling commit fraud at Enron?   Yes   No   Too early to say or View results

"At Enron we were told by management that newspaper articles were rumors and that we should look to the company to get the facts," Sides told the jury.

The amount of money in Sides' account or what he lost was inadmissible.

The prosecution, which is charging Lay and another former CEO Jeff Skilling with multiple counts of fraud and conspiracy for lying to investors about the health of Enron, played a video of Lay addressing employees in August 2001 after Skilling resigned from the firm and Lay, then chairman of the company, stepped in as chief executive.

"I want to assure you that I have never felt better about the prospects of the company," Lay said in the video.

He then went on to talk about Enron's retail energy trading unit, EES. The former head of EES testified earlier this week he and other senior executives, including Skilling, made inappropriate organizational changes in the unit to hide losses at the end of March, 2001.

"Revenues are growing, profits are growing, it's a very, very solid business," Lay said of EES in the August video.

During cross examination, the prosecution returned to EES.

"If there was a loss in EES in the first quarter of 2001, would that have effected you view of [the stock]?" a government lawyer asked.

"Yes," answered Sides.

But the defense pointed out that Lay disclosed multiple problems at the company both during the August video and one made in October that same year, including big challenges in Enron's broadband unit and trouble with a power plant in India.

"He gave us both the good stories and the bad," conceded Sides.

The defense also pointed out that Sides could have invested his 401(k) money in a wide variety of investments, including much safer government bonds.

"You're certainly not trying to tell the jury that you don't take responsibility for your own investments," said Lay's lawyer.

Lay and Skilling face multiple counts of fraud and conspiracy for lying to investors about the health of Enron, once the nation's seventh-largest company. The two men deny the charges and say there was no conspiracy to commit fraud.

Enron filed for bankruptcy in December 2001, at the time the largest bankruptcy in U.S. history. Thousands of employees lost their life savings and investors lost billions as the company's stock became worthless.

The jury also heard testimony Thursday from Kevin Hannon, a former executive from Enron's broadband unit, EBS.

The prosecution played a tape from an analyst call in March, 2001, where Skilling can be heard saying that "we are having a great quarter at the intermedation side of the broad band business," and that "EBS is coming along just fine" and that is was "looking good."

Hannon testified that none of those things were true at EBS and that he never told Skilling they were.

Earlier Thursday, defense lawyers Lay and Skilling kept trying to poke holes in a witness' claim that Skilling was in on a plan to deliberately hide losses at the failed energy company.

Skilling's lawyer, Daniel Petrocelli, presented accounting documents that showed differing opinions on those losses and indicated they may not have been losses when they were first booked.

Enron's former head of retail energy trading, David Delainey, told prosecutors Tuesday that he took part in covering up losses with the implicit approval of then-CEO Skilling, and that he improperly booked reserves as current profits to help the company meet Wall street earnings targets.

Just days before first-quarter results were due in 2001, Delainey testified, the company, with the Skilling's implicit backing, shifted part of its retail energy trading operation, including nearly $200 million in losses, to its more profitable wholesale trading business to avoid telling investors that all wasn't well on the retail side.

Delainey remained calm on the witness stand Thursday when Petrocelli produced the document, saying he hadn't seen it before and noting that the decision to move the losses was made at the end of March, not the end of April, when the document was dated.

After questioning from Petrocelli, Delainey faced cross examination from Lay's attorney, Michael Ramsey.

Ramsey asked Delainey how reserves could be booked as current profits without the knowledge of lots of people.

"It's it hard to believe that a conspiracy of this magnitude was controlled by three people when there were 100 people out there doing the work," Ramsey said.

Delainey responded that only a few people were required to move the reserves and would have been able to see the whole picture.

Ramsey also questioned Delainey's motive for testifying, saying his testimony could secure him a lighter sentence.

Delainey pleaded guilty in 2003 to insider trading and forfeited $4.2 million in profits from his stock sales.

He also agreed to cooperate with the government in exchange for possibly receiving a lighter prison sentence, which could range from zero to 10 years. He has said cooperation with the government entailed telling the truth about events at Enron.

On Wednesday, Petrocelli grilled Delainey over his honesty, trustworthiness, and the logic of his story and tried to paint him as an opportunist and a liar.

Petrocelli produced documents Wednesday that showed that moving the division was discussed as far back as 2000, and argued that it did make operational sense.

The attorney also drew comments from Delainey that indicated other Enron executives who knew of the move were not aware that it was, as Delainey claimed, a farce.

The admission led Petrocelli to claim that the move was, in fact, not fraudulent.

The prosecution has said that Andrew Fastow, Enron's former chief financial officer who is expected to be the government's star witness, could take the stand next week, possibly as early as Monday.

_______________________

Is Ken Lay going broke? Click here.