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Lay and Skilling await verdict
Shareholder suit against Enron concludes as jury deliberates for fifth day in criminal trial.
HOUSTON (CNNMoney.com) - Enron founder Kenneth Lay and former chief executive Jeffrey Skilling face another day of waiting as jurors in the biggest corporate trial in recent history ended their fifth day of deliberations Wednesday. The two men were absent from the courthouse but lead attorneys Daniel Petrocelli and Michael Ramsey were present as the 60th day of the trial concluded.
While the waiting game continued in the criminal fraud case against Lay and Skilling, a judge approved the settlement of a separate shareholder lawsuit against three banks that accused them of helping Enron engage in some of the questionable financial transactions the government says helped artificially bolster Enron's profits. The settlement has grown to $7.3 billion including interest from the original $6.6 billion. Bill Lerach, the lead attorney for the plaintiffs in the civil class-action lawsuit, told reporters outside the courthouse that Citigroup (Research), JPMorgan Chase (Research) and CIBC got final approval to settle the case but haven't admitted any liability or wrongdoing. A new trial is scheduled for the remaining banks that were named in the lawsuit in October. The banks that haven't settled yet include Merrill Lynch (Research), Barclay's, Credit Suisse Group's CSFB and Royal Bank of Scotland. Lerach said the $7.3 billion settlement was the "largest recovery in history" and he said over 90 percent of the settlement will be distributed among the investors who joined the class action suit. He added that "we're seeking billions more" from the remaining banks and said Lay and Skilling both remain defendants in the civil lawsuit. While he wouldn't comment on the current criminal charges against the two men, he said there was "no question that Enron was a criminal enterprise." The civil case was one of a handful of Enron-related cases being determined in this Houston courthouse. Not only are Lay and Skilling waiting on the judgment of the jury in the criminal trial, Lay also must wait for Judge Sim Lake to render a verdict in the bank fraud trial that concluded Tuesday afternoon. In that case, government prosecutors have accused Lay of improperly using $75 million in personal bank loans to buy stock on margin, which is a violation of an obscure banking law known as Regulation U. The government indicted him on four counts of bank fraud, each carrying up to 30 years of prison time if he's convicted. The defense, however, characterized the charges as part of a witch hunt by the government aimed at trying to ensure a conviction for Lay if the jury acquits him of the original charges of conspiracy and fraud. Judge Lake had indicated that he will not render a verdict until the jury comes back with their own verdict in the case against Skilling and Lay. But, in a possible sign that the jury is still not close to reaching a decision, Judge Lake received a note late Tuesday afternoon indicating that the jury has already determined that it does not plan to deliberate Friday or next Monday, which is the Memorial Day holiday. After 16 weeks and 56 days of testimony and documents, the jurors have a large range of factors to consider, including the testimony of both defendants and impassioned closing arguments by defense attorneys for both Skilling and Lay. Skilling faces 28 counts of conspiracy, fraud and insider trading. Lay faces six counts of conspiracy and fraud, in addition to the separate four charges of bank fraud. The men could each face 20 to 30 years in prison if convicted. Another Enron-related trial also entered deliberations on Monday afternoon. Jurors will determine the fates of two former executives that worked at the company's troubled broadband unit and are accused of manipulating accounting to make the struggling business appear profitable. It's the second trial for the broadband unit's former financial chief finance chief Kevin Howard and in-house accountant Michael Krautz. Their last trial ended in a dead-lock last year. Enron's 2001 bankruptcy was the largest in history at the time and cost 4,000 employees their jobs and many of them their life savings, and led to billions of dollars of losses for investors. Enron was once the nation's seventh-largest company. (CNNMoney.com staff writer Jessica Seid also contributed to this report.) ____________
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