Enron trial delay unlikely
Defense attorneys appeal for a delay and change of venue but legal experts say its too early for a judge to determine that jurors are biased.
NEW YORK (CNNMoney.com) - The countdown to the long-anticipated trial of Enron founder Kenneth Lay and former CEO Jeffrey Skilling is underway but not without its fair share of last-ditch efforts to delay by the defense.
Attorneys for Skilling and Lay appealed to the 5th U.S. Circuit Court of Appeals late Wednesday after presiding U.S. District Judge Sim Lake refused for the second time to change the trial's venue from Houston. The two men's legal teams also requested that the pending trial be delayed until the 5th U.S. Circuit Court of Appeals considers its request for a change of venue.
The Enron trial is currently scheduled to begin Monday.
While defense attorneys in the case have argued that their clients wouldn't receive a fair trial in Enron's hometown of Houston, legal experts say there is little chance an appeals court will overturn Lake's ruling or delay the trial ahead of a decision.
"Too much money has been spent on both sides and my feeling is that the company can get a fair trial given the diverse amount of people in Houston," said Jacob Zamansky, a former prosecutor that now runs a private practice representing investors.
Too early to determine bias
In his ruling, Judge Lake wrote that written questionnaires and the court's questioning of jurors in person would "provide adequate safeguards" that an impartial jury would be selected. About 400 people were originally called to jury duty, with at least 150 dropped for hardship or bias. Judge Lake has called an estimated 100 to court Monday.
Houston was the epicenter when Enron imploded in 2001. The bankruptcy filing by the company, once the country's seventh largest, cost 4,000 employees their jobs and life savings, and led to billions of dollars of losses for investors.
Barry Boss, a former public defender and managing partner of the Washington D.C. office of Cozen O'Connor, said given the losses and the antagonism in the community, it's understandable that the defense is pushing so hard for a change of venue and delay.
But he said Judge Lake has yet to question the jury pool, making it difficult to determine whether potential jurors would be able to set aside any negative feelings towards the defendants.
"It's unlikely that the 5th Circuit will stay the trial because we're not even at the stage where you can determine how deep those feelings are," he said.
Grounds for appeal
Still Boss said the defense's forceful objections will put pressure on the judge to truly find impartial jurors and will put them in a stronger position to appeal if the case goes against Lay and Skilling.
"The more brouhaha you make, the better situated you are to raise the issue on appeal," he said.
Enron filed for bankruptcy in December 2001 after investigators found it had used partnerships to conceal more than $1 billion in debt and inflate profits. The oil giant's collapse was the first of many high-profile scandals that rocked WorldCom, Global Crossing, Adelphia Communications and Tyco International. The wave of fraud led to the passage of the Sarbannes-Oxley legislation meant to tighten oversight of how American companies were audited.
Lawyers for Lay and Skilling have argued that 80 percent of the potential jurors harbored negative opinions about the two men, and that publicity surrounding the plea deal of a co-defendant had further hurt their chances to get a fair trial.
The trial was originally scheduled for Jan. 17 but the defense was granted a delay after former Enron accounting chief Richard Causeypled guilty to securities fraud in late December. Causey is widely expected to join former chief financial officer Andrew Fastow and testify against his former bosses.
Defense attorneys have publicly asserted that Causey pleaded guilty due to financial duress and they're confident that if he were to testify for the government, his testimony could back up their defense, that there was no blatant fraud perpetrated by Lay and Skilling.
But legal experts expect that the defense will attempt to shift total blame onto Causey and Fastow as part of their strategy.
''I call it the finger pointing defense," said former prosecutor Zamansky. "They are going to say that they relied on others and if something was wrong with the off-the-book partnership, the professionals should have told them."
HealthSouth (Research)'s founder and former CEO Richard Scrushy use a similar defense and was acquitted last year although other executives faced with similar charges, including former WorldCom CEO Bernard Ebbers, were convicted after attempting the same defense strategy.
Cozen O'Connor's Boss said the defense will likely tread lightly around Causey until they know what he will say to the jury.
"They're hoping not to alienate him and make him a hostile witness," he said. "You can be sure they will reserve the right to go after him full throttle."
Testimony will be limited at the trial of Lay and Skilling. Click here for more.
For a complete look at the Enron drama, click here.